Does it matter who makes your car payments?

[ScrimpAndSave]

This is a weird question...but you all know that I ask weird questions so here it goes!


My car is currently owned by my dad (it makes our car insurance a little lower). I always bought my cars cash. If I financed a car in his name and paid of it, would someone track who was actually paying it and call it a gift tax?

The current plan is to own the car myself...not continue to have my dad own my cars...but I was just wondering.

Thanks!

[irmanator]

I doubt it... I made payments on my husbands car before we got married... technically he paid but i wrote checks cause he didn't have a checking acct
the bank doesnt care as long as they get paid.

[disneysteve]

I don't think gift tax is an issue here.

One question. Is the insurance in your name? Depending on state laws, there could be liability issues for your dad if you were to be involved in an accident. Any injured parties could sue him as the legal owner of the vehicle even if he had nothing to do with the accident.

I'd suggest being a grown up and getting everything into your own name, especially now that you no longer live with your dad.

[ScrimpAndSave]

I don't think gift tax is an issue here.

One question. Is the insurance in your name? Depending on state laws, there could be liability issues for your dad if you were to be involved in an accident. Any injured parties could sue him as the legal owner of the vehicle even if he had nothing to do with the accident.

I'd suggest being a grown up and getting everything into your own name, especially now that you no longer live with your dad.

Yes, both the car and the insurance will be in my name. Me being a "grown up" has nothing to do with it.

[disneysteve]

Yes, both the car and the insurance will be in my name. Me being a "grown up" has nothing to do with it.

I hope that didn't come out wrong. My apologies if it did. A lot of us (if not all of us) started out as add-ons to our parents' policies and sometimes neglect to change over to our own once we are independent adults. Sometimes, as I alluded to, it can end up causing complications if something unforeseen happens.

[ScrimpAndSave]

Thanks, Steve...I wasn't sure what you meant...especially since I mentioned in the first post that I planned on owning the car myself - not through my dad.

I was just wondering if there were issues in paying off someone else's loan or not. I started thinking of tax implications.

[disneysteve]

If I financed a car in his name and paid of it

I was responding to this part - you paying for the car but it being in his name. That's where problems could arise. The car would be in his name. Not sure how that would work for your insurance. Plus, as I mentioned, there could be liability issues.

As for financial issues, I don't think it would matter at all.

[wnlbutterfly]

That is interesting and I suppose it depends on the state on the insurance issue. Our DD (just turned 21) is listed on our insurance as a driver, and her car is listed in her name as well as our name. Even if she didn't have a car, on our insurance we would HAVE to list her as a driver.

Luckily enough with her being female, a good student, and have taken defensive driving course, her insurance wasn't too bad at all. I know it is different for young male drivers however.

Banks wouldn't track payments like that nor report it to IRS.

[jIM_Ohio]

SnS-
my take is that if you or your dad pissed off the IRS, they could find a way to make that a gift tax. At same time if you were a good little taxpayer, the IRS will not have an issue with whose name the vehicle is in and who made the payments.

I do agree with Steve that having everything in your own name will simplify things for both of you. If there was an accident, the owner of the vehicle can he found just as liable as the driver. Just because you reached age of majority does not mean your dad is off the liability hook if you get an accident. A good Lawyer could take advantage of this.

My response was probably not much help, but I will once again agree with Steve- why risk the legal system and just put everything in your name.

There are fewer issues, IMO, with item being in spouse's name for those of us which are married than with an item being in a parent or child's name.

[jefffou]

This is a weird question...but you all know that I ask weird questions so here it goes!


My car is currently owned by my dad (it makes our car insurance a little lower). I always bought my cars cash. If I financed a car in his name and paid of it, would someone track who was actually paying it and call it a gift tax?

The current plan is to own the car myself...not continue to have my dad own my cars...but I was just wondering.

Thanks!

I don't think there is anything that could be construed as a gift here. A gift, defined by the IRS, is any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.

As the car is in your father's name, you are essentially buying your father a car. But, you ARE receiving something in return. Full use of the car, which should equate to the value of the car.....no?

Unless I'm missing something here, full consideration is being received by each party.

In any case, you have a $13,000 exclusion amount in the year 2009 BEFORE any gift tax is applied against your lifetime unified credit.........

Nevermind. You do not have an issue here.

Jeff