When you donate a vehicle in Louisiana, you need to transfer ownership by signing the title certificate in much the same way as you would if you were selling the vehicle. You'll also need to submit an Act of Donation of a Movable document. This declares that the transfer is a legal donation without designating a sales price, so you can take advantage of the tax breaks available for donated vehicles.
Understanding Louisiana Vehicle Titles
The Department of Public Safety Office of Motor Vehicles in Louisiana issues a certificate for every titled vehicle. The certificate lists the name of the current owner and the year, make and model of the vehicle. The certificate must be in your name for you to transfer ownership of a donated vehicle. If your title certificate lists a lien holder, you'll need to pay off the lien and have it removed from the certificate before you donate the car.
Rules for Transferring Title
To transfer the vehicle's title to the recipient, complete the recipient's name in the buyer/purchaser field of the title certificate and sign the back of the certificate in the presence of a notary public. The recipient will also need to sign the title in front of a notary. In the space where you list the sales price, print the word "donation." This records that the transfer is a donation without a sales price, so you can avoid paying taxes on the transfer.
Rules Regarding Donation
The Office of Motor Vehicles requires that an Act of Donation of a Movable certificate is filed alongside the title certificate whenever a vehicle is transferred by donation. You, the recipient and two witnesses must sign this form in the presence of a notary public. The main purpose of this document is to record the relationship between the parties. If the donation is made to a licensed charitable organization or is between immediate family members, then it is deemed to be a genuine donation. If the donation is made to anyone else, the state can rule that the donation is, in fact, a disguised sale. The state will tax a disguised sale as if it were an actual sale, based on the estimated value of the car.
It is the recipient's responsibility to submit the transfer paperwork to the DMV. However, you are responsible for reporting the vehicle as donated. Do this online by visiting: expresslane.dps.louisiana.gov/Notice_of_Transfer/VT_page_1.aspx and entering the following information:
- license plate number and expiration date
- vehicle identification number
- driver's license number
- name and address of recipient
- date of donation
The vehicle will not be legally transferred until the recipient files the paperwork, but your record will be flagged indicating the donation of the vehicle.
Donating vehicles is a tax-free act. You may be entitled to take deductions on your tax return if the donation is made to a licensed charity. The amount of the deduction depends on what the charity does with the car after the donation. If the charity sells the vehicle, the value of your donation is equivalent to the gross proceeds of the sale. Otherwise, the value of your donation is the vehicle’s fair market value at the time of donation. The recipient organization is required to give you an acknowledgement of donation, specifying the basis for the deduction.