A transfer between spouses of a motor vehicle that is community property, for which Texas motor vehicle tax has already been paid, is not subject to either gift tax or motor vehicle tax. All property acquired during a marriage is presumed to be community property.
Since Texas recognizes an informal marriage, commonly referred to as common-law marriage, community property laws also apply in such cases.
A transfer between persons formerly married to each other is exempt from both gift tax and motor vehicle tax when the transfer is part of the property settlement or results from a court-ordered division of community property in a divorce decree.
A transfer between spouses of a motor vehicle that is separate property is subject to either gift tax or motor vehicle tax (see bullet points below). Separate property includes any property owned by a spouse before the marriage or acquired during the marriage by gift or inheritance.
A transfer between persons formerly married to each other is subject to motor vehicle tax when the transfer occurs after (and is not a part of) the community property settlement or court-ordered division of community property in a divorce decree. Motor vehicle tax is due on the greater of the sales price or 80 percent of the motor vehicle’s SPV.
The transfer of a motor vehicle after the death of either spouse terminates the community estate that arose during the marriage. Therefore, any interest in the motor vehicles belonging to the decedent spouse’s estate is subject to the gift tax.
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