A Colorado affidavit of exempt sale is a signed declaration you file with the county clerk stating that a vehicle transfer qualifies for a sales tax exemption under state law. Without it, the clerk assesses the 2.9% state sales tax, plus any applicable local taxes, when you apply for the new title.1Department of Revenue – Taxation. Sales Tax Guide The affidavit covers gifts between family members, inherited vehicles, and court-ordered transfers such as those made under a divorce decree. You sign it under penalty of perjury and submit it as part of your title application, not on its own.
What the Affidavit Is (and What It Is Not)
The affidavit is a statement declaring that no taxable sale occurred. Some counties fold the declaration into their standard titling paperwork; others use a separate form. Either way, the document comes from the county clerk when you explain the nature of your transfer.
A common online mix-up identifies this affidavit as Colorado Form DR 0026. It is not. DR 0026 is the Tax Statement for Leased Motor Vehicle, used by auto dealers when they sell a vehicle to a leasing company.2Department of Revenue – Taxation. DR 0026 – Tax Statement for Leased Motor Vehicle It has nothing to do with gifts, inheritances, or divorce transfers. Ask your county clerk for the correct exempt-sale form when you arrive.
Which Transfers Qualify
Colorado exempts three main types of vehicle transfer from sales and use tax.
- Gifts. A transfer with no payment, trade, or exchange of value. The controlling phrase is “no consideration.” If the recipient assumes a loan balance, takes over payments, or provides services in exchange, the transfer is taxable and the exemption does not apply.3Colorado Department of Revenue. Sale and Use Tax Topics: Motor Vehicles
- Inherited vehicles. A vehicle passed to an heir through probate, a will, or a transfer-on-death designation. You file the affidavit along with estate documentation such as letters testamentary or a small-estate affidavit.
- Court-ordered transfers. When a divorce decree or other court order directs one party to transfer a vehicle to the other. Bring a certified copy of the order.
The exemption eliminates the 2.9% state sales tax and state-administered local taxes. Home-rule cities and counties that administer their own tax may still assess use tax, so confirm with your local clerk.1Department of Revenue – Taxation. Sales Tax Guide
What to Bring to the County Clerk
Clerks will not process an exempt transfer without the full document set. Gather everything before you go.
- Properly endorsed title. The person giving up the vehicle signs the back of the title exactly as their name appears on the front. Misspellings, missing middle names, and mismatched signatures get flagged.
- Secure and verifiable ID. A Colorado driver’s license, ID card, or other approved identification for the new owner. If someone else is handling the transaction, they need a notarized power of attorney (Form DR 2175) plus their own ID.4Boulder County. Gifted and Inherited Vehicles
- Proof of insurance. Colorado requires active liability coverage before registration. You can insure the vehicle before it is titled in your name.5Boulder County. Auto Insurance Requirements
- Emissions test. If the vehicle is subject to emissions testing in your county, you need a passing result. A gifted vehicle needs a new test even if the seller’s current report has not expired.4Boulder County. Gifted and Inherited Vehicles
- Odometer reading. Required for vehicles less than 10 years old.
- Bill of sale showing $0. If the giver and receiver have different last names, the clerk may ask for one to document the gift.
- VIN verification. Only required when the vehicle was last registered in another state. A law enforcement officer or authorized agent confirms the number matches the title.6Colorado State Patrol. Get A VIN Inspection
For an inherited vehicle, add letters testamentary, a small-estate affidavit, or the section of the will naming you as beneficiary. For a court-ordered transfer, add a certified copy of the decree.
Filing at the Clerk’s Office
You file at the Motor Vehicle Division of the county clerk and recorder in the county where the vehicle will be registered. The affidavit is not a separate submission. It rides along with the title application, endorsed title, ID, proof of insurance, and the rest of your paperwork.
The clerk reviews the exemption claim and supporting documents. If everything checks out, they process the title without collecting sales tax and issue either a temporary permit or permanent plates on the spot. If the gift relationship is not obvious from the paperwork, or the title carries a lien, expect to provide additional documentation before the exemption is approved.
Colorado gives you 60 days from the date of transfer to apply for the new title.7City and County of Denver. Transfer Vehicle Title to New Owner Keep a copy of the stamped affidavit and title receipt. If the state ever questions the tax-exempt status of the transfer, that paperwork is your proof.
Fees You Still Owe
Waiving sales tax does not make the transfer free. Several mandatory charges remain.
- Title fee. $7.20 for a standard title.8Jefferson County, CO. Forms and Fees
- Registration fees. Based on the vehicle’s empty weight and type, as set by C.R.S. 42-3-306.9Department of Revenue – Motor Vehicle. Taxes and Fees
- Specific ownership tax. Colorado’s annual ownership tax on vehicles, in place of personal property tax. The rate depends on the vehicle’s original taxable value and age, and the amount declines each year.9Department of Revenue – Motor Vehicle. Taxes and Fees
Totals typically land between $50 and several hundred dollars depending on the vehicle. A 15-year-old sedan costs far less than a two-year-old truck. The clerk can calculate the exact amount before you pay.
Late Penalties
The 60-day deadline is not a suggestion. Failing to apply for a title within 60 days of acquiring the vehicle carries a penalty of $15 to $100. Failing to register the vehicle adds a separate $50 penalty plus a $16 surcharge. Letting registration lapse past its expiration adds $25 to $100 per month.10Colorado General Assembly. SB22-123 Late Vehicle Titling and Registration Penalties
These penalties apply whether or not the transfer was taxable. People who receive a gifted vehicle sometimes assume the clock does not start until they buy something, but the titling deadline runs from the date you took possession. Driving on the previous owner’s registration also creates liability exposure if you are in an accident.
Federal Gift Tax on High-Value Vehicles
Colorado’s exemption only covers state sales and use tax. Federal gift tax rules are separate. For 2026, the annual gift tax exclusion is $19,000 per recipient, so a vehicle worth up to that amount can be given to any one person without triggering a federal reporting obligation.11Internal Revenue Service. Rev. Proc. 2025-32
If the vehicle’s fair market value exceeds $19,000, the donor (not the recipient) files IRS Form 709, the United States Gift and Generation-Skipping Transfer Tax Return.12Internal Revenue Service. About Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return Filing does not mean you owe tax. The form reports the gift and applies it against your lifetime estate and gift tax exemption, which sits at $15,000,000 for 2026.13Internal Revenue Service. Whats New – Estate and Gift Tax Very few donors owe actual tax, but skipping the form when it is required can create problems with the IRS later. Kelley Blue Book or a similar guide is a reasonable starting point for fair market value on a used vehicle.