Agree....not just wise but a necessity to document contribution percentages.
From the CPA Practice Advisor
Basis and Income Tax Rules for Joint Tenants that are Not Married
- Income Tax Purposes: Each tenant includes an equal share of the income and deductions from the property on their individual income tax returns. It does not matter how much each tenant originally contributed to the purchase of the property. When the property is sold, each tenant will report an equal share of any gain from the sale on their individual returns. Depreciation is calculated based on an equal percentage share.
- Estate Tax Purposes: Generally, when a tenant passes away, the amount of the fair market value of the property that gets included in the decedent’s estate is determined by how much each tenant actually contributed. However, if the surviving tenants cannot prove their personal contributions to the purchase of the property, the entire fair market value of the property will be included in the estate of the first tenant to die.[5] When this happens, the surviving tenants will determine their own basis in the property by equally dividing the total interest in the property. If a property owner gifts an equal share of the property to another person by adding them to the title, the entire fair market value of the property will be included in the donor’s gross estate. This is true even if the donor filed a gift tax return for the half that was gifted. For estate tax purposes the gift is set aside. Any gift tax that the donor paid can be used towards the payment of the estate tax.[6] The surviving tenant(s) will automatically inherit the property, and the fair market value of the property will be divided equally between the remaining tenants.
