“all-cash security deposit”
That isn’t right. How much of that gets declared to the IRS? Too easy to say it never got paid when you move out. (and I ain’t no friend to the IRS)
Any CPA accounting types know more than me, but, a security deposit is not considered income to the landlord, and thus, is not reported to the IRS in the first place.
The deposit is supposed to be held in a separate account, and then is refunded when the tenant moves out.
If that’s not happening, then that’s another story altogether.
Probably none since the vast majority of renters file short form........Furthermore, rental payments have never been an IRS tax deduction anyway.........
It is held apart in a separate bank account until the tenant moves out.
At that point it may or may not become income depending on the terms of the lease. If the tenant leaves unpaid utility bills, has trashed the place, has unpaid rent due or has vacated without notice then all or part of the money becomes income at that point.
The interest on the account is income and is accounted for to the IRS.
That isn’t right. How much of that gets declared to the IRS? Too easy to say it never got paid when you move out. (and I ain’t no friend to the IRS)
The only thing we ever take in cash is our application fee, $50 per adult which goes to a credit and criminal background check. Time is of the essence and before we investigate we have no assurance a personal check will clear.
All other payments are made either by check or money order, which we stamp for deposit only to our bank account, and copy immediately. This prevents disputes over amounts and dates.
When they say "all-cash" what they really mean is that it can not be financed over time.
Since the deposit must be refunded, or at least accounted for at the end of the rental it is not income, and none of it is declared at the point it is is made. If I use the deposit for cleaning or damage repair, it is not income to me and is not declared. If I use it to cover unpaid rent, it is income and is declared.
The deposit is almost never enough to cover even small issues. A turnover always means we lose a month's rent. Extensive damage, or even just extensive dirt means we lose more.
Perhaps these lawmakers should read the leases. According to lease agreements Security deposit is placed in a separate account. The tenant is notified of the account. When they move out they receive their security deposit PLUS the interest collected. SD is not the last month rent. It is used for damages.
We just had some tenants move out. The apartment was a mess, nail holes everywhere and heavy West Elm furniture left behind. The sofa itself was worth 1 1/2 month's rent, a Mongolian Lamb poof chair worth $400... and they had complained that the rent was too high. Meanwhile it cost the landlord 1k to move that furniture to the curb.
A security deposit is needed. Oh and lawyers are the worst tenants. THE WORST.