Landlord Question and Answer Forum

I have an EXCELLENT tenant (after a VERY bad first experience) whose lease is ending next month. He is moving out due to a deployment, so I need to find out how to return his security deposit. I don't anticipate having to withhold any of his deposit, so am wondering if I need to return his deposit with interest, or if the interest earned on the deposit is ours to keep. Any help with this question is greatly appreciated!

Interest earned on Security deposit is *VERY* state driven. You will really need to look into your states laws and regulations. Some states have clauses that Security Deposits are supposed to be placed into a separate account for the renter(s). There are also clauses for paying interest only on request, or only if they have been there over a year etc. If you really like the tenant and don't have any issues, I always suggest giving them back the interest, especially if you haven't received a 1099 for your taxes for the deposit. As to returning the deposit, usually just talk with the tenant to find out which is the best way to have it returned to them. Also, thank the tenant for their service!

Posted by Eric D, NH on Thursday, April 28, 2011

Thank you for your help!! My husband and I just decided to give him back his deposit with interest since he was such an excellent guy. We're military as well, so we know what he's going through, especially in regards to where he's going. We definitely give our thanks, and not just to him. :) Thank you once more!

Posted by Mikal H, GA on Friday, April 29, 2011