The priority of every landlord should be to attract good tenants. Even with a great screening process, though, some bad actors may sneak through.
Situations like these are why it's so important to collect security deposits. With a deposit in hand, you have a built-in solution for property damage. Think of the deposit as the tenant's guarantee they'll abide by your wishes.
Want to know more about how to manage a security deposit in Hooper, UT? This guide will give you all the answers you're looking for!
How Much to Charge
According to Utah security deposit laws, there's no limit to what you can charge for a deposit. That said, most Utah landlords charge one to two months' rent. The deposit can be either refundable or nonrefundable.
If you're allowing pets on your property, you can also ask for a pet deposit. The only exception is if your tenant has a service animal. Even then, the tenant will be the one liable for any damage their pet causes.
Security Deposit Deductions
Once a tenant leaves your rental property, you can use their deposit to make allowable deductions. Some common examples include:
- Unpaid rent
- Property damage costs
- Breach of the lease agreement
- Cleaning costs
Keep in mind that property damage doesn't include normal wear and tear. These issues are the expected result of using the property as intended. This can include anything from worn carpets to loose door handles.
Deductible property expenses include damage that occurred due to abuse or negligence. Pet damage falls into this group, as do holes in the walls, broken windows, broken tiles, and so on.
Security Deposits and Taxes
One common piece of landlord advice is to include deposits as tax write-offs. For this to happen, you need to return the deposit at the end of the lease. If you keep some or all of it, you must report this as rental income.
If you use the deposit to cover chargeable expenses, you can include it as taxable income. The only reason you wouldn't do that is if you don't usually add your repair costs as expenses.
Your lease agreement may also state that you can use the deposit as a final payment of rent. This is advance rent, and it's classified as taxable income.
Returning the Security Deposit
If you don't make any deductions, you'll need to return the deposit to the tenant. In Utah, you must do so within 30 days of terminating a lease. You'll also need to send an itemized receipt to the tenant's address.
If you don't return the deposit in time, the tenant can serve a notice to you demanding the funds. In this case, you'll need to pay the full amount of the deposit, plus $100 in civil penalty fees.
Security Deposits and You
Utah tenant-landlord laws can be confusing, particularly when it comes to security deposits. As long as you follow these landlord tips, though, you shouldn't have too much difficulty navigating this process.
Looking for professional help with handling your security deposits? Our property management experts at PMI Northern Utah can give you all the advice you need! Contact us here to learn more about our services!