When entering into almost any lease, a tenant has to pay a security deposit upfront to the landlord. Simply put, it's a monetary deposit given to a landlord as proof of intent. Security deposits can be either refundable, nonrefundable, or partially refundable, depending on the terms of the lease. As the name implies, the deposit is intended to be a measure of security for the landlord in case anything were to happen to the property during the tenant's stay.
Landlords generally apply security deposits as rent from tenants who cannot otherwise pay or use them to repair damage caused by tenants.
Security deposits are not considered taxable income and cannot be deducted as such. Local laws often treat security deposits as trust funds. Security deposits that are used as final rent payments must be claimed as advance rent and are taxable when paid.
When you create a lease agreement on ManageCasa, you can specify the security deposit amount and when it is due.
Specify Security Deposit
- Navigate to Manage on the left side menu. Select the Lease Agreements tile.
- Click the blue Add Lease button on the new screen to create new lease.
- You will be directed to a new screen to define the terms of the lease agreement.
- Scroll down to the Security Deposit section to indicate the amount and date due.
- You can click Save and continue later to save your work and return to it later or click Publish to notify your tenant(s) that the lease is ready to be viewed and signed.