When you rent out a property, you need to make sure it will be properly taken care of. The best way to protect your rental property is to require a deposit as a measure of security. Never underestimate the power of security deposits!
A security deposit is kept until the end of a lease agreement and will cover costs related to excessive wear and tear. In most states the deposit can also cover a broken lease and unpaid utility bills.
To add a deposit, go to the Accounting page and select Deposit from the Money In tab. Fill out all the required fields and create an invoice.
Remember that security deposits aren’t considered taxable income and are usually held in a trust account.
As a rule, a security deposit is paid before moving in. The amount is usually based upon the monthly rent. A renter’s credit score should also be taken into account.
When creating a lease for a tenant, you can easily create invoices for any type of deposit and input the date it was paid and is due. For instance, if your tenant is a pet owner, it’s reasonable to require a pet deposit. This will protect your property from unexpected damages and will cover cleaning costs, if necessary.
Related: Electronic Signature For Your House Rental Lease Agreement: How To Use, What Is The Legal Status
At TenantCloud, there’s an option to apply deposits towards open invoices.
One thing to keep in mind is that you can apply deposits towards unpaid and partially paid invoices. If there is no invoice displayed when you select the tenant, that means they have no unpaid/partially paid invoices.
If by the end of a lease you have found only normal wear and tear on a property and no damages have been caused to the rental and you will be returning the deposit.
Related: Tenant Rental Insurance: Why Do Landlords Need To Require It?
To do that, go to the Accounting page and select Return Deposit from the Money Out tab.
Check out the Help Center for detailed instructions.
FAQs you may need:
How do I add deposits?
How do I apply deposits/credits towards invoices?
How do I return a deposit?
Free Tax Preparation Software for Landlords: The Schedule E (Form 1040)
