John M. Hoffman & Associates CPAs

Frequently Asked Tax Questions

Rental Property

Tenant Security Deposits:

Security deposits held on behalf of tenants should be placed in an interest bearing account with the tenant receiving the interest on such account as well as the tax reporting document reporting such interest as paid to the tenant. If the security deposit is liquidated in favor of the landlord towards rent, it becomes income. If the security deposit is returned to the tenant, it is not a deduction unless the collection of such amount was reported as income when received.

Last month rent receipts that are not set aside like a security deposit are income when received.