On Mar 28, 3:43*am, way...[at]gmail.com wrote:
- quote -

conundrum. (There are times when rate are higher and if you have
multiple high end properties .... ) It doesn't make sense for the
landlord to pay taxes on interest on a deposit that is returned to a
tenant. A tax credit for the taxes paid on interest on a deposit
returned to a tenant seems like a good idea.

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On Mar 27, 10:42*pm, "parrisbraes...[at]yahoo.ca"
<parrisbraes...[at]yahoo.ca> wrote:
- quote -


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On Mar 26, 7:55 am, "Phil Marti" <prm20...[at]verizon.net> wrote:
- quote -

The escrow accounts I use pay a ridiculously low interest rate,
something like 0.15%. For the amount of interest this generates every
year, I just pay the taxes myself, because it is not worth it to me to
do the paperwork to shift $5 of income to each tenant.

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parrisbraeside[at]yahoo.ca posted the following as a sort of wrapup to my
sidebar discussion of rental deposits:

- quote -

I have no argument here, but simply wanted to clarify my original
anecdotal comment: In those halcyon days, there was no such thing as
"checking account interest" at most banks, and I simply allowed the
deposit for my tenant to sit in the account I maintained for the rental
property. There was actually no interest earned, no 1099 generated, and
that's why I referenced my passing along "imputed interest" to the
tenant as I returned the security deposit.

I don't know whether she reported it, and I certainly didn't issue any
report, other than the Schedule E equivalent for that era -- and I don't
recall how I handled the "interest" ... which was a very minor amount in
those low-rent days. (This was long before I became an avid student of
taxes.)

Bill

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- quote -

As mentioned, you set this as nominee interest. It is declared on your
tax return and nomineed to the tenant. The tenant pays the taxes on
the interest as it is their interest.

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On Mar 27, 3:19*am, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

or does the tenant? It's in a bank, accruing interest. I get a INT
form at the end of the year with this amount. I pay the taxes on this
even though it's the tenants money?

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On Mar 26, 7:04 am, an_ordinary_guy_...[at]hotmail.com (Bill) wrote:

- quote -

But then it would be double tax, right?

- quote -

Was any tax paid on big interest payment that was added to the
deposit? In general, gradual interest payments are better though as
they keep you from going to a higher tax bracket, but the amounts here
are probably very small.

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nickravo[at]gmail.com (nickravo1[at]gmail.com) posted this query:

- quote -

States may have legislation which would affect this issue. Normally,
such interest would properly be held in escrow, and any interest might
be credited as miscellaneous income to the property, if the escrow
account pays interest.

40 years ago, when I last had some income property, I accrued the
interest as a credit toward the deposit total ... and when the tenant
departed (with no security or damage deductions), I included the imputed
interest as an increase to the original deposit amount -- to the
satisfaction of my tenant (who was surprised I did so).

I'm not aware of any IRS specific mention of this issue.

Bill

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"nickravo1[at]gmail.com" wrote:

- quote -

It depends on who winds up with the money. When I was a landlord in DC I
was required by local law to hold the security deposit in an escrow account
and pay the interest to the tenant annually. I then treated the interest
paid as "nominee" interest, and only the tenant had taxable income from it.
See the instructions for Schedule B of the 1040 and the 1099 series.

--
Phil Marti
Clarksburg, MD

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I assume it is the landlord. Even though the interest goes back to the
tenant (and they presumably have to pay taxes on it, too.)

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >