Do I need to pay the tax on the interest my landlord is earning from my security deposit?

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Do I need to pay the tax on the interest my landlord is earning from my security deposit?

My landlord invested our security deposit and is collecting interest. I just received a 1099-INT from the bank. When I spoke to my landlord about this, they said it’s in my lease which only states that they are investing the money and collecting interest, not that I will be responsible for paying the tax. Is this legal? How were they able to create a bank account without my authorization?

Asked on February 9, 2012 under Real Estate Law, New York

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, it is legal and generally required under the law in your state. Most of the time the landlord has a main account and opens sub accounts for your benefit.  They can and it is legal too.  And the interest is income to you. Unless you are living in a super high end apartment your interest income should not be that much.  Good luck.


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