I have looked at the applying of security deposits to balance of rent due, but I believe this is a distinct question.
- $500 security deposit
- $150 to pay company to clean out unit (removing furniture, trash, food, clothing, etc).
- $200 to pay cleaning company to do deep cleaning.
- If all else was satisfied, return the remaining $150 to tenant.
Would you track the individual expenses of the clean out and cleaning as normal expenses to contractors. But could you “fund” those from the deposit? Or do you just refund the $150 from the deposit and then consider the other as income? Like the other concerns around security deposits becoming income and taxable, it seems this approach would cause the same concern/scenario.
Thanks in advance.