Non-refundable deposits

A non-refundable deposit is a fee that can never be recovered by the tenant. Common examples include:

• Key deposits
• Parking deposits
• Pet deposits
• Storage deposits

To record a non-refundable deposit

1. Charge the tenant or as usual.
   
   Non-refundable deposits are always classified as income on your chart of accounts.
   
   
2. Receive payment as usual.
   • see "Tenant payments"
   • see "Association owner payments"

Things to think about:

• Non-refundable deposits are income and will appear on reports such as the Income Statement and Rental Owner Statement.
• If there's even a slight chance that the resident can get the money back, you'll want to record the money as a liability. In this case, you'll take the money as income when it is forfeited by the resident.
  • see "Withhold tenant deposits"
  • see "Withhold association owner deposits"
• Your area might include laws on proper handling and accounting for non-refundable deposits. Guidance from your local real estate commission or accountant should take precedence over the guidance presented in this topic.