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
- Charge the tenant or as usual.
Non-refundable deposits are always classified as income on your chart of accounts.
- Receive payment as usual.
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.
- 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.