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Question: 

I am a landlord with a question about security deposit interest. I put the deposit money in an interest bearing account and I pay the interest it earns every December to the tenants. However, every year I have to pay taxes on that deposit interest. Can I deduct the taxes I pay on the deposit interest from the interest I pay to the tenants? 

Answer: 

No. But you might want to check with a tax advisor to see if, while declaring the interest income on your tax return, you can deduct the interest paid as a business expense. 

Question: 

I have a tenant who has lived in an apartment I own for 14 years. When he moved in, he paid a $300 security deposit. Now the rent is $710, so the deposit wouldn’t nearly cover any loss of rent or repairs if the tenant defaults on a payment or destroys something. I would like to increase the security deposit to cover at least one month’s rent, and ideally, to increase it with each annual rent increase. Is this possible? 

Answer: 

No. Rent Board Regulation 705 prohibits any increase in the security deposit amount during the term of a tenancy.  

Question: 

I moved out of my apartment two weeks ago, and I just got my deposit back. My landlord has withheld a fee for rent I supposedly paid late in June of 2000 that I was never billed for or notified of. The fee was just subtracted from my deposit. Is that legal? 

Answer: 

It’s not clear. You may be able to contest whether your rent was in fact late, or the amount of the charge (if it seems too high), but if your lease specifies a reasonable late fee and you were actually late, then your landlord can probably deduct it from your security deposit. However, having waited almost two years, an argument can be made that the landlord has waived his right to recover this charge. Unfortunately, if you want to challenge this deduction, you’ll have to seek a ruling in small claims court. 

You can e-mail the City of Berkeley Rent Stabilization Board at rent@ci.berkeley.ca.us for individual questions, or you can call or visit the office at 2125 Milvia Street, Berkeley, CA 94704 (northeast corner of Milvia/Center Streets) Monday, Tuesday, Thursday and Friday, between 9 a.m. and 4:45 p.m., and on Wednesday between 12:00 noon and 6:30 p.m. Our telephone number is (510) 644-6128. Our website address is www.ci.berkeley.ca.us/rent.