In Alaska, the collection and return of security deposits are primarily regulated under AK Stat. § Sec. 34.03.070. These laws provide a set of rules that Alaska landlords and property managers have to follow to protect all parties.
Quick Facts | Answer |
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Maximum Charge | Two Months’ Rent (this does not apply to rentals where the rent exceeds $2,000 a month). |
Deductions |
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Return Deadline |
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Return Penalty | Double the Deposit |
Maximum Security Deposit Charge in Alaska
In Alaska, landlords cannot charge a tenant security deposit that is more than two months’ rent . However, if the monthly rent is more than $2,000, this limit and the other rules we will discuss below will not apply.
Additional Pet Deposit: As an exception to the limit on security deposits, the landlord may charge an additional deposit of up to one month’s rent if the tenant will have a pet on the premises. This additional pet deposit can only be charged if the pet is not a service animal.
Service animal means an animal that is individually trained to do work or perform tasks that are directly related to and for the benefit of an individual with a disability, including a physical, sensory, psychiatric, intellectual, or other mental disabilities. The additional pet deposit must be accounted for separately from the tenant’s security deposit and may only be used to pay for damage that is directly related to or caused by the pet.
Security Deposit Holdings in Alaska
The landlord is not required to pay interest on security deposits. However, the landlord is required to put security deposits in a separate account. The account can be a trust account in a bank, savings and loan association, or a licensed escrow agent. The landlord does not need to have a separate account for each tenant who gives a security deposit. Security deposits from different tenants may be kept in the same account for as long as that account only holds security deposits and prepaid rent. What the landlord can’t do is put it in the same account where other funds like the rental income or personal savings are kept. Also, the landlord must inform the tenant of how the latter’s security deposit is being kept and the conditions under which the same may be withheld.
Landlords must account for each tenant’s security deposit separately even if they are in the same account. That means one tenant’s security deposit cannot be used to refund another tenant’s security deposit, to cover for another tenant’s rent, or to pay for damage chargeable to a different tenant.
Allowable Deductions on Security Deposits in Alaska
The landlord can only use the security deposit when the lease or tenancy has ended or has been terminated. Also, the landlord can only use the security deposit to cover:
- The unpaid rent; and
- The cost of damage caused by the tenant’s failure to comply with obligations as a tenant.
The landlord is not always allowed to use the security deposit to cover repairs for damage caused by the tenant. Two things must be met before the landlord may do so:
- The damage must not be due to normal wear and tear (read more);
- The cause of the damage must be the tenant’s failure to comply with obligations under the Alaska Statutes (read more).
Can the deposit be used by the tenant as last month’s rent? Not usually, but it can be done if there is a written agreement between the parties to do so.
“Normal Wear and Tear” vs. Damage in Alaska
- “Normal wear and tear” refers to the deterioration of the property that happens when the property is used as it was meant to be used and only when that deterioration occurs without negligence, carelessness, accident, misuse, or abuse by the tenant or the people the tenant brings there. They are minor issues that occur naturally like aging and expected decline as a result of everyday living. These can include gently worn carpets, loose door handles, fading wall paint and flooring, stained bath fixtures, lightly scratched glass, dirty grout and mold that occur naturally.
- “Damage,” on the other hand, is deterioration or destruction that is the tenant’s fault, either through deliberate acts or as a result of negligence during the tenancy period. With respect to those chargeable to security deposits in Alaska, it refers to the damage that resulted from non-compliance with any of the tenant’s obligations as such under the law.
Check out our article on wear and tear vs. damage to get a better idea of the difference.
Tenant’s Obligations
The landlord can only charge the cost of repairs if the damage was caused by the failure of the tenant to comply with specific obligations. To comply with positive obligations under the said rule, the tenant must:
- Keep the premises, including all plumbing fixtures, clean and safe;
- Dispose of garbage and other waste in a clean and safe manner;
- Use all facilities (e.g. electrical, plumbing, heating, etc.) and appliances reasonably;
- Maintain smoke detection and/or carbon monoxide detection devices;
- Comply with the maximum number of persons allowed to occupy the premises; and
- Leave the premises in the same condition it was in when it was handed to the tenant.
Note: A landlord of a single-family residence located in an underdeveloped rural area or located where public sewer or water service has never been connected is not liable for a breach of the rental agreement if the premises at the beginning of the rental agreement did not have running water, hot water, sewage, or sanitary facilities from a private system.
According to Alaska law, the tenant must not:
- Change the locks on doors on the premises (except in an emergency) and the landlord cannot be contacted after a reasonable amount of time. If the tenant must change the locks on the doors, the tenant must immediately provide the landlord with a set of keys to all doors for which locks have been changed within five days and must provide written notice of the change;
- Engage in unreasonable conduct that will cause members of the municipal police department to check on the premises enough times in a year to warrant the imposition of fees for excessive use or necessity of a municipal ordinance under Section 29.35.125 of the Alaska Statutes;
- Allow the number of individuals occupying the premise to exceed the number allowed by law or by the rental agreement;
- Deliberately or negligently destroy, damage, or remove parts of the premises;
- Unreasonably disturb the neighbor’s peaceful enjoyment of the premises; and
- Engage in illegal activities involving prostitution, gambling, use of alcohol or controlled or prohibited substances, and other similar or illegal activities, or in activities promoting the same within the premises.
If the damage to the premises was caused by the tenant’s failure to comply with any of the above, then the landlord may take the cost of repairing it from the security deposit.
Returning Security Deposits in Alaska
Time Frame: If the lease is terminated by the landlord or tenant through a proper notice and there are no deductions on the security deposit, the landlord has 14 days to mail the written notice and refund the security deposit. The 14 days are counted from the date stated specified in the notice as the end of the lease.
However, if the tenant does not give proper notice or if there are deductions on the security deposit, the landlord has 30 days to return the same. The 30 days may be counted from the termination of the lease, the date the tenant gives the premises back or the date the landlord finds out that the tenant has abandoned the premises, whichever is earlier. The landlord is required to exert reasonable efforts to deliver the written notice and return the security deposit.
Also, if there are deductions on the security deposit, the landlord is required to inform the tenant of the specifics of the same in an itemized list on a written notice. This should be mailed to the tenant with the remaining amount.
Failure to Return Security Deposit as Required: If the landlord refuses or fails to return the security deposit within the 14 or 30 days, the tenant stands to recover up to double the amount the landlord is withholding.
Security Deposits and Tax Filing in Alaska
How the security deposit will be treated tax-wise depends on whether or not the landlord gets to keep it (or part of it).
Taxable Income: Security deposits are not automatically considered income when the landlord receives them. The IRS advises to not include security deposits as income if the landlord may still be required to return the same. They only become taxable income when the landlord no longer has any obligation to refund them. For example, if the security deposit was given in 2020 but was only forfeited in 2021, then the landlord should only include it as income in 2021.
Reporting Security Deposit as Income: Whether or not security deposit should be reported as income and when to do so will depend on what it is being applied to or used as. Below are three simple rules the IRS has suggested to follow:
- When and if the deposit is forfeited due to a breach of the lease or applied to unpaid rent, then the amount kept should be declared as income in the year it was forfeited or applied.
- If a security deposit is used to cover expenses that are chargeable to it, then the landlord should only include the part of the deposit used as income if the landlord includes the cost of repairs as expenses. If the landlord doesn’t include them as expenses as a matter of practice, then there’s no need to include the part of the deposit kept to cover them as income.
- When there is an agreement between the parties to use the deposit or part of it as the final month’s rent, then the landlord should include it as income when the same is received.
Additional Rules & Regulations in Alaska
Receipt Requirements: The landlord is not required to provide a receipt for the security deposit in Alaska.
Security Deposit Interest in Alaska: Alaska law requires security deposits to be deposited into a separate account. The landlord is not required to pay interest on them.
For additional questions about security deposits in Alaska, please refer to the official state legislation, Alaska Statutes § 34.03.020, § 34.03.070, and § 34.03.290, for more information.
Sources
- 1 AK § 34.03.070 (2018)
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“…(a) Except as provided in (h) of this section, a landlord may not demand or receive prepaid rent or a security deposit, however denominated, in an amount or value in excess of two months’ periodic rent. This section does not apply to rental units where the rent exceeds $2,000 a month…”
- 2 AK § 34.03.070 (2018)
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“…(h) Notwithstanding the limitation on the amount of prepaid rent or security deposit in (a) of this section, a landlord may demand or receive an additional security deposit from a tenant who has a pet on the premises that is not a service animal. The additional security deposit
(1) may not exceed the periodic rent for one month…” - 3 AK § 34.03.070 (2018)
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“…(c) All money paid to the landlord by the tenant as prepaid rent or as a security deposit in a lease or rental agreement shall be promptly deposited by the landlord, wherever practicable, in a trust account in a bank, savings and loan association, or licensed escrow agent… The landlord may not commingle prepaid rent and security deposits with other funds…”
- 4 AK § 34.03.070 (2018)
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“… and the landlord shall provide to the tenant the terms and conditions under which the prepaid rent or security deposit or portions of them may be withheld by the landlord …”
- 5 AK § 34.03.070 (2018)
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“… however, the landlord shall separately account for prepaid rent and security deposits received from each tenant… The landlord may not use money held for one tenant in a trust account to
- refund the security deposit of another tenant;
- apply to the payment of another tenant’s accrued rent;
- apply to damages suffered by the landlord because of another tenant’s noncompliance with AS § 34.03.120…”
- 6 AK § 34.03.070 (2018)
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“…(b) Upon termination of the tenancy, property or money held by the landlord as prepaid rent or as a security deposit may be applied to the payment of accrued rent and the amount of damages that the landlord has suffered by reason of the tenant’s noncompliance with AS § 34.03.120…”
- 7 AK § 34.03.070 (2018)
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“…(i) In this section,
- “normal wear and tear” means deterioration that occurs from the intended use of the rental unit and without negligence, carelessness, accident, misuse, or abuse of the premises or contents by the tenant, members of the household of the tenant, or the invitees or guests of the tenant…”
- 8 AK § 34.03.120 (2018)
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“…(a) The tenant
- shall keep that part of the premises occupied and used by the tenant as clean and safe as the condition of the premises permit;
- shall dispose all ashes, rubbish, garbage, and other waste from the dwelling unit in a clean and safe manner;
- shall keep all plumbing fixtures in the dwelling unit or used by the tenant as clean as their condition permits;
- shall use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air-conditioning, kitchen, and other facilities and appliances, including elevators, in the premises;
- may not deliberately or negligently destroy, deface, damage, impair, or remove a part of the premises or knowingly permit any person to do so;
- may not unreasonably disturb, or permit others on the premises with the tenant’s consent to unreasonably disturb, a neighbor’s peaceful enjoyment of the premises;
- shall maintain smoke detection devices and carbon monoxide detection devices as required under AS 18.70.095;
- may not, except in an emergency when the landlord cannot be contacted after reasonable effort to do so, change the locks on doors of the premises without first securing the written agreement of the landlord and, immediately after changing the locks, providing the landlord a set of keys to all doors for which locks have been changed; in an emergency, the tenant may change the locks and shall, within five days, provide the landlord a set of keys to all doors for which locks have been changed and written notice of the change;
- may not unreasonably engage in conduct, or permit others on the premises to engage in conduct, that results in the imposition of a fee under a municipal ordinance adopted under AS 29.35.125; and
- may not allow the number of individuals occupying the premises to exceed the number allowed by applicable law, by a covenant limiting the landlord’s use of the premises, or the rental agreement.
(b) The tenant may not knowingly engage at the premises in prostitution, an illegal activity involving a place of prostitution, an illegal activity involving alcoholic beverages, an illegal activity involving gambling or promoting gambling, an illegal activity involving a controlled substance, or an illegal activity involving an imitation controlled substance, or knowingly permit others in the premises to engage in one or more of those activities at the rental premises.
(c) When terminating the tenancy, the tenant shall leave the premises in substantially the same condition, except for normal wear and tear, as the condition of the premises at the beginning of the tenancy, including, in the landlord’s discretion, professionally cleaning the carpets if the carpets were professionally cleaned immediately before the tenancy began. In this subsection, “normal wear and tear” has the meaning given in AS 34.03.070…”
- 9 AK § 34.03.070 (2018)
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“…(g) If the landlord or tenant gives notice that complies with AS 34.03.290, the landlord shall mail the written notice and refund required by (b) of this section within 14 days after the tenancy is terminated and possession is delivered by the tenant…”
- 10 AK § 34.03.070 (2018)
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“…(g)…except the landlord shall have 30 days after the tenancy is terminated to mail the refund if costs are deducted for damages that the landlord has suffered because of the tenant’s noncompliance with AS 34.03.120. If the tenant does not give notice that complies with AS 34.03.290, the landlord shall mail the written notice and refund required by (b) of this section within 30 days after the tenancy is terminated…”
- 11 AK § 34.03.070 (2018)
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“… (b) … The accrued rent and damages must be itemized by the landlord in a written notice mailed to the tenant’s last known address within the time limit prescribed by (g) of this section, together with the amount due the tenant…”
- 12 AK § 34.03.070 (2018)
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“…(d) If the landlord wilfully fails to comply with (b) of this section, the tenant may recover an amount not to exceed twice the actual amount withheld…”
- 13 AK § 34.03.070 (2018)
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“…(f) The holder of the landlord’s interest in the premises at the time of the termination of the tenancy is bound by this section…”