Indiana Security Deposit Collections & Holdings

Indiana Security Deposit Collections & Holdings

Last Updated: January 14, 2023 by Ashley Porter

To learn about laws on security deposit returns in Indiana, click here.

Maximum Security Deposit Allowed in Indiana

There is no limit on how much a landlord can collect for a security deposit in Indiana. While other states impose a maximum security deposit limit, such as one month’s rent, Indiana does not.

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State law preempts local governments from establishing their own security deposit rules. If any city or county law imposes security deposit rules that conflict with state law, it is unenforceable.

Can Landlords Charge an Additional Pet Deposit in Indiana?

Yes, landlords can collect an additional pet deposit in Indiana, except for service dogs and emotional support animals.

How Much Rent Can a Landlord Collect Upfront in Indiana?

There is no limit on the amount of rent that can be collected upfront in Indiana. Many states have a limit on the amount of rent that can be collected at once, but Indiana does not.

However, if rent is collected in advance beyond the first full rental payment period (e.g. first month’s rent), it is considered part of the security deposit and must be treated according to the same rules.

Security Deposit Collections in Indiana

While other states have additional requirements for landlords that collect a security deposit, such as providing certain documentation of the condition of the unit at move-in, Indiana does not.

Do Landlords Have to Provide a Receipt for the Security Deposit in Indiana?

Although some states like Washington require a receipt, landlords are not required to provide a receipt for the security deposit in Indiana.

What Obligations Do Landlords Have to Establish the Condition at Move-in in Indiana?

Indiana law does not require landlords to document or establish the property’s condition at move-in. While other states legally require a written inventory of damages to be completed when collecting a security deposit, Indiana does not.

Security Deposit Holdings in Indiana

Indiana law does not require landlords to hold security deposits separate from other funds. Some other states mandate how and where security deposits are held, but Indiana does not.

Are Tenants Entitled to Interest on Their Security Deposit in Indiana?

Indiana law does not require landlords to provide interest on held security deposits.

How Are Security Deposits Accounted for in Indiana?

Security deposits are not considered taxable income when they are collected.

What Happens to a Security Deposit When the Property is Sold in Indiana?

When a property is sold in Indiana, the landlord must transfer the security deposit to the new owner, who must handle it according to the same rules. The landlord must notify the tenants in writing regarding the transfer of property and responsibility.

Within one year after the original landlord sends written notice to the tenant notifying them of the sale, they remain liable until both of the following events occur:

  • The security deposit is transferred
  • The new owner sends written notice to the tenant that they have accepted responsibility for the security deposit

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