In Missouri, the collection and return of security deposits are regulated under MO Rev Stat § 535.300 . These laws provide a set of rules that Missouri landlords and property managers have to follow to protect all parties.
Maximum Security Deposit Charge in Missouri
In Missouri, the maximum security deposit allowed is two months’ rent, but there is no limit on pet deposits. If the deposit collected exceeds legal limits, the landlord forfeits the right to retain any of the deposit at the termination of the lease.
Additional Pet Deposits: Under Missouri’s law, people with disabilities who use service animals are entitled to full and equal access to housing. Thus, the tenant may not be discriminated against and the landlord may not require the tenant to pay extra to have a service animal. If the service animal causes damage to the rental unit, the tenant is liable to pay for any damages.
The Federal Fair Housing Act requires housing facilities to allow tenants who use service dogs and emotional support animals to have an equal opportunity to use and enjoy their home.
Security Deposit Withholding for Wrongfully Quit Dwellings in Missouri
If a tenant wrongfully quits the lease by abandoning the property without proper notice, the landlord may retain the entire security deposit towards the cost of re-leasing the property or repairing it to rentable conditions without the requirement to provide itemizations to the tenant.
Allowable Deductions on Security Deposits in Missouri
Missouri landlords are allowed to make the following deductions from a tenant’s security deposit AFTER the tenant vacates the property:
- Unpaid rent.
- Compensate the landlord for actual damages due to the tenant’s failure to give adequate notice to terminate the tenancy.
- Costs of damage caused by the tenant’s failure to comply with obligations as a tenant but not those considered to be standard wear and tear.
Can the deposit be used by the tenant as last month’s rent? The deposit may not be used as the last month’s rent in Missouri.
“Normal Wear and Tear” vs. Damage in Missouri
- “Normal Wear and Tear” is defined as deterioration that occurs as a result of use for which the rental unit is intended and without negligence, carelessness, accident, or misuse or abuse of the premises or contents by the tenant or members of his household, or their invitees or guests. It can include minor issues, such as gently worn carpets, loose door handles, fading wall paint and flooring, stained bath fixtures, lightly scratched glass and dirty grout that occur naturally as a result of the tenant using the property as it’s designed to be used.
- “Damage” refers to destruction to the rental unit that occurs because of abuse or negligence by a tenant during the course of the tenancy and can affect usefulness, value, normal function of the rental unit. Pet damage (heavily stained and ripped carpet), broken tiles, hole in the wall, broken windows and missing fixtures are all examples of damage.
Check out our article on wear and tear vs. damage to get a better idea of the difference.
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 obligations, 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.
- Avoid illegal activities.
- Leave the premises in the same condition it was in when it was handed to the tenant.
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 Missouri
Time Frame: A Missouri landlord has 30 days after the termination of tenancy to return any unused portion of the security deposit along with an itemized list of damages deducted. This period begins on the date of termination presented in the lease agreement and the statement should be sent to the tenant’s forwarding address.
Written Notice: The landlord shall provide the tenant with a written itemized list of damages that the security deposit will be used for along with the balance of the remaining security deposit. The written notice and the remaining funds of the security deposit shall be mailed to the last known address of the tenant.
Failure to Return Security Deposit as Required: If the landlord refuses or fails to return the security deposit within the 30-day limit, the tenant stands to recover double the withheld funds, plus any legal fees associated with recovering the deposit in court.
Move-Out Inspection Walkthrough: Missouri landlords are required to conduct an inspection of the premises after the tenant moves out at the end of a lease, which the tenant has a right to be present for. The landlord should send notice of the scheduled walkthrough time to the tenant’s last-known address or hand it to them in person.
Security Deposits and Tax Filing in Missouri
Whether a security deposit will be treated as taxable or not depends on if the deposit is used or returned.
Taxable Income: Security deposits are not automatically considered income upon collection at the beginning of tenancy. They only become taxable income when the landlord no longer has any obligation to refund them (such as for settling damages incurred). At this point they may also qualify as a write-off for tax purposes as well.
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:
- 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 the 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.
- 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 Missouri
Receipt Requirements: The landlord is not required to provide a receipt for the security deposit in Missouri.
Security Deposit Holdings in Missouri: Missouri laws require landlords to hold security deposits in a separate, federally insured account.
Security Deposit Interest in Missouri: Missouri laws do not require landlords to provide interest on held security deposits, but if any interest is earned on a security deposit, the landlord may keep it.
New Property Owner’s Responsibility: If the original landlord decides to sell or transfer ownership of the rental property, he or she is required to assume responsibility for the security deposit funds and their return.
For additional questions about security deposits in Missouri, please refer to the official state legislation, Missouri Landlord-Tenant Statutes.