In Nebraska, the collection and return of security deposits are regulated under NE Code § 76-1416. These laws provide a set of rules that Nebraska landlords and property managers have to follow to protect all parties.
Maximum Security Deposit Charge in Nebraska
In Nebraska, security deposits are limited to one month’s rent.
Additional Pet Deposit: Under Nebraska’s law, the landlord may ask for an additional pet deposit with a limit of one-fourth’s month rent. This is not applicable under the Nebraska Housing Agency Act or to housing agencies.
However, 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.
Allowable Deductions on Security Deposits in Nebraska
Once the tenant moves out, the landlord may make deductions from the security deposit for damages. These include:
- Unpaid rent.
- 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 be used as the last month’s rent only if both parties agree in the lease agreement.
“Normal Wear and Tear” vs. Damage in Nebraska
- “Normal Wear and Tear” is 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.
Nebraska provides guidelines for tenant responsibilities, which include the following:
- Comply with all building and housing codes affecting health or safety.
- Keep the premises clean and safe.
- Dispose from all ashes, rubbish, garbage, and other waste in a clean and safe manner.
- Keep all plumbing fixtures in the dwelling unit or used by the tenant as clean as their condition permits.
- Use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air conditioning and other facilities and appliances including elevators in the premises.
- Not deliberately or negligently destroy, deface, damage, impair or remove any part of the premises or knowingly permit any person to do so.
- The tenant shall conduct themselves and their invited guests on the premises in a manner that will not disturb the neighbors’ peaceful enjoyment of the premises.
- Abide by all bylaws, covenants, rules or regulations of any applicable condominium regime, cooperative housing agreement, or neighborhood association not inconsistent with landlord’s rights or duties.
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.
Landlord Rules and Regulations
Nebraska landlords may adopt new rules or regulations regarding the premises. The rules are enforceable, but not limited to the following:
- The rule is to promote the appearance, convenience, safety, or welfare of the tenants in the premises, protect the landlord’s property from abuse, or make a fair distribution of services and facilities held out for the tenants generally.
- It fairly applies to all tenants in the premises.
- It is not for the purpose of evading the obligations of the landlord.
- The tenant is aware of the rule at the time of entering the rental agreement.
If a rule or regulation is adopted after the tenant enters into the rental agreement the landlord must give the tenant a reasonable amount of time of notice.
Returning Security Deposits in Nebraska
Time Frame: A Nebraska landlord has 14 days to return any unused portion of the security deposit along with an itemized list of damages deducted. This statement should be sent to the tenant’s forwarding address, if provided, or sent to the last-known address via first-class mail.
If the tenant does not claim their funds within one year of lease termination or forwarding address is undeliverable, they are forfeited to the State Treasurer in accordance with the Uniform Disposition of Unclaimed Property Act.
Failure to Return Security Deposit as Required: If the landlord fails to return the security deposit within the 14-day limit, the tenant stands to recover the full security, plus any legal fees associated with recovering the deposit in court. The tenant may sue the landlord in Small Claims Court for the refund of their security deposit.
If the withholding is negligent and willful, the tenant may be awarded damages up to the lesser of double the withheld funds or one month’s rent.
Security Deposits and Tax Filing in Nebraska
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 Nebraska
Receipt Requirements: The landlord is not required to provide a receipt for the security deposit in Nebraska.
Security Deposit Holdings in Nebraska: Nebraska laws do not require landlords to hold security deposits separate from other funds.
Security Deposit Interest in Nebraska: Nebraska laws do not require landlords to provide interest on held security deposits.
New Property Owner’s Responsibility: If the original landlord decides to sell or transfer ownership of the rental property, they must either transfer the deposit to the new landlord and notify the tenant or return the partial or full deposit to the tenant directly.
For additional questions about security deposits in Nebraska, please refer to the official state legislation, Nebraska Landlord-Tenant Statutes.