In Nevada, the collection and return of security deposits are regulated under NV Rev Stat § 118A.242. These laws provide a set of rules that Nevada landlords and property managers have to follow to protect all parties.
Maximum Security Deposit Charge in Nevada
In Nevada, landlords may charge a maximum of three months’ rent as a security deposit or through a surety bond if agreed upon by both landlord and tenant. A combination of both a security deposit and surety bond may be used.
Additional Pet Deposits. Under Nevada’s law, the landlord may ask for an additional pet deposit which is usually between one to two months’ rent. 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 Nevada
The landlord may use the security deposit to make deductions only after the tenant has vacated the premises. The security deposit should be used to cover:
- 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.
- Cleaning costs.
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. Otherwise, the security deposit should be handled separately from any rent balance left outstanding.
“Normal Wear and Tear” vs. Damage in Nevada
- “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 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.
- Leave the premises in the same condition it was in when it was handed to the tenant.
The rest of the tenant’s obligations under the same law consist of not doing some things. Tenants should not:
- Change the locks on doors on the premises, except if necessary in an emergency.
- Destroy, damage, or remove parts of the premises.
- Unreasonably disturb the neighbor’s peaceful enjoyment of the premises.
- 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.
Rules and Regulations of the Landlord: The landlord may adopt rules or regulations concerning the tenant’s use of the premises. Rules and regulations are enforceable against the tenant only if:
- Its purpose is to promote the convenience, safety or welfare of the landlord or tenants in the premises, protect the landlord’s property from abusive use and make a fair opportunity for the distribution of services and facilities for the tenants.
- It is reasonably related to the purpose for which it is adopted.
- It applies to all tenants in the premises in a fair manner.
- It is sufficiently explicit in its prohibition, direction or limitation of the tenant’s conduct fairly to inform the tenant of what must or must not be done to comply.
- It is in good faith and not for the purpose of evading an obligation of the landlord.
- It does not affect the tenant’s obligation to pay rent, utilities or other charges.
- It does not affect, before the end of the duration of the rental agreement, any right the tenant may have under the rental agreement to keep a pet.
- The tenant has notice of the rule or regulation at the time the tenant enters into the rental agreement or after the rule or regulation is adopted by the landlord.
If a rule or regulation is adopted after the tenant enters into the rental agreement, it is enforceable against a tenant if the landlord does the following:
- Expressly consents to the rule or regulation in writing.
- Allows 30 days’ advance written notice of the rule or regulation.
Returning Security Deposits in Nevada
Time Frame: A Nevada landlord has 30 days 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. The statement should be handed to the tenant directly or mailed to their forwarding address.
Disputes of Deductions: If the tenant wants to dispute any of the itemized deductions taken from the security deposit, they may provide a written response to the surety within 30 days of receiving the statement.
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 up to the full security deposit in damages, plus any legal fees associated with recovering the deposit in court. Additionally, a court will decide if a sum shall be granted to the tenant; however, the sum shall not be more than the amount of the entire deposit. To determine the sum, the court will make the decision on the following:
- Whether the landlord acted in good faith.
- The course of conduct between the landlord and the tenant.
- The degree of harm to the tenant caused by the landlord’s conduct.
Security Deposits and Tax Filing in Nevada
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 Nevada
Receipt Requirements: The landlord shall deliver a requested written receipt to the tenant for the security deposit, surety bond, or the combination of both payments.
Security Deposit Holdings in Nevada: Nevada laws do not require landlords to hold security deposits separate from other funds.
Security Deposit Interest in Nevada: Nevada laws do not require landlords to provide interest on held security deposits.
Surety Bond: If the landlord and tenant agree, a surety bond may be used as a security deposit, with all applicable laws and regulations applying to the bond as they would a standard deposit.
Nonrefundable Security Deposits: Except for an agreement which provides for a nonrefundable charge for cleaning, in a reasonable amount, no rental agreement may contain any provision as nonrefundable or wave or modify a tenant’s rights. Any such provision that relates to a nonrefundable security deposit shall be considered as void.
New Property Owner’s Responsibility: If the original landlord decides to sell or transfer ownership of the rental property, they must do one of the following:
- Notify the tenant in writing of the contact information for the successor and that the funds were transferred to them.
- Return the security deposit, minus deductions, to the tenant.
The new landlord may not require an additional deposit during the term of the rental agreement after taking possession of the property and deposit.
For additional questions about security deposits in Nevada, please refer to the official state legislation, Nevada Landlord-Tenant Statutes.