- Standard Limit / Maximum Amount: No Limit (read more)
- What Can Be Deducted: Unpaid rent & cost of damage to the unit (read more)
- Time Limit for Return: 30 days after the end of the lease (read more)
- Penalty if Not Returned on Time: The amount withheld & attorney’s fees (read more)
- Interest Rate: When required, 5% yearly on the excess over the greater of $50 or 1 month’s rent (read more)
Purpose. Security deposits are like safety nets. They ensure compensation for any loss that the landlord might incur because of the tenant’s acts. It covers for incidents like damage to the property, termination of the lease without notice or non-payment of rent.
Legal Basics. Ohio laws do not put a limit on the amount that can be charged as security deposit from which unpaid rent and cost of repairs of damage to the unit may be deducted. It must be returned within 30 days of the end of the lease and surrender of the premises, with an itemized statement of charges if there are deductions. Otherwise, the landlord may be made to pay a penalty equal to the amount withheld and attorney’s fees.
Maximum Security Deposit Charge in Ohio
There is no limit on the amount that Ohio landlords can charge as security deposit.
Allowable Deductions on Security Deposits in Ohio
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.
To clarify, 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 Ohio Code (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 Ohio
- “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” refers to the destruction that occurs because of abuse or negligence by a tenant during 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 and operate all electrical and plumbing fixtures properly;
- Comply with rules and regulations of applicable building, housing or fire codes on health and safety; and
- Maintain in good working order and condition any and all appliances supplied by the landlord.
The rest of the tenant’s obligations under the same law consist of not doing some things, specifically those enumerated below. The tenant, personally or through the tenant’s guests or invitees to the unit, must not:
- Destroy, damage, or remove fixtures or parts of the premises;
- Disturb the neighbor’s peaceful enjoyment of the premises
- Engage in illegal activities within the premises.
- Unreasonably withhold consent for the landlord to enter into the unit when the landlord has a valid reason to do so.
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 Ohio
Time Frame: The landlord has 30 days to return the security deposit, or what’s left of it, to the tenant. The 30 days start counting from the day both of the two conditions below happen:
- The lease has terminated; and
- The unit has been surrendered to the landlord by the tenant
Where deductions have been made from the security deposit, the landlord is required to provide the tenant a written notice with an itemized list of all the deductions made to be delivered to the latter within the same timeframe.
Failure to Return the Security Deposit on Time: If the landlord fails to return the security deposit or what’s left of it with the required written notice, the landlord may be made to give the security deposit back and pay a penalty equal to the amount withheld plus reasonable attorney’s fees.
Security Deposits and Tax Filing in Ohio
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 2019 but was only forfeited in 2020, then the landlord should only include it as income in 2020.
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 3 simple rules the IRS has suggested to follow:
- 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.
- If 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 Ohio
Failure of the Tenant to Provide a Forwarding Address: It is the tenant’s responsibility to provide a forwarding address to where the landlord may return the security deposit. If the tenant fails to do so, the landlord will not be held liable for the penalty for not returning the security deposit on time.
Interest Payments: Ohio landlords are not always required to pay interest on security deposits received. Landlords who charge security deposits that are more than $50 or 1 month’s rent, whichever is greater, are required to pay interest on security deposits of tenants who stay for 6 months or more. When required, the landlords must pay 5% yearly interest on the excess of the security deposit collected over the greater of $50 or 1 month’s rent.
Frequently Asked Questions
How much can a landlord charge for a security deposit in Ohio?
There is no maximum security deposit a landlord can charge in Ohio. Ohio law on security deposits does not currently put a limit on the amount of security deposit. However, counties and cities can impose a limit, so it is best to check the local ordinances to be sure.
Can you use the security deposit as last month’s rent in Ohio?
In Ohio, a tenant is not usually allowed to use the security deposit as last month’s rent. However, if there is an agreement between the landlord and the tenant to use the security deposit for last month’s rent, then the tenant can do so.
What can a landlord deduct from a security deposit in Ohio?
A landlord in Ohio can legally deduct the following from the security deposit: unpaid rent and cost of damage caused by the tenant’s breach of the lease. However, repairs and restorations are not chargeable against the security deposit if they are for that damage was caused by normal wear and tear, or existed before the tenant moved in.
Can a landlord charge a cleaning fee in Ohio?
In Ohio, a landlord is allowed to charge a cleaning fee but only insofar as necessary to bring the unit to the state it was in when the tenant moved in. Beyond that, the landlord can only charge cleaning costs against the security deposit if the rental agreement allows doing so.
What is considered normal wear and tear in Ohio?
Normal wear and tear in Ohio is defined as a matter of case law or practice. The statutes do not specifically provide a definition but generally, it is deterioration that occurs naturally as a result of the tenant using the property as it’s designed to be used without fault or negligence from the tenant.
How long does a landlord have to return the security deposit in Ohio?
In Ohio, a landlord has 30 days from the move out date to return the security deposit. If the landlord intends to make deductions on the security deposit, the landlord must also provide the tenant with the written statement of charges within the same 30 days.
What happens if a landlord does not return the security deposit in Ohio?
If a landlord in Ohio does not return the security deposit within 30 days from the move out date, the landlord loses the right to make any deductions and may be liable for a penalty equal to the amount withheld, costs of suit and attorney’s fees.
Are security deposits taxable in Ohio?
Security deposits in Ohio aren’t taxable until they become the landlord’s property. This happens when the security deposit is applied to rent, forfeited, or applied to charges allowed under the lease.
However, when they are used to cover expenses incurred by the landlord due to the tenant’s fault, like the cost of repairs or unpaid utilities, they are not always taxable. The IRS advises to only report them as income if the landlord also reports the costs they covered as expenses. Otherwise, there is no need to report them as income, in which case they will not be taxed.
For additional questions about security deposits in Ohio, please refer to the official state legislation, Ohio Revised Code § 5321.16, for more information.