In Minnesota paying interest on investment property security deposits is required. Here is the state statute on it.
I hope I am “preaching to the choir” when I remind everyone that in Minnesota, you must pay your tenant interest on the security deposit they have on file with you, when they move out. As a Minnesota landlord, you must return a tenant’s security deposit plus interest or give a written explanation why the deposit (or any portion of it) is not being returned, within 21 days after the tenant moves out and gives the landlord a forwarding address.
Below are the interest rates that apply depending upon when the tenant moved in:
- From August 1, 2003 through present, interest is figured at 1% per year.
- From March 22, 1996 through July 31, 2003, interest is figured at 3% per year.
- From April 28, 1992 through March 21, 1996, interest is figured at 4% per year.
- From October 1, 1984 through April 27, 1992, interest is figured at 5.5% per year.
If a tenant’s residency spans more than one interest rate change, you will need to figure the interest for that period until the change (round to the month) and then calculate the total. For example, if your tenant has lived in your investment property since August 2002 and moved out on July 31, 2007, they are entitled to 3% interest for 12 months and 1% for 48 months.
Using the above table will help you easily comply with state law when calculating the interest on your Minnesota investment property security deposits.