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Calculating Security Deposit Interest For A Minneapolis Rental Property

March 19, 2013

If you own a Minneapolis rental property one thing you need to be aware of is that you must provide your tenant’s 1% simple interest on their security deposit at the end of the lease. Some rental property owners are not aware that this is required per Minnesota statute 504B.178. If you are managing your Minneapolis rental property on your own, you will be required to refund the tenant’s security deposit and interest to the tenant. If you have hired a Minneapolis professional landlord or Minneapolis property management company, they will hold your tenant’s security deposit for you in a trust account, and will bill you for the interest near the end of the lease, as interest earned in a trust account is paid directly to the Minnesota state super fund.

Interest on a security deposit is called simple interest:
To calculate what you may have earned or have to return Use the simple interest formula: Principal x Interest (for a full year)
Example of Calculating Security Deposit Interest FULL YEAR
The deposit = $1,000
Interest = 1% or .010
$1,000 * .01 = $10
Example of Calculating Security Deposit Interest PARTIAL YEAR
$1000 * .01/12 * (number of months) = interest for partial year