Landlords have to pay interest on security deposits collected from tenants. However, the security deposit interest rate went to zero % back in 2009. That was because interest rates were so low it didn't make any practical sense to force landlords to pay interest for a few dollars or perhaps even a few cents.
The days of low interest are past. You can easily get 5% in Guaranteed Investment Certificate.
The Alberta Government says landlords must now start paying interest on tenant security deposits.
So, effective January 1 2024, landlords have to start paying interest on security deposits. There is a formula for determining the interest and is starting at 1.6%. Interest is payable once a year unless the parties agree to pay differently.
Buyers and sellers Realtors should ensure their investor clients know they must pay interest on tenant security deposits.
Protect yourself.
Cheers,
Barry
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