Rental Income rules for security deposits General Rules Each state has slightly different rules regarding deposits collected when a new tenant moves in. Deposit can be collected for utilities, cleaning, damages, last month rent and some other purposes. Deposits can be refundable or nonrefundable in some cases. The rules will vary from state to state. A deposit is a liability. In other words this is money that you may have to return at some future date. Because of this many states have enacted rules regarding what can and cannot be done with these funds. In Washington State, (11 comments)