Iowa security deposit interest
Iowa requires deposits to be kept in a separate account, but it hands the landlord the interest for the first five years of a tenancy. Only interest earned after the fifth anniversary belongs to the tenant, and only if the account actually earns interest; the statute does not force the landlord to choose an interest-bearing account.
Print this page for a dated statement showing the rate applied to each year and the statute.
How Iowa deposit interest works
In practice, Iowa deposit interest matters only for long tenancies. The deposit is capped at two months’ rent and must be returned within 30 days with a written statement; bad-faith retention can cost the landlord up to twice the deposit in punitive damages.
The rules in brief
- Deposit held in a separate account; interest for the first five years is the landlord’s.
- Interest earned after five years belongs to the tenant, if the account is interest-bearing.
- Deposit capped at two months’ rent; return within 30 days with an itemised statement.
Set by the holding account. Whatever the account earns.
Worked examples: one year held
Assuming an account rate of 0.5%. Enter the real rate from the landlord’s notice in the calculator.
| Deposit | Interest-bearing portion | Interest owed |
|---|---|---|
| $1,000.00 | $1,000.00 | $5.00 |
| $1,500.00 | $1,500.00 | $7.50 |
| $2,500.00 | $2,500.00 | $12.50 |
Other Iowa deposit rules
- Maximum deposit: 2 months' rent.
- Return deadline: 30 days after termination of the tenancy AND receipt of the tenant's mailing address or delivery instructions; return the deposit or furnish a written statement of the specific reasons for withholding.
- Late fees: Tiered statutory cap: if monthly rent is $700 or less, no more than $12 per day and $60 total per month; if monthly rent is more than $700, no more than $20 per day and $100 total per month. No statutory grace period. Numeric fields reflect the over-$700 tier.
Full page: Iowa landlord and tenant rules.
Frequently asked questions
Does an Iowa tenant get interest on the security deposit?
Only on interest earned after the tenancy has lasted five years, and only if the landlord placed the deposit in an interest-bearing account.
Who keeps the interest for the first five years?
The landlord, by statute.