In Taiwan, the rental deposit system typically involves two main components: a security deposit and the first month's rent. Here’s how it works:
1. Security Deposit
- Amount: Usually 1–3 months’ rent, depending on the property and landlord
- Purpose: To cover damages, unpaid bills, or lease violations
- Refund: Returned at the end of the tenancy if:
- The property is in good condition (normal wear and tear accepted)
- All bills (utilities, internet) are settled
- The keys are returned
- Key deposit: A smaller amount (NT$500–2,000) for the door keys, refundable when keys are returned
2. First Month’s Rent
- Paid upfront at the start of the lease
3. Interest on security deposits
- By law (Tenant Protection Act), landlords must pay 1% annual interest on the security deposit
- However, this rule is not always enforced, so contracts may waive this clause. Always clarify in the rental agreement
4. Lease Termination Process
- Notice period: Typically 1–2 months’ notice is required (check the contract)
- Inspection: The landlord inspects the property for damages
- Refund: The deposit is returned minus any deductions for repairs, unpaid bills, or cleaning
- Disputes: Mediation can be sought through the Consumer Protection Agency or courts
5. Tax Implications
- The security deposit is not taxed as income
- If interest is paid on the deposit, it may be subject to income tax (consult a tax professional)
6. Variations
- Short-term leases: Some landlords may charge a higher deposit or require a guarantor
- Student rentals: Deposits might be lower, but flexibility varies by landlord
- Popular areas (Taipei): Higher demand may lead to stricter terms
Tips
- Always document the property’s condition at move-in (photos, written logs)
- Review the contract carefully to avoid surprises
- Negotiate terms (deposit amount, interest, refund timelines) before signing
