Security Deposit Deductions: What Landlords Can (and Can't) Keep

Security deposits sit at the center of more landlord-tenant disputes than almost any other issue. Tenants feel cheated when deductions eat their deposit; landlords feel exposed when real damage costs more than what's withheld. The tension usually comes down to one question: what can a landlord actually keep?

The answer is controlled entirely by state law — and most landlords (and tenants) don't know those rules well enough. Here's the full breakdown.

The Core Principle: Normal Wear and Tear Is NOT Deductible

Every state's security deposit law is built around the same foundation: landlords can deduct for damage beyond normal wear and tear, but not for the ordinary deterioration that happens when someone lives in a property.

Normal wear and tear includes things that happen just from living there:

• Minor scuffs on walls from furniture or daily use
• Small nail holes from hanging pictures (1-2 per room is standard)
• Carpet wear in high-traffic areas (hallways, stairs)
• Faded paint or wallpaper from sunlight
• Loose hinges, handles, or towel bars from normal use
• Worn or faded finish on hardwood floors from walking

Deductible damage goes beyond normal living:

• Large holes in walls from anchors, door handles, or intentional damage
• Stains on carpet that won't come out with professional cleaning
• Burns on countertops or carpet
• Broken windows, tiles, fixtures, or appliances (not from normal use)
• Pet damage: scratches, stains, odors
• Excessive filth requiring professional deep cleaning (beyond standard move-out cleaning)
• Missing items: light fixtures, blinds, shelving that was there at move-in

What Landlords Can Deduct

1. Unpaid Rent

Any rent owed at the time of move-out is deductible from the security deposit. This includes the final month's rent if not paid, as well as any back rent accrued during the tenancy. Important distinction: "last month's rent" collected at move-in is often treated as prepaid rent under the lease, not a deposit — different rules may apply to those funds.

2. Cleaning Costs

If the tenant leaves the unit in a condition that requires more than standard professional cleaning to restore to move-in condition, those costs are deductible. "More than standard" is key — a landlord can't charge for routine cleaning if the unit is reasonably clean. Most leases include a cleaning clause specifying the expected condition; courts look at what was in the lease and what photos show.

3. Damage Repair

Repairs that go beyond normal wear and tear are deductible at the actual cost to repair (parts + labor). Landlords can use professional contractors or their own labor at a reasonable hourly rate. They cannot charge for repairs at inflated rates.

4. Replacement of Damaged Items

If something is damaged beyond repair, the replacement cost is deductible — but with prorated depreciation. A 10-year-old carpet at the end of its useful life can't be replaced at full cost and charged to the tenant. Most courts use a straight-line depreciation schedule: a carpet with a 10-year life that's 7 years old is worth 30% of its replacement cost — that's the deductible amount.

5. Lease-Specified Costs

Some leases include specific fees that can be charged against the deposit: re-keying costs if the tenant doesn't return all keys, restoring altered fixtures, or removing unauthorized additions (shelving, hooks, etc.). These are enforceable if clearly stated in the lease and if the state allows it.

What Landlords CANNOT Deduct

• Normal wear and tear (as described above)
• Pre-existing damage that was present at move-in (this is why move-in inspection reports matter)
• Costs for repairs the landlord had been notified of but failed to address during the tenancy
• Repairs required by housing codes (landlord's legal obligation regardless)
• General maintenance and upkeep (replacing worn appliances, routine painting between tenants)
• Penalties or fees not specified in the lease

The Itemization Requirement

Nearly every state requires landlords to provide a written itemized list of all deductions when returning (or withholding) the security deposit. The itemization must:

• List each deduction separately with a description
• Show the dollar amount of each deduction
• Often include supporting documentation: receipts, invoices, photos

Failure to provide a proper itemization within the required deadline often results in the landlord forfeiting the right to keep any portion of the deposit — even if the deductions were legitimate.

State Deadlines: The Most Commonly Violated Rule

Every state sets a deadline for returning the security deposit (or providing the itemization if withholding). Common timeframes:

• 14 days: California, New York, Virginia, Wisconsin
• 21 days: Washington, Oregon, Colorado
• 30 days: Texas, Illinois, Arizona, Florida (in most circumstances)
• 45 days: Georgia

Missing the deadline typically carries significant penalties. In California, a landlord who fails to return the deposit within 21 days can be liable for twice the deposit amount as a penalty, plus attorney's fees. Many other states have similar penalty structures.

The Move-In/Move-Out Inspection Paper Trail

The most reliable protection for both sides is a thorough move-in inspection report signed by both landlord and tenant, with photos. Without this documentation, disputes become "he said/she said" — and in ambiguous cases, courts often rule in favor of the tenant on the presumption that damage was pre-existing.

Best practice: complete a written inspection at move-in and move-out, photograph every room from multiple angles, and get the tenant's signature acknowledging the condition. Digital tools that date-stamp and store this documentation make it easier to produce in court if needed.

Automating Lease Document Review

For property managers handling multiple units, keeping track of lease-specific deposit clauses, move-out requirements, and state deadline compliance across different jurisdictions is complex. Tools like parselease.com extract key lease terms — deposit amounts, return deadlines, condition clauses — automatically from lease PDFs, making it easier to track obligations across a portfolio.