Beth Davis

All County Editor

What Landlords Can & Can’t Deduct From a Security Deposit

At All County® Property Management, we help owners protect their investments while staying compliant with landlord-tenant laws. Security deposits often create confusion and disputes. However, when owners understand the rules and follow a consistent process, they can avoid most problems.

Because laws vary by state, landlords must follow both general best practices and local requirements. Even so, most states share common standards. This guide explains what landlords can deduct, what they cannot deduct, and how All County helps owners handle security deposits correctly.

What a Security Deposit Covers

A security deposit protects landlords from financial losses caused by a tenant. In most states, the deposit remains the tenant’s money until the landlord makes lawful, documented deductions.

For this reason, landlords should not treat the deposit as a maintenance fund. Instead, they should use it only to recover legitimate tenant-related losses.

What Landlords Can Deduct From a Security Deposit

In most situations, landlords can deduct the following items:

Unpaid Rent

First, landlords can apply the deposit to any unpaid rent owed at move-out. This deduction often represents the most straightforward use of a security deposit.

Damage Beyond Normal Wear and Tear

Next, landlords can deduct for tenant-caused damage beyond normal wear and tear.

For example, this may include:

• Large holes or major wall damage

• Broken doors, cabinets, or fixtures

• Excessive pet damage

• Heavy carpet stains or damaged flooring

• Missing appliances or hardware

At the same time, landlords must clearly separate damage from normal aging.

Unpaid Utilities (When Allowed by the Lease)

If the lease makes the tenant responsible for utilities, landlords can often deduct unpaid balances. However, they must support these charges with proper documentation.

Lease Violations

When the lease clearly allows it, landlords may deduct for:

• Unauthorized alterations

• Early termination obligations

• Excessive cleaning caused by neglect

Because of this, strong lease language plays a critical role.

What Landlords Cannot Deduct

On the other hand, landlords cannot charge tenants for normal ownership costs. Most states prohibit deductions for the following:

Normal Wear and Tear

Normal wear and tear includes:

• Minor scuffs on walls

• Faded paint or carpet

• Lightly worn flooring

• Small nail holes from hanging pictures

These conditions result from everyday living. Therefore, landlords must absorb these costs.

Routine Maintenance and Aging

Landlords cannot use a security deposit to pay for:

• Repainting due to normal use

• Replacing carpet at the end of its lifespan

• Appliance failure due to age

• Property upgrades or improvements

In contrast, only tenant-caused damage qualifies.

Reasonable Cleaning

Tenants usually must return the unit in broom-clean condition. Light dust or basic cleaning does not justify deductions. However, extreme filth or neglect may support a charge.

Undocumented Charges

Finally, landlords should never deduct without proof. Without documentation, tenants can successfully dispute even valid claims, thereby costing landlords more time and money.

Why Documentation Protects Owners

Strong documentation reduces disputes and protects owners. For this reason, All County uses:

• Detailed move-in and move-out inspections

• Date-stamped photos and videos

• Itemized deduction statements

• Repair invoices or estimates

• Lease provisions that support charges

As a result, owners gain stronger protection and fewer conflicts.

Security Deposit Deadlines Matter

Most states require landlords to:

• Return the remaining deposit within a set timeframe

• Provide an itemized list of deductions

If landlords miss these deadlines, they may face penalties. In some cases, they may lose the right to keep any portion of the deposit. Therefore, timing remains just as important as accuracy.

How All County Helps Owners Avoid Deposit Disputes

Security deposit disputes waste time and money. However, professional management dramatically reduces risk. All County helps by:

• Applying consistent wear-and-tear standards

• Performing professional inspections

• Maintaining complete documentation

• Tracking state-specific deadlines

• Acting as a neutral third party

As a result, owners spend less time in conflict and more time growing their portfolios.

The Bottom Line

Security deposits are not about maximizing deductions—they’re about fairness, compliance, and protection. In most cases, when handled properly, they safeguard rental income and maintain positive tenant relationships. When mishandled, they can lead to disputes, delays, and legal exposure.

Q: When can landlords deduct from a security deposit?

A: Landlords can deduct for unpaid rent, tenant-caused damage beyond normal wear and tear, and lease violations supported by documentation.

Q: What counts as normal wear and tear?
A: Normal wear includes minor scuffs, faded paint, and light carpet wear that result from everyday living.

To get more owner resources or find a Property Manager near you, visit www.AllCounty.com.

With over 35 years of experience, All County Property Management learn how we help owners navigate security deposits the right way—so you can focus on growing your investment, not managing disputes.