How to write a security deposit deduction letter

Start by writing down the date the tenant returned possession. Not the lease end date, not the day you got around to inspecting. The day the keys came back. Almost every state’s clock runs from that date, and a statement that arrives late is often worth nothing regardless of how well it is written.

Here is the template. The steps after it explain each part.

[Your name / entity]
[Address]
[Date]

To: [Tenant name(s)]
Forwarding address: [address the tenant provided]

Re: Security deposit, [unit address], tenancy ended [date possession returned]

Security deposit held:                              $X,XXX.00
Interest owed (if your state requires it):          $   XX.XX
Total held:                                         $X,XXX.XX

Deductions
1. [Room, item]. [What was wrong, one sentence.]
   Source: [invoice / estimate / labor at $X per hour]     $XXX.XX
2. [Room, item]. [What was wrong.]
   Original cost $XXX, useful life X years, X years used.
   Remaining value charged                                $XXX.XX
3. Unpaid rent, [month]                                   $XXX.XX

Total deductions:                                         $XXX.XX
Amount returned with this letter:                       $X,XXX.XX

Enclosed: [check / notice of electronic transfer], copies of
[invoices, estimates], and [photographs].

Questions about any line above can be directed to [contact].

Step 1: Gather what the statement has to reference

Three documents, in this order: the move-in condition report, the move-out condition report, and the payment ledger. Then the photographs, and then any invoice or written estimate for work you had done.

If a deduction is not traceable to a difference between the two reports or a gap in the ledger, it does not go on the statement. That single filter removes most of the lines that lose in court.

California now requires the photographs on both ends, so this pile is not optional there:

For the full comparison method, see how to compare move-in and move-out condition reports.

Step 2: Write each deduction line

Four elements per line, every time: where in the unit, what was wrong, what it cost, and what proves the cost.

“Cleaning: $350” fails all four. “Kitchen, oven interior. Baked-on grease not removed at move-out; cleaned by ABC Cleaning 09/12, invoice attached: $145” passes all four, and it is shorter than most people expect.

Keep unpaid rent on its own numbered line and label the month. It is a different kind of claim from a repair, and combining them invites a dispute over the whole total rather than over one line.

Write plainly. This is not the place for legal-sounding phrasing, and a statement written in normal English reads better to a judge than one that tries to sound like a court filing.

Step 3: Show depreciation on anything with a useful life

Carpet, paint, blinds, and appliances all wear out on a schedule whether or not a tenant damages them. Charging full replacement cost for a seven-year-old carpet asks the tenant to pay for the three years you already used.

Put the math on the page: original cost, useful life, years used, remaining value. Four numbers. A tenant who can follow the arithmetic argues about the arithmetic instead of about your good faith.

Cleaning is the exception. It restores the unit to its move-in condition and does not depreciate, but it also cannot be charged when the unit came back in the condition it went out in.

Step 4: Total the statement and the refund

Total the deductions, subtract from the amount held, and state the refund on its own line. Where your state requires interest on the deposit, add it to the amount held before you subtract, not after.

Maryland is a useful illustration of why the interest line matters: a landlord there owes simple interest accrued at the greater of the one-year U.S. Treasury yield curve rate as of the first business day of each year or 1.5% a year, and it comes due with the refund within 45 days of the end of the tenancy. Minnesota runs 1% simple noncompounded interest and a three-week return window. A statement that ignores the interest line is short by whatever the interest was.

Check whether your state requires interest at all before you use this line. Many do not.

Step 5: Send it the way your state requires

The deadline, the delivery method, and what happens next are all state-specific, and this is the step where an otherwise correct statement fails.

• California: the itemized statement and any refund go out no later than 21 calendar days after the tenant vacates, under Civ. Code § 1950.5(h)(1). Documentation can be omitted only when repairs and cleaning together total $125 or less. See the California move-out and deposit return page for the mechanics, and the state’s electronic deposit return rules before you send anything by email or transfer.
• Florida: written notice of intent to impose a claim goes out within 30 days after the tenant moves out, and the tenant then has 15 days to object, under Fla. Stat. § 83.49.
• Minnesota: three weeks after termination of the tenancy, under Minn. Stat. § 504B.178 subd. 3.
• Maryland: 45 days after the end of the tenancy, under Md. Real Prop. § 8-203(e).

Mail it to the forwarding address the tenant gave you. If they gave none, most statutes say the unit’s own address, and the missing address does not pause your clock. What to do in that situation is covered in when a tenant leaves no forwarding address.

Keep a copy of what you sent, the postmark, and the enclosures. If the tenant disputes a line later, tenant disputes your deposit deductions covers the response.

Deposit tracking in LeaseRooster assembles this statement from the condition reports and the ledger, keeps the receipts attached to the right line, and puts your state’s deadline on the record so nothing goes out on day 24.

This is general information, not legal advice. Rules change and local ordinances vary. Confirm current requirements with your city, county, or an attorney before you act.