FAQ: What Can I Deduct From a Security Deposit in California?
INVESTOR FAQ SERIES
Four Categories Are Allowed, and Nothing Else
The following is not intended as legal advice. It is provided only for informational and entertainment purposes. Consult with an attorney for guidance on your specific situation.
By BRIAN BEAN
Rental Home Advocate | Property Manager | Real Estate Broker
To withhold any funds from a California renter’s residential security deposit, the deductions must fall into one of four buckets, according to state law.
Security deposit funds can be used for:
- Unpaid rent
- Damage beyond normal wear and tear
- Cleaning needed to return the home to its move-in condition
- Repair or replacement of items the resident agreed in the lease to maintain but did not
Some landlords and property managers forget that security deposit funds belong to the residents, not the property owner. But California Civil Code Section 1950.5 stipulates that the tenants’ funds are to be held in trust by landlords and PMs, on behalf of renters, to be used only if they leave behind unpaid rent or damage.
What You Cannot Deduct
Normal wear and tear is an owner expense. Worn carpet from foot traffic is normal. Faded or scuffed paint after years of occupancy is not a resident’s responsibility. Small nail holes from hanging pictures can be considered normal use.
An assumptive cleaning fee also is not allowed. Residents can be charged for the actual cost to remedy what was actually left unclean, to bring the home back to the condition it was in at move-in. For example, a carpet cleaning fee cannot be charged if the carpet is being replaced.
Outgoing renters also cannot be charged for upgrades or pre-existing damage. Replacing old carpet with vinyl plank or tile, for example, is not an allowable assessment.
Paint and Carpet Proration
Paint and flooring have useful lives. Even when the damage is real, whether pet stains, carpet tears from misuse or walls painted a color nobody approved, owners must prorate the remaining useful life of the item.
Check with your attorney about local rules on the useful life of such items.
No Photos, No Deduction
AB 2801, in force since 2025, requires time-stamped photos before move-in, after moveout, and again after any repair, in order to deduct anything from a deposit. Miss the documentation and you can lose the deduction even where the charge is fair.
Doing the Work Yourself
You may charge for your own labor, but the itemized statement has to describe the work, the time spent and the reasonable hourly rate. It also may trigger tax issues, so consult with your tax professional for guidance.
The Cost of Getting It Wrong
An improper deduction can put you in court, potentially liable for the amount you held back plus penalties and attorney fees. Missing the 21-day deadline can cost you every deduction on its own.
In all cases, it’s crucial to document the condition of a property and each step in the process.
For more information about local trends in your rental market, contact us directly at Dream Big Property Management, 951-314-5402, brian@dreambigpm.com. You can also find valuable information on our website: dreambigpm.com.
Related Reading
- Riverside Landlords, Do You Know the Difference Between Wear and Tear and Tenant Damages?
- FAQ: How Long Do I Have to Return a Security Deposit in California?
- FAQ: What Happens If I Don’t Return a Security Deposit on Time in California?
- California Security Deposit Laws 2025: What Riverside CA Rental Property Investors Must Know
- What Is a Security Deposit and How Does It Work? | A Guide for Riverside CA Renters
Full Transcript
Transcript of the video above — Brian Bean, Broker/Owner and Rental Home Advocate, Dream Big Property Management. CA DRE #01346382. Lightly edited for readability.
Hey, Brian Bean here with Dream Big Property Management in Riverside, California. We help people just like you become intentional rental property investors.
Our clients often ask, “What are we allowed to deduct from our tenant’s security deposit when they move out?” Well, let’s start with the most important and misunderstood fact first.
A security deposit belongs to the tenant, not the landlord, not the property owner, not the property manager. It’s the resident’s money, held in trust as security in case that tenant leaves the property with any unpaid fees or damages.
With that in mind, when it comes to tenant security deposits, the penalties are severe if you do not handle it right. We’re not attorneys. This is not legal advice. Our intent here is only to raise awareness. Consult with your qualified legal adviser for guidance on your specific situation.
Now, when a tenant vacates a property, California law says that you must refund their security deposit in full within 21 days of a move-out. There are ways, though, to deduct portions of it, but only for four specific reasons.
First, unpaid rent. Two, to repair damage beyond normal wear and tear — actual damages, like fist-sized holes in walls, or broken windows, or damage from misuse. Three, cleaning necessary to restore the unit to move-in condition. And lastly, repairing or replacing items that the tenant agreed to maintain but then did not. That’s it. Those are the only four things for which you can deduct.
Now, here’s what you cannot deduct for. One, normal wear and tear. Worn carpet from foot traffic, that’s normal. Faded or scuffed paint after three years, not a tenant responsibility. Small nail holes from hanging pictures, that’s considered normal use. This is normal maintenance of the property, and it’s borne by the property owner.
Two, automatic cleaning charges. An assumptive cleaning fee is not allowed. You can only charge for items that were left unclean, and only for actual costs to clean after the move-out, to bring that property back into the same condition as at move-in. Another example: you can’t charge an auto carpet cleaning fee if you’re replacing the carpet. That’s just common sense, right?
Three, full replacement costs for paint and carpet. Paint and flooring have useful lives. Wall scuffs and some small nail holes are considered wear and tear. Carpet foot traffic, that’s normal use. But even if there was significant pet stains or carpet tears from misuse, or if the tenant painted the walls bright colors without permission, you can still only charge the prorated amount of the repair based on the years of useful life left in that flooring or paint. Check with your attorneys for local rules on the useful life of such items.
Four, upgrading or improving a property. If you’re replacing old carpet with vinyl plank or tile, that’s an owner expense.
Five, pre-existing damage. This is a common argument, which is why pre-move-in documentation is so critical.
And lastly, speaking of documentation, as of April 1, 2025, California law requires a landlord to take time-stamped photos before move-in, after move-out, and again after any repairs, in order to lawfully deduct any money from a security deposit. AB 2801 applies to move-ins on or after April 2025.
If you deduct unlawfully, you could end up in small claims court and be liable for the money you held back, plus penalties and attorney fees. So make sure that you are following the rules, and document everything with time-stamped photographic evidence to back your decisions.
If you have questions about security deposit deductions, or anything related to the right and profitable way to run your rental property, call me today at 951-314-5402. I’m happy to share. You can also find valuable information on our website, dreambigpm.com.
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Don’t be accidental about your future. Be intentional. To your success.