Handling Deposits: Security, Pet, and Everything In Between
The deposit rules in BC are strict, deadline-driven, and unforgiving. This module covers every step — from collecting within legal limits to returning on time with interest — so you never face a double-deposit penalty.
Deposits Are Not Your Money
This is where most landlords get the law wrong. A deposit is money held for the tenant — not money the landlord "owns." Until the tenant gives written consent for a deduction or the RTB issues an order, the full deposit (plus interest) belongs to the tenant. Treating it otherwise is how double-deposit penalties happen.
The rules are strict and deadline-driven. The Residential Tenancy Act sets maximum amounts, return timelines, and inspection requirements. Miss any of these and you can be ordered to pay back twice the deposit — even if the tenant caused real damage.
Key Point
The law rewards landlords who follow the process, not landlords who feel "morally right." Procedure is the protection. RTB-27 inspections + evidence + 15-day action + interest calculation = your defence. (Source: RTA s. 38, s. 36, s. 24.)
Collecting Deposits: The 50% Rule
Security Deposit
The maximum security deposit is 50% of one month's rent. If rent is $2,400, the maximum deposit is $1,200. One deposit per tenancy — not per roommate. The amount is fixed at the start of the tenancy. It does not increase when rent increases. (RTA s. 19.)
Pet Damage Deposit
If you allow a pet, you can collect a separate pet damage deposit — also capped at 50% of one month's rent. Combined maximum (security + pet) is one full month's rent. If a tenant gets a pet mid-tenancy with your permission, you can require the pet deposit at that time. The pet deposit is for pet damage only — do not treat it as rent insurance. (RTA s. 19.)
Caution
Certified guide dogs and service dogs are not "pets" for deposit purposes. Do not charge a pet deposit for them. Doing so can result in a human rights complaint. (Source: Guide Dog and Service Dog Act; BC Human Rights Code.)
Key and Fob Deposits
You cannot charge a deposit for the key or fob that is the tenant's only way into the unit. For additional keys or fobs requested by the tenant, a refundable deposit is allowed — limited to the actual replacement cost. Return it immediately when the extra key/fob is returned.
RTB-27 Condition Inspections: No Report, No Claim
Your right to claim damage against the deposit depends on condition inspections. If you skip the move-in inspection, you lose the ability to prove what damage existed before the tenancy. If you skip the move-out inspection, you lose the ability to prove what damage occurred during the tenancy. The RTB expects a side-by-side comparison — move-in condition vs. move-out condition — documented on the RTB-27 form. (RTA s. 23, s. 36.)
☑ 15-Day Deposit Return Protocol
When the tenancy ends, follow these steps in order. The 15-day clock starts on the later of: tenancy end date OR date you receive the tenant's forwarding address in writing. (RTA s. 38.)
Deposit Interest: Know the Annual Rate
Interest must be calculated on the deposit before returning it. The rate is set each January 1 based on the formula: prime lending rate minus 4.5% (Residential Tenancy Regulation s. 4). When the prime rate is at or below 4.5%, the rate is 0% — no interest is owed. Always use the official RTB Deposit Interest Calculator for exact amounts.
💰 Deposit Interest — Annual Rate History & Quick Reference
Rate = Prime lending rate (Jan 1) minus 4.5%. Always verify the current year's rate with the RTB calculator.
| Year | Interest Rate | Note |
|---|---|---|
| 2026 | 0% | Prime rate on Jan 1, 2026 at or below 4.5% — no interest owed |
| 2025 | 0.95% | Prime was 5.45% on Jan 1, 2025 |
| 2024 | 2.70% | Prime was 7.20% on Jan 1, 2024 |
| 2023 | 1.95% | Prime was 6.45% on Jan 1, 2023 |
| 2009–2022 | 0% | Prime was at or below 4.5% — no interest owed |
Important — 2026 Rate Update
For tenancies ending in 2026, the deposit interest rate is 0% — no interest is owed for this calendar year. However, if the deposit was held during part of 2025 or 2024 when rates were above 0%, interest accrued for those periods must still be calculated and returned. Always use the RTB's official calculator to cover multi-year tenancies accurately.
Useful Life Depreciation — You Cannot Claim "New for Old"
When you claim damage against a deposit, the RTB does not award full replacement cost for used items. They apply "useful life" depreciation — your claim is limited to the remaining value of the item at the time of damage. This is based on RTB Policy Guideline 40 (updated February 2025). Always check the current guideline table for the most up-to-date figures.
| Item | Useful Life (PG 40, Feb 2025) | What This Means |
|---|---|---|
| Interior paint | 6 years | If paint is 4.5 years old, your claim is limited to roughly 25% of repainting cost. |
| Carpet | 12 years | 10-year-old carpet? Claim is ~17% of replacement — not the full amount. |
| Laminate flooring | 15 years | Newer flooring = higher claim. Older = lower. |
| Vinyl flooring | 25 years | Vinyl lasts longer — depreciation is slower over its life. |
| Stove / Range / Fridge | 15 years | Keep purchase receipts to prove age. |
| Dishwasher / Washer / Dryer | 10–12 years | Replacement receipt needed for age verification. |
| Window blinds / coverings | 15 years | Cosmetic wear is normal; damage from misuse is claimable. |
| Countertops (laminate/wood) | 15 years | Scratches from use = wear. Burns and gouges = damage. |
| Countertops (granite/stone) | 20–50 years | Much longer life — significant remaining value even in older units. |
| Toilet | 20 years | Cracked or broken from misuse is claimable. |
| Plumbing fixtures / faucets | 15–20 years | Keep installation records to verify age. |
Key Point — Depreciation Example
Carpet is 10 years old (useful life 12 years per PG 40, Feb 2025). Replacement cost is $2,400. Remaining life is 2 out of 12 years = ~17%. A reasonable maximum claim is about $400 — not $2,400. Always calculate depreciation before presenting a claim. (Source: RTB Policy Guideline 40, updated February 2025.)
Damage Deduction Statement Builder
Select each damage item found at move-out, fill in the tenancy details, and click Generate Statement to produce a copy-ready deduction statement. Add the actual dollar amounts from contractor quotes before sending to the tenant.
| Damage Item | Typical Cost | Unit |
|---|---|---|
| Cleaning (professional) | $40–$60 | per hour |
| Light bulb replacement | $5 | each |
| Wall patch — small hole | $75 | per patch |
| Wall repair — deliberate/excess damage | $200+ | per wall |
| Room repaint — beyond wear | $350+ | per room |
| Carpet steam cleaning | $150 | per unit |
| Carpet repair/patch | $300+ | per room |
| Blind replacement | $45+ | each |
| Door repair | $150+ | each |
| Appliance repair — service call | $175+ | per call |
| Lock re-key | $125+ | per lock |
| Toilet seat replacement | $35+ | each |
| Smoke / cannabis odour remediation | $500+ | per unit |
| Junk/garbage removal | $200+ | per load |
Damage Deduction Statement Builder
Fill in property details, select each damage item found at move-out, then click Generate Statement.
Property Details
Select Damage Items Found at Move-Out
Damage Deduction Statement — Copy-Paste Template
SELECT ALL → COPYCaution
Normal wear and tear is not claimable. Faded paint, minor scuffs on floors, and small nail holes from picture hanging are expected after years of normal use. The RTB only awards deductions for damage beyond reasonable wear. Always apply useful-life depreciation to your claim using the current Policy Guideline 40 table. (Source: RTA s. 24(1); RTB Policy Guideline 40, updated Feb 2025.)
Key Takeaways
What to Remember from This Module
- Security deposit and pet deposit are each capped at 50% of one month's rent. Combined maximum is one full month's rent. These amounts do not increase with rent increases. (RTA s. 19.)
- You have 15 days from the later of tenancy end or receiving the forwarding address in writing to return the deposit, get written consent for deductions, or file for dispute resolution. Miss this and you risk paying double. (RTA s. 38.)
- No RTB-27 move-in and move-out inspections = no ability to prove damage = no valid deposit claim. Always complete both inspections with photos. (RTA s. 23, s. 36.)
- You cannot claim "new for old." Use useful-life depreciation (RTB Policy Guideline 40, updated Feb 2025) to calculate the remaining value of damaged items before presenting your claim.
- The deposit interest rate changes every January 1. For 2026 it is 0%. For 2025 it was 0.95%. Always use the RTB's official Deposit Interest Calculator — never estimate from memory.
Action Checklist
Apply What You Learned
Common Questions
Frequently Asked Questions
No. The security deposit is capped at 50% of one month's rent. If rent is $2,400, the maximum deposit is $1,200. (RTA s. 19.)
The tenant can apply for dispute resolution and you may be ordered to pay double the deposit — even if there was real damage. The 15-day deadline is strict. (RTA s. 38.)
No. Certified guide dogs and service dogs are not "pets" for deposit purposes. Charging a pet deposit for a service dog can result in a human rights complaint under the BC Human Rights Code and the Guide Dog and Service Dog Act.
Usually no. Use useful-life depreciation per RTB Policy Guideline 40 (updated Feb 2025). Carpet useful life is now listed as 12 years. If the carpet is 10 years old and replacement costs $2,400, your maximum claim is roughly $400 (2 out of 12 years remaining = ~17%).
Your ability to claim damage against the deposit can be extinguished. Without a move-in baseline on the RTB-27, you cannot prove what condition the unit was in before the tenancy. Always do the RTB-27 at move-in. (RTA s. 23, s. 36.)
You can apply to the RTB for dispute resolution to seek additional compensation beyond the deposit amount. Bring all evidence — RTB-27 reports, photos, invoices, and useful-life calculations under PG 40.
Normal aging from reasonable use: faded paint, minor scuffs on floors, small nail holes from pictures, light carpet wear in high-traffic areas. The RTB only awards deductions for damage beyond normal wear. (RTA s. 24.)
The 2026 rate is 0% — no interest is owed on deposits this year. The rate is calculated as prime lending rate minus 4.5%. When prime is at or below 4.5% on January 1, no interest accrues for that year. Always verify with the official RTB Deposit Interest Calculator as rates can change year to year. (Residential Tenancy Regulation s. 4.)
The 2025 rate was 0.95%. The prime lending rate on January 1, 2025 was 5.45%, making the deposit interest rate 5.45% minus 4.5% = 0.95%. If a tenancy ended in 2026 but the deposit was held during part of 2025, interest for the 2025 portion must still be calculated and returned.
The deposit cannot be applied to unpaid rent without the tenant's written consent or an RTB order. A tenant who unilaterally applies their deposit toward last month's rent is in breach of the RTA. (RTA s. 21.) Keep rent and deposit issues separate — address unpaid rent through the proper RTB-30 process.
No. Both the security deposit and the pet damage deposit are fixed at the amounts collected at the start of the tenancy. They do not automatically increase when rent increases. You cannot top up either deposit mid-tenancy. (RTA s. 19.)
If the tenant refuses or is unavailable after you made reasonable attempts to schedule the inspection, you can complete it on your own. Document your attempts to contact the tenant in writing. The RTB will consider whether you made reasonable efforts to conduct a joint inspection. Complete the RTB-27 with photos regardless.
The security deposit belongs to the tenancy, not to an individual roommate. If one roommate leaves but the tenancy continues with the remaining tenant(s), the deposit stays with the active tenancy. The departing roommate's share of the deposit is a matter to be resolved between the tenants — it is not the landlord's obligation to split or return part of the deposit until the tenancy fully ends.