Collect the security deposit the lease names, inside the cap where the unit sits, and hold it as the tenant's money until move-out. "How much is a security deposit" is searched about 2,400 times a month in the United States. The dollar amount is local. The bookkeeping is not: a deposit is not rent, and it does not belong on the owner's monthly draw.

A close-up of a metal house key on a keychain.
Image: Shixart1985 · CC BY 2.0

How much security deposit can you collect?

A security deposit is money you hold to cover unpaid rent, damage beyond ordinary wear, and cleaning back to the condition at move-in, to the extent the lease and the local statute allow. It is not a fee you earn on day one.

California changed the cap on July 1, 2024. Civil Code section 1950.5, as amended by AB 12, generally stops a landlord from demanding security of more than one month's rent, in addition to the first month's rent paid at the start. A small landlord who is a natural person, or an LLC made up only of natural persons, and who owns no more than two residential properties totaling no more than four units, may demand up to two months' rent, unless the tenant is a service member. The California Attorney General's security-deposit guide states the same split. Deposits already collected before July 1, 2024, were not automatically cut by the new cap. Cities can be stricter. Read the statute and the city before you print a number.

Other states do not use California's cap. Texas does not set the same one-month ceiling in Property Code chapter 92. Do not copy a California limit onto a Houston lease, and do not copy a Texas habit onto a Los Angeles lease. Ask local counsel for the cap, then write that cap into the lease template for that state.

How do you calculate the deposit on a real lease?

Unit 2 rents for $1,850. You also charge $75 for parking. Decide what "one month's rent" means before you collect.

If the statute and your counsel treat rent as the base housing charge, one month is $1,850. If parking is part of the rent the statute counts, one month is $1,925. Write the definition in the lease so the next move-in uses the same figure. On a California lease that is capped at one month of base rent, you collect $1,850 of deposit, plus April rent of $1,850 and April parking of $75 if those are due at move-in. The deposit line and the rent line are different receipts.

Do not call the deposit "nonrefundable." If it is nonrefundable, it is a fee, and a fee can break a deposit cap or a local rule. Pet rent charged every month is a recurring charge. A pet deposit held until move-out is security, and it may count toward the cap. Confirm that with the statute before you add a second deposit on top of the maximum.

Where does the money sit?

Hold the deposit in the trust account, labeled to the tenant and the unit, until you apply it or return it. Paying it to the owner at move-in feels tidy and is the mistake. The owner then has the tenant's money. When the tenant moves out and is owed $1,850 back, you are collecting it from the owner under pressure.

On the tenant ledger, post the deposit as a deposit held, not as rent income. A ledger that shows $1,850 of "rent" on the day you collected a deposit will overstate April income by a full month. The owner statement should not show that $1,850 as rent earned.

What do you tell the tenant at move-in?

Give a receipt that says "security deposit" and the amount. Keep the move-in condition notes and photos with the lease. California, beginning in 2025, requires photographs around the start of the tenancy and around move-out before and after repairs you intend to deduct. Section 1950.5 is the text. If you manage outside California, photos are still the file you want when a deduction is challenged.

Tivio records the deposit on the lease beside the recurring charges, and the tenant ledger keeps that deposit separate from rent. Collect the legal amount, hold it, and do not spend it as if the month had started twice.

What does the move-in packet look like?

On April 1, 2026, Jordan Lee takes Unit 2. Base rent is $1,850. Parking is $75. You and your counsel have decided the California cap counts base rent, so the deposit is $1,850, not $1,925. They also pay April rent and April parking before they get keys.

Item Amount Where it posts
Security deposit $1,850 Deposit held. Not rent income.
April rent $1,850 Rent charge, then payment
April parking $75 Parking charge, then payment
Cash in $3,775 Trust deposit the same day

The receipt has three lines, not one line that says "move-in money $3,775." A single line gets booked as rent by the next person who opens the file. Three lines survive a question from the owner in July: how much of April was rent, and how much is still the tenant's deposit.

Photograph the unit the day you hand over the keys. Note the stain on the living-room carpet and the chip in the bathroom tile. Those notes are what you compare at move-out. California's photograph rule is in Civil Code section 1950.5. Outside California, the photos are still the difference between a deduction you can explain and a deduction you have to refund.

What do you refuse to do with the deposit?

Do not use it to cover a vendor bill in May because the operating cash is short. That is the tenant's money. If the owner needs a new dishwasher in May, the owner funds it, or you use a reserve the owner already approved. The deposit stays labeled to Jordan Lee until they move out and you finish the itemized list.

Do not net the deposit against your management fee. The fee is calculated on rent, under the management agreement. Taking $148 of an 8 percent fee out of a deposit treats the deposit as income. It is not.

Do not collect a second "cleaning deposit" on top of the cap and hope the name saves you. If the statute counts every upfront refundable charge, the second deposit counts. If a charge is truly nonrefundable, call it a fee and confirm it is legal. The safer office rule is one deposit, at the cap, receipted as a deposit.

Tivio keeps that deposit on the lease, separate from the recurring rent. The tenant ledger can show the deposit held and the April rent paid without adding them into one balance the owner might withdraw. Collect the legal amount, receipt the pieces, and leave the deposit alone until move-out.