- Standard Limit / Maximum Amount: No limit (read more)
- What Can Be Deducted: Unpaid rent, utilities, services & cost of repairs for damage caused by the tenant (read more)
- Time Limit for Return: 30 days after recovery of the premises (read more)
- Penalty if Not Returned on Time: Three times the original deposit plus attorney’s fees (read more)
- Tenant’s Deadline to Claim Funds: 90 days (read more)
Purpose. Security deposits are like safety nets. They ensure compensation for any loss that the landlord might incur because of the tenant’s acts. It covers for incidents like damage to the property, termination of the lease without notice or non-payment of rent.
Legal Basics. There is no limit on the amount Georgia Landlords can charge as security deposit from which unpaid rent, utilities and services, and cost of repairs for damage caused by the tenant may be deducted. It must be returned within 30 days from the end of the lease. Otherwise, the landlord may be made to pay a penalty of up to three times the deposit.
Maximum Security Deposit Charge in Georgia
In Georgia, landlords are not bound by a statutory limit on the amount of security deposit that a tenant can be charged.
Exceptions to Certain Security Deposit Rules in Georgia
The rules to be discussed below, except for those pertaining to the manner of returning the security, do not apply if all of the conditions below are met:
- The landlord is a natural person (i.e. not a company or business entity);
- The total number of rental units the landlord owns collectively with his immediate family is less than 10 rental units; and
- The landlord does not use a management service in relation to renting out units, including rent collection services.
To clarify, even if the landlord falls within the exception, the rules on the deadline for returning the security deposit, providing a written statement, mailing both and the tenant’s forfeiture of the security deposit will apply.
Security Deposit Holdings in Georgia
Unless the landlord falls withing the exception discussed, the landlord must do one of the two things below:
Place the security deposit in an escrow account that is only used for holding security deposits and notify the tenant in writing of the details of where the latter’s security deposit is being kept; or
Post a surety bond in the amount of $50,000 or the total amount that the landlord is holding in security deposits (from all tenants), whichever is lower. The bond must be issued by a surety company authorized to do business as such in Georgia and posted with the clerk of the superior court in the county where the rental property is located. It shall be conditioned upon the landlord returning the security deposit on time and in compliance with the rules.
If the landlord fails to comply with the above rule on holding the security deposit, the landlord will lose the right to withhold the security deposit or retain any part thereof.
Allowable Deductions on Security Deposits in Georgia
The landlord can only use the security deposit when the lease or tenancy has ended or has been terminated. Also, the landlord can only use the security deposit to cover:
- Unpaid rent
- Unpaid utilities and repair or cleaning services contracted by the tenant
- Unpaid pet fees
- Cost of repairs for damage caused by the tenant
- Damages or loss suffered by the landlord caused by the tenant’s abandonment of the unit
To clarify, the landlord is not always allowed to use the security deposit to cover repairs for damage to the unit. Two things must be met before the landlord may do so:
- The damage must not be due to normal wear and tear; and
- The damage was not included in the list of existing damage presented to the tenant prior to the latter’s move-in date.
Can the deposit be used by the tenant as last month’s rent? Not usually, but it can be done if there is a written agreement between the parties to do so.
“Normal Wear and Tear” vs. “Damage” in Georgia
- “Normal wear and tear” refer to minor issues that occur naturally as a result of the tenant using the property as it was intended to be used to be used but only when that deterioration occurs without negligence, carelessness, accident, misuse, or abuse by the tenant or the people the tenant brings there. These minor issues can include gently worn carpets, loose door handles, fading wall paint and flooring, stained bath fixtures, lightly scratched glass, dirty grout and even mold.
- “Damage” refers to the destruction that is a result of abuse or negligence by a tenant during the tenancy period. Damage to the rental property negatively impacts its usefulness, value, or normal function. It can include pet damage (heavily stained and ripped carpets), broken tiles, holes in the wall, broken windows and missing fixtures.
Check out our article on “wear and tear” vs. “damage” to get a better idea of the difference and visit our state laws page to learn more about other landlord-tenant responsibilities.
Returning Security Deposit in Georgia
Time Frame: The landlord has 30 days from the day the landlord gets the unit back from the tenant to return the security deposit. If the landlord intends to make any deduction on the security deposit, the landlord must do the following:
The landlord shall inspect the premises within 3 business days from the end of the lease or of the tenant’s vacation of the premises, whichever is earlier and make a complete itemized list of damage in the unit and estimated costs of the same. If the tenant vacates the unit without notifying the landlord, the landlord must do the inspection within a reasonable time from finding out that the tenant has left. This will serve as the basis for the deductions. The tenant may request to inspect the premises within 5 business days from vacating the premises or the end of the tenancy to verify the items on the list. If the tenant agrees to the damage as itemized in the list and signs the same together with the landlord, then the list will serve as conclusive evidence of the damage described therein. If the tenant objects to some or all of the items stated in the list, the tenant must specify the same therein, otherwise, the tenant will not be able to dispute them in a court proceeding to recover the security deposit. However, if the tenant never saw the list or was not present for the inspection is not barred from disputing the items on the list later on.
Within 30 days of the termination of the lease or of the tenant’s vacation of the premises, the landlord must provide the tenant with the written statement of deductions that were actually made (including those in the itemized list of damage above and other deductions such as unpaid rent or utility bills) and return what is left of the security deposit.
Manner of returning the deposit: The landlord can return the deposit and deliver the notice for deductions any reasonable way the landlord can for as long as the tenant gets it. But if he there isn’t a more practical way, or if the landlord prefers it, the landlord is considered to have fulfilled his obligation if he mails the deposit with the written notice of deductions via first-class mail to the tenant’s last known address.
Failure to Provide the Itemized List of Damage: Failure to provide the tenant with an initial list of damage will cause the landlord to forfeit all rights to retain any part of the security deposit.
Failure to Provide the Tenant with the Written Statement of deductions: If the landlord fails or refuses to provide the tenant with the written statement of deductions, the landlord likewise loses all rights to withhold any portions of the security deposit.
Failure to Return the Security Deposit on Time: If the landlord fails or refuses to return the security deposit, or what’s left of it, then the landlord may be maid to pay 3 times the amount withheld plus reasonable attorney’s fees. However, if the landlord is able to show that the refusal was due to an honest mistake that was not due to the landlord’s fault, then the landlord will only be made to pay the amount mistakenly withheld.
Unclaimed funds: If the letter containing the written statement and the balance of the security deposit is returned to the landlord undelivered and if the landlord is unable to find the tenant despite reasonable efforts to look for the latter, the unclaimed security deposit will be forfeited by the tenant and will become the landlord’s property 90 days after the initial mailing.
Security Deposits and Tax Filing in Georgia
How the security deposit will be treated tax-wise depends on whether or not the landlord gets to keep it (or part of it).
Taxable income: Security deposits are not automatically considered income when the landlord receives them. The IRS advises to not include security deposits as income if the landlord may still be required to return the same. They only become taxable income when the landlord no longer has any obligation to refund them. For example, if the security deposit was given in 2019 but was only forfeited in 2020, then the landlord should only include it as income in 2020.
Reporting security deposit as income: Whether or not security deposit should be reported as income and when to do so will depend on what it is being applied to or used as. Below are 3 simple rules the IRS has suggested to follow:
- If the deposit is forfeited due to a breach of the lease or applied to unpaid rent, then the amount kept should be declared as income in the year it was forfeited or applied.
- If the security deposit is used to cover expenses that are chargeable to it, then the landlord should only include the part of the deposit used as income if the landlord includes the cost of repairs as expenses. If the landlord doesn’t include them as expenses as a matter of practice, then there’s no need to include the part of the deposit kept to cover them as income.
- If there is an agreement between the parties to use the deposit or part of it as the final month’s rent, then the landlord should include it as income when the same is received.
Additional Rules & Regulations in Georgia
List of Existing Damage: The landlord must furnish the tenant a list of all the existing damage to the unit before taking the latter’s security deposit. The tenant has the option of inspecting the unit before moving in to confirm the items on the list and if there is damage to the unit that was not included. If the tenant finds that the list is accurate, the two parties must sign the list, which will then be conclusive proof as to the preexisting damage to the unit except for those that are not readily apparent or are hidden and could not have have been identified with reasonable effort during the inspection. Failure to provide the tenant with an initial list of damage will cause the landlord to forfeit all rights to retain any part of the security deposit.
Receipt Requirements: The landlord is not required to provide a receipt for the security deposit in Georgia.
Security Deposit Interest in Georgia: Georgia laws require security deposits to be deposited into a separate account but the landlord is not required to pay interest on them.
Frequently Asked Questions
How much can a landlord charge for a security deposit in Georgia?
There is no maximum security deposit a landlord can charge in Georgia. Georgia law on security deposits does not currently put a limit on the amount of security deposit. Usually, landlords charge one to two months’ rent as security deposit.
Can you use the security deposit as last month’s rent in Georgia?
In Georgia, a tenant is not usually allowed to use the security deposit as last month’s rent. However, if there is an agreement between the landlord and the tenant to use the security deposit for last month’s rent, then the tenant can do so.
What can a landlord deduct from a security deposit in Georgia?
A landlord in Georgia can legally deduct the following from the security deposit: unpaid rent, utilities, repair or cleaning services hired by the tenant for the unit, pet fees, cost damage caused by the tenant and loss suffered by the landlord caused by the tenant’s abandonment of the unit.
Can a landlord charge a cleaning fee in Georgia?
In Georgia, a landlord isn’t allowed to charge a cleaning fee unless the landlord is expressly allowed to do so under the lease. However, the landlord may deduct the cost of cleaning services that the tenant hired for the unit but did not pay for.
What is considered normal wear and tear in Georgia?
Normal wear and tear in Georgia is defined as wear and tear that occurred as a result of the use of the premises for the purposes for which it was intended, provided that there was no negligence, carelessness, accident, or abuse of the premises by the tenant or their invitees or guests.
How long does a landlord have to return the security deposit in Georgia?
In Georgia, a landlord has 30 days from the move out date to return the security deposit. Also, the landlord must do a final inspection of the unit within 3 business days of the tenant’s move out date.
If the landlord intends to make deductions from the security deposit, the landlord must provide the tenant with an itemized list of damage to the unit found during the inspection within 30 days from the tenant’s move out date.
What happens if a landlord does not return the security deposit in Georgia?
If a landlord in Georgia does not return the security deposit within 30 days from the move out date, the landlord may be made to pay up 3 times the amount withheld plus reasonable attorney’s fees.
Are security deposits taxable in Georgia?
Security deposits in Georgia aren’t taxable until they become the landlord’s property. This happens when the security deposit is applied to rent, forfeited, or applied to charges allowed under the lease.
However, when they are used to cover expenses incurred by the landlord due to the tenant’s fault, like the cost of repairs or unpaid utilities, they are not always taxable. The IRS advises to only report them as income if the landlord also reports the costs they covered as expenses. Otherwise, there is no need to report them as income, in which case they will not be taxed.
For additional questions about security deposits in Georgia, please refer to the official state legislation, Georgia Code § 44-7-30 – § 44-7-37, for more information.