Indiana Security Deposit Deductions: The Four Allowed Uses and the Itemized List
Indiana lists the only four things a landlord may use a security deposit for, bars charges for ordinary wear and tear and requires an itemized list with the cost of each item. Here is how each part works.
What can an Indiana landlord keep a deposit for?
A security deposit may be used only for four purposes (IC 32-31-3-13): (1) to reimburse the landlord for actual damages to the rental unit or any ancillary facility that are not the result of ordinary wear and tear; (2) to pay all rent in arrearage and rent due for premature termination by the tenant; (3) to pay the last payment period if a written agreement says the deposit will serve as the last rent; and (4) to reimburse the landlord for utility or sewer charges it paid that are the tenant’s obligation and unpaid. The deposit deadline calculator shows when the list is due.
Can the landlord charge for ordinary wear and tear?
No. The first allowed use is limited to actual damages not the result of ordinary wear and tear. Faded paint, worn carpet in a high-traffic area and small nail holes are the kind of deterioration that comes from normal use. Holes in walls, burns, stains and broken fixtures are damage. Photographs from move-in and move-out decide most disputes.
What does the itemized list need to show?
The estimated cost of repair for each damaged item and the amounts and lease terms on which the landlord intends to assess the tenant, mailed with a check or money order for the difference between the damages claimed and the deposit (32-31-3-14). A list with only a lump sum does not meet the statute.
Can the deposit be used as last month’s rent?
Only if a written agreement between the landlord and the tenant says so (32-31-3-13(3)). Unless otherwise agreed, a tenant is not entitled to apply the deposit to rent (32-31-3-12(a)). A tenant who skips the last month expecting the deposit to cover it is in default.
What counts as a security deposit?
A deposit paid to be held for all or part of the term to secure the tenant’s obligations, including a required prepayment of rent other than the first full rental period, a sum required as rent above the average rent for the term and any other money returnable on condition of returning the unit in the required condition (32-31-3-9). A fee that is returnable on that condition is a deposit.
What if the tenant disagrees?
Tell the landlord in writing which items you dispute and why, with photographs. If the landlord does not comply with the 45-day rules, the tenant may sue in small claims court, which has jurisdiction over deposit cases (32-31-3-11). See the Indiana small claims rules for deposits.
A checklist for landlords
Photograph the unit at move-in and move-out; keep estimates and invoices; list each damaged item with its estimated cost and the lease term you rely on; mail the list with a check or money order for the difference within 45 days; and keep proof of mailing.
A checklist for tenants
Compare each charge with your photographs and the lease; ask for the cost of each item; tell the landlord in writing which items you dispute and why; and keep copies.
What a usable list looks like
A usable list names each damaged item (for example, a hole in a bedroom wall), the estimated cost of repair and the lease term the landlord relies on, and adds up to the amount kept. It comes with a check or money order for the rest of the deposit. A list that says only “damages $600” invites a small claims judge to treat the landlord as having given no notice at all, and the statute then treats it as agreeing that no damages are due.
Where to get help
Legal aid, the county clerk and a licensed Indiana attorney can explain the forms and the small claims process. Bring the lease, the list and your photographs.
Frequently asked questions
What can an Indiana landlord deduct from a deposit?
Actual damage beyond ordinary wear and tear, rent owed, a last-month agreement and unpaid utility or sewer charges.
Can a landlord charge for normal wear and tear?
No.
Does the list need the cost of each item?
Yes. It must show the estimated cost of repair for each damaged item.
Can the deposit be the last month’s rent?
Only if a written agreement says so.
Where do deposit cases go?
To a circuit, superior, municipal or small claims court.
Official sources
A local landlord-tenant attorney can review your situation — many offer a free consultation.
This is general information, not legal advice. It is based on the cited Indiana statutes, rules and court opinions, and every case turns on its own facts. Confirm how the law applies to your situation with a licensed Indiana attorney.