Quick answer. Alberta's Residential Tenancies Act caps the security deposit at one month's rent. The landlord must place the deposit in an interest-bearing trust account at a financial institution in Alberta within two banking days of receipt. Interest accrues at the rate prescribed by regulation (a modest positive rate updated periodically) and is payable to the tenant either at move-out or annually if the tenancy continues. At move-out, the landlord has 10 business days to either return the full deposit plus accrued interest or provide an itemised statement showing the deductions made and return any balance. Deductions must be for specific documented reasons: unpaid rent, cleaning costs beyond ordinary use, damage beyond ordinary wear and tear, and any costs the tenant is contractually liable for. Comingling the deposit with the landlord's personal or operating funds is a breach of the RTA and can invalidate deductions the landlord would otherwise be entitled to make. For property managers, the trust account arrangement is a RECA regulatory requirement in addition to the RTA requirement.
The Deposit Cap and What Counts
One month's rent is the total maximum for all deposits combined. This includes the security deposit, any pet deposit, any key deposit, and any other deposit called by any name. If the monthly rent is $2,000, the total deposit is capped at $2,000, whether that is $2,000 for security only or $1,700 security plus $300 pet. Landlords who collect more than one month's rent in aggregate deposits are in breach of the RTA, and the excess is recoverable by the tenant. Prepaid rent (last month's rent) is separately addressed in the RTA and does not count against the deposit cap, but requires its own written terms.
The Trust Account Requirement
The deposit must be held in an interest-bearing trust account at a financial institution in Alberta. Interest-bearing means the account pays interest (a standard savings or trust account, not a chequing account). Trust account means the funds are held for the tenant, not owned by the landlord, and cannot be used for the landlord's operating expenses. For individual landlords managing their own property, this typically means opening a dedicated trust savings account and depositing each tenant's deposit into that account with the tenant's name identified. For RECA-licensed property managers, this is a separate regulated trust account with specific reconciliation and audit requirements under RECA rules.
The Interest Rate
The applicable interest rate is set by regulation under the RTA and is updated periodically. As of 2026, the rate is a modest positive number in the low single digits. The interest accrues from the date the deposit is received to the date it is returned. Interest is paid to the tenant either at move-out (added to the deposit refund) or annually if the tenancy continues beyond a year. Failure to pay interest is a common landlord oversight that RTDRS regularly addresses.
Permitted Deductions from the Deposit
- Unpaid rent for the period during the tenancy.
- Cleaning costs for the unit if the tenant left it in materially worse condition than at move-in (must be documented against the move-in condition report).
- Damage costs beyond ordinary wear and tear (with invoices or repair estimates).
- Any specific costs the tenant is contractually liable for under the lease (utility arrears if the tenant was responsible, unpaid pet fees if properly documented, etc.).
What Cannot Be Deducted
- Ordinary wear and tear (small nail holes, faded paint, minor carpet compression from foot traffic).
- Costs the landlord would incur regardless of the tenant (turnover cleaning between tenancies, painting done for the next tenant's preference, appliance replacement due to age).
- Rent for periods after the tenant has vacated (unless the lease was a fixed-term ending on a specific date and the tenant left early).
- 'Administrative' or 'processing' fees not authorised by the lease.
- Repair markup added by the landlord (deductions must be actual cost, not marked-up cost).
The Move-Out Return Timeline
Within 10 business days of the tenant's vacating date, the landlord must either return the full deposit plus accrued interest, or provide an itemised statement of deductions and return any balance. The 10 business days start the day after the tenant vacates (not the day of move-out itself). Business days exclude weekends and statutory holidays. A landlord who fails to return the deposit or provide the statement within the 10 days is in breach and often loses the right to make any deductions in the subsequent RTDRS proceeding. This is the second-most common deposit-related landlord error after comingling.
What the Itemised Statement Must Include
- The full deposit amount received, plus accrued interest to date.
- Each deduction listed separately with a specific description ('carpet cleaning: $220,' not 'cleaning: $220').
- Invoices, receipts, or written estimates supporting each deduction.
- Reference to the move-in condition report and photographs where damage or condition is at issue.
- The net amount returned to the tenant (or the net amount the tenant owes if deductions exceed the deposit).
What Happens If the Landlord Fails to Comply
The tenant can file an RTDRS application for return of the deposit. The RTDRS regularly orders full return of the deposit (with interest) where the landlord: comingled the deposit with operating funds; failed to return the deposit or provide the statement within 10 business days; deducted for ordinary wear and tear; deducted amounts not supported by receipts; or failed to conduct a joint move-in inspection with a signed condition report. Damages awards can also apply where the landlord acted in bad faith.
The Move-In and Move-Out Inspection Link
Every deposit deduction rests on the condition report. A jointly-signed move-in inspection with 60 to 120 dated photographs establishes the baseline. A jointly-signed move-out inspection with matched photographs demonstrates any change. Without both reports and photographs, the landlord is at a severe evidentiary disadvantage at any RTDRS deposit dispute. See our related guide at /blog/alberta-move-in-move-out-inspection-legal-photograph-playbook for the inspection workflow.
Frequently Asked Questions
Can the landlord use the security deposit to pay for regular turnover cleaning?
No, unless the unit is left in materially worse condition than at move-in. Standard turnover cleaning between tenants is a landlord operating cost, not a tenant charge. A tenant who leaves the unit in reasonable condition after normal use has not caused damages the deposit can cover.
What if the tenant disputes a deduction?
The tenant can file an RTDRS application. The landlord bears the burden of proving that each deduction is (a) supported by documented cost, (b) for damage beyond ordinary wear and tear or for another RTA-permitted reason, and (c) referenced to the move-in and move-out condition reports and photographs. Deductions that fail this test are typically refunded to the tenant with interest.
Can I keep the entire deposit if the tenant broke the lease early?
Generally no. A tenant who terminates a fixed-term lease early is liable for rent until the unit is re-leased (or lease end, whichever is earlier), and reasonable re-leasing costs. The deposit can be applied against these amounts, but the landlord has a duty to mitigate by actively re-leasing. Keeping the deposit as a punitive lump-sum without accounting is not permitted.
Do I have to give the tenant a receipt for the deposit?
Best practice: yes. A written receipt showing the deposit amount, the date received, the tenant's name, and the property address protects both parties. Some property management software issues these automatically.
Does UrbanLease handle security deposit trust accounting for owner clients?
Yes. Under PREP Realty's RECA-regulated trust account arrangement, tenant security deposits are held separately from brokerage operating funds, interest accrues to the tenant, and the return process at move-out follows the 10-business-day statutory timeline. Property management services provided by PREP Realty.
Bottom Line
Alberta's security deposit framework is prescriptive and enforced. Cap at one month's rent, trust account within two banking days, interest accrues at the regulated rate, deductions only for specific documented reasons, itemised statement and refund within 10 business days of move-out. Individual landlords must set up the trust account correctly at first tenancy; RECA-licensed managers do this by default through the brokerage's regulated trust arrangement. Getting this wrong is one of the most common paths to an adverse RTDRS ruling. UrbanLease handles trust accounting for Calgary owner clients under PREP Realty.