What you can collect
- Last month's rent deposit: you can only require it on or before the tenancy agreement is entered into; it can be no more than one month's rent (or one rent period, if shorter); and it must be used for the rent for the last rent period of the tenancy (RTA s. 106).
- Key deposit: a refundable deposit for keys, remote entry devices or cards is allowed, but it cannot be more than the expected direct replacement cost (O. Reg. 516/06, s. 17).
What you can't collect
- Damage, pet or other security deposits: not allowed. The only security deposit a landlord may collect is the rent deposit (RTA s. 105), and a rent deposit cannot be used as a damage deposit.
- Deposits under any other name: money held as security for the tenant's obligations is a security deposit whatever it is called, so the same rule applies (RTA s. 105(2)).
Interest and records
- Each year you must pay the tenant interest on the rent deposit at the rent increase guideline in effect when the payment is due: 2.1% in 2026 and 1.9% in 2027 (RTA s. 106(6)). If you don't pay it, the tenant can deduct it from a later rent payment.
- When the rent goes up, you may require the tenant to top up the deposit to the new rent, and you may keep some or all of the interest for that top-up (RTA s. 106(3) and (7)).
- Keep receipts, the move-in inspection checklist and interest records so the refund is easy to work out.
Work out the yearly interest with the deposit interest calculator. The Ontario standard lease has sections for the rent deposit and the key deposit: see our standard lease guide.
Sources
- Residential Tenancies Act, 2006 (Ontario legislation)
- O. Reg. 516/06 (General), section 17: key deposits
- ontario.ca: Guide to Ontario's standard lease
Last checked: 2026-11-01. The Residential Tenancies Act amendments in force on September 21, 2026 did not change these deposit rules. Laws and tax rules change, so rely on the official text. This page is not legal or tax advice.