In Ontario, a damage deposit isn't legal.
The only deposit your landlord can collect is last month's rent. Damage deposits, pet deposits, and security deposits are all against the law — and you're owed interest on what you paid. Here's what to know.
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In 30 seconds, here's what's true
- The only deposit a landlord can legally collect in Ontario is last month's rent (LMR) — capped at one month's rent. 'First and last' is fine, but nothing more.
- Damage deposits, security deposits, pet deposits, and cleaning deposits are all illegal in Ontario. A key deposit is only allowed if it's refundable and matches the actual cost of the key.
- Your landlord must pay you interest on your last month's rent deposit every year, at the rent increase guideline rate. For 2026 that rate is 2.1%.
- The last month's rent deposit can only be used for your last month's rent — never for damage, cleaning, or unpaid bills.
- Your landlord can't require post-dated cheques or automatic payments as a condition of renting. You can agree to them, but they can't be forced on you.
The steps your landlord must follow
Work out what you actually paid
List every up-front payment: first month, last month, and anything labelled 'damage,' 'security,' 'pet,' 'cleaning,' or 'key.' Anything beyond first-and-last (except a fair, refundable key deposit) was likely collected illegally.
Check your interest
Your landlord owes you interest on your last month's rent deposit each year, at the guideline rate (2.1% for 2026). If you've rented a while and never got it, it may have added up — you can claim it back.
Ask your landlord in writing
Send a short message asking for any illegal deposit back and any unpaid interest. Cite the rule: last month's rent is the only legal deposit, and interest is owed yearly. Keep a copy.
Deduct owed interest if needed
If your landlord won't pay the interest you're owed on your last month's rent, the law lets you deduct it from a later rent payment. Make sure you've calculated it correctly first.
File a T1 to get it back
To recover an illegal deposit or unpaid interest, file a T1 application with the Landlord and Tenant Board within one year. It can order your money back. A legal clinic can help you prepare it.
What to do next
- List every up-front payment your landlord asked for.
- Flag anything beyond first-and-last (damage, pet, security, cleaning).
- Check whether your key deposit is refundable and matches the key's cost.
- Calculate the interest owed on your last month's rent (2.1% for 2026).
- Ask your landlord in writing for any illegal deposit and interest back.
- Keep copies of your lease, receipts, and all messages.
- File a T1 with the LTB within one year if they won't pay.
- Start a free PLAIN session to check your deposit and plan next steps.
Common myths
| Myth | Reality |
|---|---|
| My landlord kept my last month's deposit for damages. | That's not allowed. The last month's rent deposit can only be applied to rent — never to damage or cleaning. |
| Damage deposits are normal and legal. | Not in Ontario. The only legal deposit is last month's rent. Damage, security, and pet deposits are illegal. |
| I won't get any interest on my deposit. | Your landlord owes you interest every year on your last month's rent, at the guideline rate (2.1% for 2026). |
| My landlord can demand post-dated cheques. | No. They can't require post-dated cheques or automatic payments — only offer them as an option you can decline. |
| A pet deposit is allowed if I have a pet. | No. Pet deposits are illegal in Ontario, just like damage and security deposits. |
| The landlord can charge whatever 'key deposit' they want. | A key deposit is only legal if it's refundable and no more than the actual replacement cost of the key or fob. |
| Application or 'admin' fees are just part of renting. | Charging extra fees beyond rent and the legal deposit isn't allowed in Ontario. |
| It's too late to get an illegal deposit back. | You generally have one year from when it was collected to file a T1 and recover it. |
Last reviewed June 2026
Written and reviewed by the founder of PLAIN, checked against primary government and legal sources. How we research these guides
Sources
PLAIN gives legal information, not legal advice. It is not a substitute for a lawyer or paralegal — and we'll point you to free ones. Laws change; we review these pages regularly, but always confirm current rules with the Landlord and Tenant Board.
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