Let's sort out what you're actually owed.
In Ontario your deposit is last month's rent — not a damage deposit. Damage and security deposits are illegal here. Here's how the money, and the interest you're owed, really works.
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In 30 seconds, here's what's true
- In Ontario a landlord can only collect two deposits: a last month's rent deposit and a refundable key deposit. Security deposits, damage deposits, and pet deposits are all illegal.
- Your last month's rent deposit can only be used for your last month's rent — never for cleaning or damage. So usually there's nothing to 'return': it pays your final month.
- Your landlord must pay you interest on the deposit every year, at the rent increase guideline rate. For 2026 that rate is 2.1%.
- A key deposit is legal only if it's refundable and no more than what it actually costs to replace the key or fob. You get it back when you return the keys.
- A landlord cannot keep your deposit for damage. To claim for damage, they have to apply to the Landlord and Tenant Board — they can't just take it.
The steps your landlord must follow
Confirm what your deposit actually was
Check your lease and receipts. In Ontario it should only be last month's rent, plus maybe a refundable key deposit. Anything labelled 'damage' or 'security' deposit was not allowed.
Apply your deposit to your last month
Your last month's rent deposit pays your final month of rent. You don't pay that month separately, and the landlord can't ask you to.
Add up the interest you're owed
The landlord owes yearly interest at the guideline rate (2.1% for 2026). If they never paid it, you can deduct it from your last month's rent or claim it back.
Get your key deposit back
Return all keys and fobs and ask for your key deposit back in writing. It must be refunded — it was only ever security for replacement cost.
File a T1 if the landlord kept money they shouldn't have
If a landlord charged an illegal deposit or won't return what you're owed, file a T1 with the Board — usually within one year. Start a free PLAIN session to map it out.
What to do next
- Find your lease and any deposit receipts.
- Confirm the deposit was last month's rent (and maybe a key deposit).
- Flag any 'damage' or 'security' deposit — those are illegal here.
- Calculate the yearly interest you're owed at 2.1% for 2026.
- Return all keys and fobs and ask for the key deposit back.
- Put any refund request to the landlord in writing.
- Note the one-year deadline to file a T1 for money collected illegally.
- Start a free PLAIN session to check what you're owed.
Common myths
| Myth | Reality |
|---|---|
| My landlord keeps my deposit for cleaning or damage. | No. The deposit is last month's rent only. For damage, the landlord must apply to the Board — they can't just keep your money. |
| There's a damage or security deposit in Ontario. | There isn't. Only last month's rent and a refundable key deposit are allowed. Any other deposit is illegal. |
| I won't get the interest on my deposit. | You're entitled to it every year, at the guideline rate. For 2026 that's 2.1%. If it wasn't paid, you can claim it. |
| The landlord can use my last month's rent for repairs. | No. That deposit can only go toward your last month of rent — nothing else. |
| A key deposit can be any amount the landlord wants. | It has to be refundable and no more than the real cost to replace the key or fob. |
| If I leave the place spotless, I'll get my deposit refunded. | There's nothing extra to refund — the deposit already paid your final month. You may still be owed unpaid interest, though. |
| The landlord can charge me extra at move-out for normal wear. | Normal wear and tear isn't chargeable, and a landlord can't unilaterally bill you — they'd have to apply to the Board. |
| It's too late to do anything once I've moved out. | You generally have up to one year to file a T1 for an illegal charge or deposit after it happened. |
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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