How much can a landlord deduct from a security deposit in New Jersey?
Short answer: Within 30 days after the lease terminates, return the deposit plus the tenant's interest, less charges spent under the lease, and itemize the interest and every deduction. Both the money and the itemized notice go by personal delivery, registered mail or certified mail (N.J.S.A. 46:8-21.1). No deductions while the tenant is still in possession.
The deposit is capped at 1½ months' rent (§ 46:8-21.2). It must sit in a New Jersey interest-bearing account, and the tenant gets written notice within 30 days (§ 46:8-19). If a court finds you wrongly kept money, it shall award double the amount plus full costs, and it may award attorney's fees.
Do the math in 2 minutes: the free Kitwright Security Deposit Deduction Calculator prorates replaced items for wear and tear, totals your deductions, estimates the New Jersey 30-day date, and prints an itemized statement. No sign-up, and nothing you type leaves your browser.
Who this guide covers
New Jersey's security deposit law (N.J.S.A. 46:8-19 through 46:8-26) covers money or other security deposited for the rental of real property. Under § 46:8-26, it applies to all rental premises or units used for dwelling purposes except owner-occupied premises with not more than two rental units, and that exception ends once the tenant gives the landlord 30 days' written notice invoking the Act. Any lease clause that waives the Act is void (§ 46:8-24).
How much deposit you can collect
Under N.J.S.A. 46:8-21.2, you may not require more than 1½ times one month's rent as security for a dwelling. If you collect additional security later, the amount collected annually as additional security may not exceed 10 percent of the current deposit.
Where the deposit must be held, and the 30-day notice
The deposit stays the tenant's property, held in trust. It may not be mingled with your own money or become your asset (§ 46:8-19).
- Fewer than 10 rental units (§ 46:8-19(b)): deposit it in a State or federally chartered bank, savings bank or savings and loan association in New Jersey, federally insured, in an account bearing interest at the rate those institutions pay on time or savings deposits. The Commissioner of Banking and Insurance may, by rule, apply the larger-landlord rules to some smaller landlords.
- 10 or more units (§ 46:8-19(a)): invest it in an insured money market fund run by a New Jersey-based investment company, or deposit it in a New Jersey bank or savings association account with a variable rate set at least quarterly, as the statute describes.
- Written notice (§ 46:8-19(c)): tell the tenant in writing the name and address of the bank or fund, the type of account, the current interest rate, and the deposit amount. Do this within 30 days of receiving the deposit, within 30 days of moving it to another account or institution, at each annual interest payment, and within 30 days after a transfer of ownership.
- Interest belongs to the tenant: pay it in cash or credit it toward rent on the lease renewal or anniversary date. Or pay it on January 31 each year if the tenant got written notice of that schedule.
- Seasonal rentals (§ 46:8-19(d)): the bank/fund deposit requirement does not apply to seasonal use of 125 consecutive days or less by someone with a permanent residence elsewhere. You bear the burden of proving the rental is seasonal.
If you skip these steps: when you don't deposit the money as required, don't give the notice, or don't pay the interest, the tenant may give you written notice to apply the deposit plus interest at 7 percent per year to rent. After that you can't demand another deposit from that tenant. For a missed annual interest payment or annual notice, the tenant must first give you written notice and 30 days to fix it (§ 46:8-19).
What you can (and can't) deduct
§ 46:8-21.1 says you return the deposit plus the tenant's interest "less any charges expended in accordance with the terms of a contract, lease, or agreement," and that the interest and deductions must be itemized. It also says no deductions may be made from the deposit of a tenant who remains in possession.
The NJ Department of Community Affairs (Security Deposit Bulletin; Truth in Renting) describes allowable deductions as damage beyond normal wear and tear and other money due under the lease. If the tenant owes more than the deposit, you may sue for the difference. DCA also says landlords may no longer take administrative fees out of deposit money.
| Generally not a deposit claim | May support a deduction |
|---|---|
| Carpet worn thin in a hallway from years of normal foot traffic | Carpet stained or destroyed by a pet the current tenant kept |
| Paint faded from sunlight and light furniture scuffs | Large holes, unauthorized paint left unrestored, or marker damage |
| Routine turnover you would do between any two tenants | Unpaid rent or other charges the lease makes the tenant responsible for |
Illustrative only. N.J.S.A. 46:8-21.1 does not list these examples. Keep invoices, receipts and dated photos. If the tenant sues, expect to justify each dollar.
The 30-day itemized return
- Deadline: within 30 days after the termination of the tenant's lease (§ 46:8-21.1).
- What you return: the deposit plus the tenant's portion of the interest or earnings, less charges spent under the lease.
- Itemize: list the interest or earnings and each deduction, and notify the tenant.
- Delivery: return the money and send the itemized notice by personal delivery, registered mail or certified mail. Keep the receipt or tracking record.
- Broken leases: DCA's Truth in Renting guide says that when a tenant leaves early without legal cause, a court decision (J.C. Mitchell v. First Real Estate, 1996) treats the lease as terminated when the unit is re-rented or the lease expires, whichever comes first. The 30 days run from then.
Make the statement: enter each line in the free calculator, then print the itemized statement. Add the tenant's interest line from your bank records and deliver it with the balance, plus copies of invoices, estimates and photos.
Shorter deadlines: displacement and the Safe Housing Act
- Fire, flood, condemnation or evacuation (§ 46:8-21.1): suppose an official posts the premises against occupancy, or a building inspector certifies the displacement will likely last more than seven days. Then within five business days, have the deposit plus interest (less lease charges and rent due at displacement) available and return it on demand. Give the tenant written notice of where and when within three business days of learning of the displacement. Keep the money available for 30 days in the same municipality, with an itemized statement. If the tenant moves back in, they repay the deposit in thirds: immediately, at 30 days and at 60 days.
- Safe Housing Act termination: when a lease ends under N.J.S.A. 46:8-9.6, the deposit plus interest (less lease charges and rent due) must be available on demand within 15 business days, with written notice within three business days.
Hypothetical worked example
Hypothetical example (made-up numbers for illustration). A tenant pays $2,000 a month with a $3,000 deposit (exactly the 1½-month cap). The deposit sits in a New Jersey interest-bearing account, and the tenant got the 30-day written notice. The one-year lease ends October 31, 2026, the tenant moves out, and no rent is owed. Your bank records show $12.40 of the tenant's interest not yet paid out. You claim two repair items.
| Item | How it's figured | Amount |
|---|---|---|
| Security deposit held | From the lease | $3,000.00 |
| Tenant's interest not yet paid | From the bank statement (hypothetical) | + $12.40 |
| Bedroom carpet ruined by pet urine (4 years old, expected to last 8, $1,000 to replace with similar quality) | Charge only the life it had left: $1,000 × (8 − 4) ÷ 8 | − $500.00 |
| Patching and repainting a wall with many large anchor holes ($225 painter's invoice) | Invoice amount | − $225.00 |
| Paint faded and lightly scuffed in the living room | Normal wear and tear: not claimed | $0.00 |
| Balance due to the tenant ($3,000 + $12.40 − $725) | $2,287.40 | |
Deliver the $2,287.40 and an itemized list of the interest and both deductions, in person or by registered or certified mail, by November 30, 2026 (30 days after the lease terminated on October 31, 2026). New Jersey's statute does not prescribe a carpet-proration formula. Charging only remaining useful life is one way to keep a claim to the real cost of the damage. Keep the invoice, receipts, photos and mailing receipt with your copy.
Run your own numbers: the free calculator uses the same proration approach and works out return-by dates for New Jersey and 50 other jurisdictions (49 states + DC). Add the interest line yourself.
Penalties
- Double the amount (§ 46:8-21.1): in a tenant's action for return of money due under that section, a court that finds for the tenant shall award double the amount, together with full costs and, in the court's discretion, reasonable attorney's fees.
- Rent offset for deposit/notice/interest failures (§ 46:8-19): the tenant may apply the deposit plus 7% per year to rent, and you lose the right to demand another deposit. See above.
- Diversion (§ 46:8-25): knowingly diverting deposit trust money unlawfully, or consenting to it, is a disorderly persons offense, with a fine of not less than $200, up to 30 days' imprisonment, or both.
- Assisted tenants (§ 46:8-21.1): if a State entity made the deposit for a tenant receiving State or federal assistance, it may impose a civil penalty of $500 to $2,000 per offense for willful and intentional withholding.
- Where disputes go (§ 46:8-21.4): the Small Claims section of the Superior Court, Law Division, Special Civil Part hears deposit-return cases where the amount in dispute, including penalties, is $5,000 or less, not counting costs. See the NJ Courts security deposit FAQ for where larger claims go.
Selling or buying a rental with deposits
When you sell or assign, or the property goes through foreclosure, turn over each deposit plus the tenant's interest to the buyer, assignee or foreclosure purchaser. Do it at delivery of the deed or within five days after. Notify each tenant by registered or certified mail of the turnover and the new holder's name and address (§ 46:8-20). The buyer must obtain the deposits, and is responsible for investing them, giving notices, paying interest and returning them, whether or not the seller actually transferred the money (§ 46:8-21).
Local rules
This guide covers New Jersey state law. Municipalities may have their own landlord-tenant ordinances, such as rent control or registration. When both apply, follow the stricter rules that cover your property. The NJ Department of Community Affairs Security Deposit Bulletin and Truth in Renting guide are useful self-help overviews. Rely on the current statute sections above for exact deadlines.
Quick checklist before you return the deposit
- Confirm the lease termination date. If the tenant broke the lease, read DCA's note on when the lease is treated as terminated. The 30-day clock runs from termination.
- Confirm the tenant is no longer in possession. No deductions while they remain.
- Pull the bank or fund statement and calculate the tenant's interest still owed.
- List each deduction separately, with the lease term it relies on. Avoid lump-sum lines like "cleaning."
- Cut normal wear and tear. Claim only amounts you can prove with invoices, receipts and photos.
- Deliver the balance and the itemized interest-and-deductions list by personal delivery, registered or certified mail within 30 days, and keep proof.
For your year-end records, the free Year-End Landlord Ops Checklist (Excel) includes a deposits section.
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Need the full deposit worksheet?
The Deposit Kit is Excel worksheets for move-out deductions. Code FIRSTKIT is 40% off through Nov 30 (apply the code on Gumroad if it is not already filled in).
Guides for other states
- Arizona: how much can a landlord deduct from a security deposit? (14 business-day itemized list after possession and demand, 1.5-month cap, nonrefundable fees in writing, move-out inspection notice, twice-the-amount damages)
- California: how much can a landlord deduct from a security deposit? (21-day itemized statement, receipts and photos, 2026 changes)
- Florida: how much can a landlord deduct from a security deposit? (15-day full return or 30-day claim notice, tenant 15-day objection, itemized claim)
- Georgia: how much can a landlord deduct from a security deposit? (30-day return after possession, move-in/out damage lists, two-month cap, escrow or bond, treble damages for wrongful withholding)
- Illinois: how much can a landlord deduct from a security deposit? (30-day itemized statement, 45-day full return if none, double-deposit penalty)
- New York: how much can a landlord deduct from a security deposit? (14-day refund, one-month cap, itemized list, forfeiture if late)
- North Carolina: how much can a landlord deduct from a security deposit? (30-day itemized accounting (60-day final if needed), statutory deposit caps, trust account or bond, willful noncompliance voids retention)
- Ohio: how much can a landlord deduct from a security deposit? (30-day itemized written notice + refund, written forwarding address, wrongful withholding doubled + attorney fees)
- Pennsylvania: how much can a landlord deduct from a security deposit? (30-day written damages list + refund, forfeit if late, double excess withheld)
- Texas: how much can a landlord deduct from a security deposit? (30-day refund, forwarding address, itemized list, bad-faith penalties)
- Washington: how much can a landlord deduct from a security deposit? (move-in checklist required, 30-day full and specific statement, up to 2x deposit)
For every other state's return deadline and statute, see the 51-jurisdiction table in the free deposit calculator.
Also for landlords: Do I need to send a 1099 to my contractor? (IRS rules for 2026 payments)
FAQ
How much can a landlord deduct from a security deposit in New Jersey?
N.J.S.A. 46:8-21.1 lets you return the deposit plus the tenant's interest 'less any charges expended in accordance with the terms of a contract, lease, or agreement.' The NJ Department of Community Affairs (DCA) describes allowable deductions as damage beyond normal wear and tear and other money due under the lease. The interest and every deduction must be itemized, and no deductions may be made while the tenant remains in possession.
How long does a New Jersey landlord have to return the deposit?
Within 30 days after the termination of the tenant's lease, by personal delivery, registered mail or certified mail (N.J.S.A. 46:8-21.1). Shorter windows apply when a tenant is displaced by fire, flood, condemnation or evacuation (five business days, on demand) or ends a lease under the Safe Housing Act (15 business days, on demand).
Is there a cap on New Jersey security deposits?
Yes. N.J.S.A. 46:8-21.2: no more than 1 1/2 times one month's rent. Any additional security collected annually may not exceed 10 percent of the current deposit.
Do New Jersey landlords have to pay interest on security deposits?
Yes. N.J.S.A. 46:8-19 requires the deposit to be held in trust in a New Jersey interest-bearing account or qualifying fund. The interest belongs to the tenant and is paid in cash or credited toward rent on the lease renewal or anniversary, or on January 31 if the tenant received written notice of that schedule.
What written notice is required after a New Jersey landlord receives the deposit?
N.J.S.A. 46:8-19(c): give the tenant written notice of the name and address of the bank or fund, the type of account, the current interest rate and the amount, within 30 days of receiving the deposit, within 30 days of moving it, at each annual interest payment, and within 30 days after a transfer of ownership. If you fail to deposit the money properly, give notice, or pay interest, the tenant may give written notice to apply the deposit plus 7 percent annual interest to rent, after which you may not demand a further deposit. For annual interest or annual notice failures, the tenant must first allow 30 days to cure.
What happens if a New Jersey landlord wrongfully withholds the deposit?
In a tenant's action for return of money due under N.J.S.A. 46:8-21.1, a court that finds for the tenant shall award double the amount, together with full costs and, in the court's discretion, reasonable attorney's fees. Knowingly diverting deposit trust money is a disorderly persons offense under N.J.S.A. 46:8-25.
Does the New Jersey security deposit law apply to owner-occupied two-family homes?
N.J.S.A. 46:8-26 says the Act applies to all dwelling units except owner-occupied premises with not more than two rental units, unless the tenant gives the landlord 30 days' written notice invoking the Act. Once that notice is given, the Act applies.
Where do New Jersey deposit disputes go?
N.J.S.A. 46:8-21.4 gives the Small Claims section of the Superior Court, Law Division, Special Civil Part jurisdiction over deposit-return cases where the amount in dispute, including any penalties, does not exceed $5,000, exclusive of costs. Larger claims go to other parts of the Superior Court; check NJ Courts for current limits.
Is this legal advice?
No. This page is general information based on N.J.S.A. 46:8-19 through 46:8-26 (checked against the New Jersey Legislature's statutes database, updated through P.L.2026, c.50) and NJ DCA and NJ Courts self-help materials, as of November 2026. Read the statute or talk to a New Jersey attorney before you withhold money.
Sources
- N.J.S.A. 46:8-19, Deposit held in trust; where to deposit or invest; written notice; annual interest; 7% rent-offset remedy; seasonal exception: FindLaw
- N.J.S.A. 46:8-20 and 46:8-21, Transfer of deposits on sale, assignment or foreclosure; liability on transfer: § 46:8-20, § 46:8-21 (FindLaw)
- N.J.S.A. 46:8-21.1, Return of deposit within 30 days; itemization; displacement and Safe Housing Act deadlines; double damages, costs and attorney's fees: FindLaw
- N.J.S.A. 46:8-21.2, Limit of 1½ months' rent; 10% annual limit on additional security: FindLaw
- N.J.S.A. 46:8-21.4, Small Claims jurisdiction for deposit cases up to $5,000: FindLaw
- N.J.S.A. 46:8-24 (waiver void), 46:8-25 (unlawful diversion), 46:8-26 (application; owner-occupied two-unit exception): § 46:8-24, § 46:8-25, § 46:8-26 (FindLaw)
- Text checked against the New Jersey Legislature statutes database (updated through P.L.2026, c.50)
- NJ Department of Community Affairs, Security Deposit Bulletin (revised July 2025) and Truth in Renting
- NJ Courts, What Happens to the Residential Security Deposit?