If you need to return a deposit or any other liability payment to your tenant, open the Transactions/Expenses page from the Financials left-side menu.
Click on the Money Out button and select the Return deposit option from the drop-down list:
Select the tenant from the drop-down. You will see the list of available liabilities. Check the boxes of those you are about to return, enter the date, and the amount if you are returning only a part of it.
"Mark as paid" option will only record the deposit as returned, while "Pay now" will initiate a deposit return transaction.
Note! You can return online only those payments that were made online.
Deposits can only be returned online within 720 days of the original payment date. Payments older than 720 days must be returned outside the system.
Alternatively, you can access the same page from the Renters page - simply open the tenant's list, view the profile for the needed one and choose "Return" from the Actions menu next to the Deposit section:
Deducting charges from a tenant’s security deposit
Before returning a deposit, you may need to first deduct charges for move-out expenses by creating an income invoice and applying the tenant's security deposit to cover those charges. This ensures accurate accounting and reflects the deductions properly.
To apply a tenant’s security deposit toward move-out charges, follow these steps:
Create an income invoice for the charges: How do I create an invoice?
Apply the deposit to it
Create the matching expense or open the existing one: How do I add an expense invoice?
Mark the expense as paid and add a note indicating the payment source (e.g., "Paid from tenant’s security deposit"): How do I mark a transaction as paid?
Repeat these steps for each charge you need to deduct. This process reduces the deposit held balance, shows the tenant charge as paid by the deposit, and keeps your property accounting balanced.
How long does a deposit return take?
Online deposit returns are sent by ACH. Allow at least 3 business days, and up to about 6 business days, for the return to show on the tenant's bank statement. For more detail, see ACH refunds and disputes.
Does the tenant need to do anything?
Usually no. The return goes back to the same payment method used for the original deposit, so the tenant doesn't need to add a new bank account or accept the return. The original payment method just needs to still be valid. If it was removed or closed, the online return will fail and the tenant will be notified. They will then have the option to receive the deposit to their saved card or add a new card. A processing fee will apply to this transaction. Alternatively, you can return the deposit outside the system and manually record it as returned in your account.
Will the tenant be notified?
TenantCloud doesn't send a dedicated "security deposit returned" notification. Tenants can turn on Online Payments notifications (initiated, failed, cleared) in their own settings, so they may receive a general payment status alert, but landlords can't control this. We recommend letting your tenant know directly that their security deposit is being returned and when to expect it.