Small Portfolio Desk

1–20 unit landlords

Security deposits & move-out accounting on DIY landlord software — held vs returned, deductions

Search intent: record a deposit as held (not rent income), document move-out deductions, return the remainder on time, and know free vs paid ledger depth on RentRedi / TurboTenant / Avail. Updated: Sep 2026 from vendor help centers and product pages — re-check payout eligibility, plan gates, and your state’s deposit statute before you treat any in-app refund as “done.”

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For a 1–20 unit DIY landlord, security deposits are where software, bank routing, and state law collide. The money is usually a liability (tenant’s funds you hold), not rent income — until you lawfully retain a portion for damage, cleaning, or unpaid rent. TurboTenant publishes the clearest end-to-end path: Moving Out Checklist + in-app Return Security Deposit (photos/receipts) + paid Accounting templates for held / refunded / retained. RentRedi is strong on separate deposit bank routing and charge type “Security Deposit,” with returns via Send Money (beta) or outside the app. Avail lets you collect deposits and route them to a different bank than rent — but as of Sep 2026 we found no published ACH deposit-refund / deduction closeout product; landlords typically refund externally and keep records in the ledger or spreadsheet.

What this page is (and is not)

Held vs returned vs deducted (read this first)

Feature snapshot (verify on vendor pages)

Capability RentRedi TurboTenant Avail
Collect / record deposit Create charge → Charge Type Security Deposit (help: “Create Charge for Security Deposit,” May 2026). Tenant pays through portal like other charges Deposit as a lease payment / charge; can collect online. Return flow works even if original deposit was cash/check/Zelle outside TT Add security deposit (and optional pet deposit / move-in fees) when setting up charges on a lease; tenant pays via portal
Separate bank / “don’t commingle” Yes (published): Property Connections → Primary vs Security Deposit payment account. Deposit account receives charges labeled “Tenant Security Deposits Held” (help Apr 2026) Operating bank used for payouts; paid Accounting treats deposits as liability (Security Deposits Held report) — separate physical escrow bank is still your banking setup, not a TT “trust module” Yes (published): Assign Banks → per building, different accounts for Rent/Fees vs Security Deposits to support non-commingling
Move-out checklist / inspection photos Education + refund-letter templates on rentredi.com blog; condition docs often live in tenant/property files. No “Moving Out Checklist” product named like TT’s Moving Out Checklist on the lease (prep unit, final inspection, return deposit on time). Free digital/printable inspection checklists; attach photos + receipts on the return form Education article on move-out inspection basics; no published in-app deposit-deduction + ACH refund workflow found. Document in files / ledger notes
Partial return + deductions Calculate outside or in notes; Send Money sends the refund amount you choose. Itemized letter still your statutory job. User reports: processor refund of original ProPay charge may be blocked after ~180 days — then check/ACH outside and file the receipt Return Security Deposit form: enter amount returning; write deduction details; upload photos + receipts. Full or partial in one flow No published guided deduction + refund product. Practical path: itemize in letter/spreadsheet; refund via check/bank bill-pay/Zelle; log manual accounting entries
How tenant gets money back Send Money (beta): payout from RentRedi Payment Account; recipient emails claim bank details; help says processed in 1–3 business days. Eligibility: contact Support to enable. Marketing blog has mentioned a flat ~$1 Send Money fee — confirm live. Else: check / external ACH and store proof In-app return via Stripe: TT charges your linked bank, tenant must add a receiving bank (even if they already pay rent). Typical transfer 7–10 business days after initiate + tenant bank setup. No check mailed by TT. Offline return tracking not supported No verified ACH deposit-refund feature in public help as of Sep 2026 (community requests remain). Return outside Avail; keep receipt
Accounting: held / returned / retained Blog FAQ (Feb 2026): record as liability, not income; separate often interest-bearing account per law; retained portion may become taxable income. Native Accounting Suite is P&L / Schedule E–oriented — deposit liability depth stronger if you use REI Hub / careful bank split Paid Accounting: transaction types Security Deposit (liability), Security Deposit Refunded, Security Deposit Retained (revenue when kept); Security Deposits Held report + Balance Sheet. Help: if partial keep + partial return, book both Refunded and Retained Income/expense tracker + CSV; security deposits appear as payment transactions you filter. No published “Security Deposits Held / Retained” report suite like TT Accounting
Export / switch handoff Export payment/charge history; keep a deposit register (tenant, amount held, bank, move-out date, amounts returned/retained). See switch checklist Help FAQ: security-deposit refunds do not appear in CSV export at this time — export earlier payment history + keep TT receipts / external register. Accounting: Security Deposits Held report if on paid books Email/download accounting CSV; filter deposit lines. Soft spot: no first-class deposit closeout export — build a one-row-per-lease deposit register before you migrate
Deposit alternative / bond / insurance No native Obligo/Rhino-style deposit-alternative product found in Sep 2026 help No native deposit-alternative product found in Sep 2026 help No native deposit-alternative product found in Sep 2026 help
Free vs paid gap Collect + separate deposit bank + charges: core payments path (verify your plan). Send Money: beta / Support enable — not a clear “Pro-only” sticker in help. Deep liability reporting: treat as Accounting / REI Hub question Collect + Moving Out Checklist + in-app return: available on the landlord payments path (confirm Free vs Premium labels in your account). Security Deposits Held / Refunded / Retained bookkeeping: TurboTenant Accounting add-on (paid; published ~$15–$85/mo by unit band historically — confirm) Collect + separate deposit bank + CSV tracker: marketed on Unlimited / no extra accounting fee. Plus (~$9/unit/mo) is not sold as a deposit-refund unlock. Refund workflow remains largely external

Sources (Sep 2026): RentRedi help — Create a Separate Payment Account for Security Deposits (Apr 2026); Create Charge for Security Deposit (May 2026); How to Refund a Security Deposit… Send Money (updated 2026, beta); blog FAQ “How Should Security Deposits Be Accounted For?” (Feb 2026); blog guides on deposit return letters. TurboTenant help — Return a Security Deposit (updated ~this week of research); My Lease is Ending Soon; Transaction Types in TurboTenant Accounting (Security Deposit / Refunded / Retained); move-out checklist marketing pages. Avail support — Manage Deposits to Different Bank Accounts; Collect Rent Online (add fees & deposits); Income and Expense Tracking; education “Move-Out Inspection Basics.” Avail community forum threads requesting ACH security-deposit refunds (multi-year). Deposit-alternative vendors (Obligo, Rhino) exist in the market but were not found as native features inside these three DIY tools. Re-verify payout eligibility, fees, and CSV columns in a live account.

Worked example: SFH move-out, $2,000 deposit (not legal advice)

Single-family rental. Tenant paid a $2,000 security deposit at move-in (held in your deposit bank). Move-out walkthrough + photos show cleaning beyond move-in condition ($350 invoice) and unpaid late fees allowed by the lease ($200). You plan to return $1,450 with an itemized statement inside your state’s deadline. This is an operational illustration — allowable deductions and deadlines are state- and lease-specific.

Step RentRedi TurboTenant Avail
1. Confirm held balance Lease/charge history: Security Deposit charge paid; funds should have routed to the Security Deposit payment account if configured Lease Payments: deposit line. If on Accounting: Security Deposits Held report shows liability Payments + Accounting filter for the deposit payment; confirm it landed in the Security Deposits bank assignment
2. Document deductions Store cleaning invoice + late-fee ledger + move-out photos in the tenant file; draft statutory itemized letter (blog templates help, not legal forms) Moving Out Checklist → start Return Security Deposit; enter $1,450 return; write $350 cleaning + $200 late fees; attach photos/receipts Complete inspection notes/photos in your files; draft itemized letter outside Avail (education covers inspection purpose, not a refund wizard)
3. Pay the $1,450 return If Send Money enabled: send $1,450 to tenant email/phone; tenant claims bank; ~1–3 business days. If not eligible / old ProPay path blocked: check or external ACH + upload proof Send Deposit from return form; your bank charged; tenant adds receiving bank; typical 7–10 business days. Cancel path exists if tenant never connects bank Check / bank bill-pay / Zelle (as your counsel allows); upload or note the confirmation in Avail records
4. Book the $550 retained Do not leave $550 sitting as “held forever.” Record retained amount per your bookkeeping method (liability ↓; income and/or offset to cleaning expense per CPA). Pair $350 cleaning expense if paid to a vendor Accounting: Security Deposit Refunded $1,450 + Security Deposit Retained $550 (and book the $350 cleaning expense). Free/manual TT: spreadsheet register Manual ledger lines or spreadsheet: reduce held balance; note retained categories; export CSV for CPA

At one SFH turnover, TurboTenant wins if you want photos + partial ACH return + liability bookkeeping in one vendor stack (Accounting add-on for the books piece). RentRedi wins if your state cares about separate deposit banking and you already live in RR payments — budget time for Send Money eligibility or paper/ACH outside. Avail wins on cheap collection + separate deposit routing if you are disciplined about external refunds and a deposit register.

Free vs paid: who should upgrade for deposit depth

Fit notes for 1–20 units

Related

Educational product research only — not legal, tax, or accounting advice. Security deposit deadlines, allowable deductions, interest/escrow rules, notice formats, and penalties are state- and fact-specific. Verify every payout feature, fee, and plan gate in a live account; have counsel review your itemized statements and banking setup.