Is there a limit on security deposits in Indiana?

No, Indiana does not limit security deposit amounts. However, market standards are typically one month's rent for unfurnished units and 1.5-2 months for furnished or high-risk tenants. Excessive deposits may deter quality applicants and indicate potential fair housing issues if applied inconsistently.

Do I have to pay interest on security deposits in Indiana?

No, Indiana does not require landlords to pay interest on security deposits or hold them in separate accounts. However, many property managers choose to maintain separate accounts for easier record-keeping and to demonstrate professionalism.

What can I deduct from a security deposit in Indiana?

Allowable deductions include: unpaid rent, damage beyond normal wear and tear, cleaning costs to restore to move-in condition, and costs specified in the lease. You cannot deduct for: normal wear and tear, pre-existing damage, or repairs due to landlord negligence.

What happens if I don't return the deposit within 45 days?

Failure to return the deposit or provide an itemized statement within 45 days can result in: liability for the full deposit amount, attorney fees if the tenant sues, and potential punitive damages. Courts take deposit violations seriously—always meet the deadline.

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Indiana Security Deposit Laws: Complete Guide to Collection, Holding & Returns

Leaseway Team

Property Management Experts

January 4, 20268 min read

Security deposit check and keys for rental property transaction

Article Summary

Master Indiana's security deposit rules to protect yourself legally and maintain positive tenant relationships. Includes move-in/move-out checklist templates.

Published: January 4, 2026

Security deposits are essential protection for landlords, but mishandling them is one of the quickest ways to end up in court...

Sources & References

Indiana Code IC 32-31-3 - Security Deposits
Indiana State Bar - Landlord-Tenant FAQ
Leaseway Move-In/Move-Out Procedures

Frequently Asked Questions

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The Leaseway Team brings together decades of combined experience in Indianapolis property management, real estate investing, and landlord-tenant relations. Our experts are dedicated to helping property owners maximize their investments.

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