Last Month's Rent Deposit in Ontario: Rules, Interest, and Getting It Back
In Ontario, the only deposit your landlord can legally collect is a last month's rent (LMR) deposit — never a damage or cleaning deposit. Here is exactly what it can be used for, the interest you are owed every year, and how to recover money you are owed when you leave.
What Deposit Can a Landlord Actually Charge?
Ontario's Residential Tenancies Act (RTA) is unusually protective on this point. The only deposit a landlord may collect is a rent deposit, commonly called last month's rent (LMR). It cannot be more than one month's rent (or one rental period's rent, if you pay weekly), and it must be collected at or before the start of the tenancy.
That means the following are not allowed in Ontario:
- Damage deposits or "security" deposits
- Cleaning deposits
- Pet deposits
- Key or fob deposits above the landlord's actual replacement cost (a refundable key deposit at true cost is permitted)
- Any deposit larger than one month's rent
If a landlord asks for "first, last, and a damage deposit," the damage deposit portion is illegal. You are entitled to get it back, and you can apply to the Landlord and Tenant Board (LTB) to recover it.
What the Deposit Can — and Can't — Be Used For
The rent deposit can only ever be applied to the rent for the last rental period of your tenancy. It is not a fund your landlord can dip into during the tenancy. Specifically, your landlord cannot use it to cover:
- Damage to the unit (real or alleged)
- Cleaning after you move out
- Unpaid utility bills
- Rent arrears that come up partway through the tenancy
If your landlord believes you owe money for damage, the correct process is to apply to the LTB and prove it — not to quietly keep your deposit. For where the line between chargeable damage and ordinary use falls, see our guide on normal wear and tear vs. damage.
The Interest You Are Owed Every Year
This is the part most tenants never claim. Your landlord must pay you interest on your rent deposit every 12 months, at the same rate as that year's rent increase guideline. For 2026, that rate is 2.1%. So on a $2,000 deposit, roughly $42 in interest is owed for the year.
The landlord can either pay the interest to you directly, or — because the deposit is allowed to equal one month's rent — apply it toward topping up your deposit after a lawful rent increase. What they cannot do is simply keep it. If years have gone by with no interest paid, you can claim it, including for past years.
How to Get Your Money Back When You Leave
Because the deposit is applied to your final month, most tenants don't receive a cheque at move-out — the deposit simply covers that last month's rent. You are owed money back in these situations:
- Unpaid interest: any deposit interest the landlord never paid.
- An over-collected deposit: if the deposit exceeds one month's current rent.
- An illegal deposit: any damage, cleaning, or pet deposit you were charged.
To recover it, ask your landlord in writing first. If they refuse, file a T1 application(Tenant Application for a Rebate) with the LTB. There are time limits — generally one year from when the money was collected or should have been returned — so don't wait. The LTB information line is 1-888-332-3234.
For a cross-country comparison of deposit rules, see our security deposit rules by province guide.