Depreciation

Full Definition

Depreciation, in the context of security deposits, is the concept that property loses value over time through ordinary use, and therefore a landlord cannot charge a tenant the full replacement cost of a damaged item that was already partially worn. The standard approach is to determine the item's expected useful life, calculate its remaining value at the time of damage, and limit the deduction to that prorated amount. For example, if carpet has an expected lifespan of 10 years and is 7 years old when a tenant damages it, the landlord can only recover 3/10 of the replacement cost (30%) -- not the full price of new carpet. Most state statutes and courts endorse this approach, and some states (such as California) explicitly require landlords to account for the age and condition of items when calculating deductions. Ignoring depreciation and charging full replacement cost for an old or partially worn item is considered an improper deduction and a basis for challenging the landlord's itemized statement.