Breaking a Lease in Indiana

Indiana Security Deposit Law — Limits & Deadlines (2026)

By Oleg Kachko · Updated June 10, 2026

✓ Law Verified June 2026

This guide explains indiana security deposit law in plain English — how much your landlord can charge, when they must return it, what they can and cannot deduct, and what to do if they do not give it back. All figures are from Indiana law, verified as of June 2026.

Indiana Security Deposit Rules at a Glance

Maximum deposit No state limit. Indiana law does not cap the amount a landlord may charge as a security deposit. Some local ordinances may impose limits, so tenants should check their city or county rules.
Return deadline 45
Itemized deductions required YES. Under IC 32-31-3-14, the landlord must mail the tenant an itemized list of all damages claimed, with the estimated cost of repair for each item, within 45 days after the tenancy ends. The itemized list must be accompanied by a check or money order for the remaining balance. The 45-day clock does not start until the tenant provides the landlord with a written forwarding address.
Interest on deposit required NO. Indiana law does not require landlords to pay interest on security deposits, regardless of how long the deposit is held.
Penalty for late/bad-faith return If the landlord fails to return the deposit or provide the required itemized list within 45 days, the landlord forfeits the right to keep any portion of the deposit. Under IC 32-31-3-12, the tenant may recover the entire deposit plus reasonable attorney’s fees and court costs. If the landlord acted in bad faith in withholding the deposit, many tenants may be able to recover additional damages.

Move-in/move-out walkthrough: NO. Indiana law does not require landlords to conduct a move-in or move-out walkthrough inspection with the tenant. However, tenants are strongly encouraged to document the unit’s condition with dated photos or video at both move-in and move-out to protect against wrongful deductions.

Separate deposit account: NO. Indiana law does not require the landlord to hold the security deposit in a separate or escrow account. The landlord may commingle the deposit with personal funds.

What Your Landlord Can and Cannot Deduct in Indiana

Under IC 32-31-3-12, a landlord may deduct for: (1) accrued unpaid rent, (2) damages the landlord has suffered or will reasonably suffer because of the tenant’s noncompliance with the law or the rental agreement (beyond normal wear and tear), and (3) unpaid utility or sewer charges that the tenant was obligated to pay under the rental agreement.

Normal wear and tear vs damage: Indiana defines normal wear and tear as the gradual deterioration of the property that occurs through ordinary, day-to-day use when the tenant cleans regularly and cares for the premises reasonably. Examples include minor scuff marks on walls, small nail holes from standard picture hanging, slight carpet wear from foot traffic, and faded paint.

Damage beyond normal wear includes large holes in walls, heavy carpet stains, unauthorized paint colors, broken fixtures, and pet damage.

How to Get Your Deposit Back in Indiana

First, send the landlord a written demand letter (keep a copy) requesting the return of your deposit and citing IC 32-31-3-12 and IC 32-31-3-14. If the landlord does not respond or refuses, you may file a claim in Indiana small claims court (for disputes up to 6000). The statute of limitations is 2 years from the end of the lease.

You may be able to recover the full deposit amount plus reasonable attorney’s fees. Low-income tenants may qualify for free legal help through Indiana Legal Services (indianalegalservices.org). You may also file a consumer complaint with the Indiana Attorney General’s Consumer Protection Division.

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Other Indiana deposit rules: (1) The 45-day return deadline does not begin until the tenant provides the landlord a forwarding address in writing — if the tenant never provides one, the landlord’s obligation is suspended. (2) Indiana has no statewide limit on the amount a landlord can charge as a security deposit, making it one of the few states with no cap.

(3) Landlords may charge a separate pet deposit, but it is limited to 25 percent of one month’s rent under Indiana law.

(4) If the rental property is sold or transferred, the original landlord must transfer the deposit to the new owner and notify the tenant in writing. (5) Failure by the landlord to provide the required itemized damage notice is treated as the landlord’s agreement that no damages are owed, and the full deposit must be returned immediately.

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Official Indiana Sources & Resources

Understanding Indiana Security Deposit Law

Your Indiana security deposit is your money until the landlord proves a lawful deduction. Indiana security deposit law sets clear limits on how much can be charged, what can be deducted, and when the balance must be returned. If your landlord misses the Indiana security deposit return deadline or takes deductions that are not allowed, you may be entitled to penalties.

Document the condition of your unit at move-in and move-out — photos are the best protection for your Indiana security deposit.

This Indiana security deposit guide was last verified against official sources in June 2026. Laws change — verify with your state or a local legal-aid office.

More Indiana Tenant Rights Guides

Disclaimer: This guide is informational only and is not legal advice. Landlord-tenant laws change and vary by city and county within a state. Verify current rules with your state, your local court, or a free legal-aid office before acting. If you are facing eviction, contact a local tenant attorney or legal-aid organization right away.

Renting? Protect your belongings — compare renters insurance at Home Insure Guide. Divorce involving a lease? See Divorce Help Guide. Unsafe housing / toxic mold injury? Some cases qualify — see Mass Tort Info.