In short: a security deposit secures the landlord's claims but is not the landlord's money — it is a refundable deposit. The Polish tenants' rights act sets the ceiling (twelve months' rent, six months for an occasional lease), the refund deadline (one month from the day the flat is vacated) and the rule that only documented claims may be deducted. Below: limits, deadlines, what you may deduct and the moment a retained deposit becomes taxable income.
How much you may charge
The cap depends on the form of the agreement and is calculated from the rent in force on the day it was signed — a later rent increase does not automatically raise the permitted deposit.
| Form of tenancy | Maximum deposit | Legal basis |
|---|---|---|
| Standard tenancy (fixed or open-ended) | 12 months' rent | art. 6(1) of the tenants' rights act |
| Occasional lease | 6 months' rent | art. 19a(4) of the same act |
| Common market practice | usually 1–2 months' rent | — |
The statutory limits are therefore far above what the market expects. A three-month deposit is sometimes accepted for flats with expensive furnishings, but for a standard property it lengthens the search for a tenant — and every week of vacancy costs more than an extra month of deposit protects.
What the agreement must say
A single line saying “the tenant pays a deposit of X” is not enough to avoid a dispute at move-out. The agreement should state the amount, the deadline and form of payment (a transfer beats cash because it leaves a trail), the account the deposit goes to, the list of claims it may cover, and the deadline and method of settlement after the tenancy ends. It is worth adding that the settlement is based on the handover report — that moves the discussion from “I think” to a document signed by both parties.
When the deposit must be returned
The act refers to one month from the day the flat is vacated (art. 6(4)), not a fixed 30 days from the end of the agreement — what counts is the actual handover. The refund is made after deducting the landlord's claims, so the deadline also covers the time needed to settle utilities, which often arrive late. If you expect the water invoice only two weeks later, put that in the agreement and settle the deposit in two steps: return the undisputed part immediately, the rest once the bill arrives.
The act also provides for indexation (art. 6(3)): the deposit is returned in an amount corresponding to the same percentage of rent as when it was taken, calculated from the rate applicable on the day of return, but never less than the amount paid in. For tenancies lasting several years, where rent rose in the meantime, that is a real difference in the tenant's favour.
What you may and may not deduct
- rent arrears and unpaid utilities — where they follow from an actual settlement, not an estimate,
- the cost of repairing damage beyond normal wear and tear,
- the cost of removing and disposing of items left in the flat,
- cleaning, where the flat was returned in a state departing from the handover report.
You may not deduct the cost of ordinary use: scuffs on walls, natural ageing of floors, worn seals or a burnt-out bulb. The line between wear and damage is the most common axis of dispute — I break it down in the article on how to avoid disputes when returning a deposit. The second typical trap is deducting flat amounts (“PLN 500 for repainting”) without an invoice — such a deduction will not hold up in court.
How to document deductions
Every deduction needs three elements: proof of the initial condition, proof of the damage and proof of the cost. The first comes from a handover report with dated photographs, the second from a move-out report prepared the same way, the third from an invoice or receipt for the repair. A missing link turns the deduction into a matter of opinion.
The tenant is entitled to a written settlement with itemised positions, not just a transfer. In SmartRentier, deposit settlement generates that document automatically: it lists the deductions with attached evidence and calculates the amount left to return, and the refund history stays with the property.
Deposits and tax
The deposit itself is not income — as long as it is refundable, it is a deposit you do not report in your rental settlement. That changes the moment you retain part of it to cover rent arrears: that amount becomes rental income and enters the tax base for the month in which it was retained. A deduction covering repair costs is compensation for damage rather than payment for the tenancy service — but under the lump-sum regime it is worth documenting that split, because it determines the size of the base.
Four mistakes that cost the most
- Taking the deposit in cash without a receipt — in a dispute there is nothing to prove either the amount or the date.
- Treating the deposit as the last month's rent — offsetting it against the final month removes the security exactly when it is needed.
- No move-out report — without a document from the day the keys were handed back, any later damage claim is one word against another.
- Silence after move-out — missing the refund deadline without a settlement is the shortest route to a payment demand and statutory interest.
The deposit is the last piece of a puzzle that starts much earlier — with pricing the flat, screening the tenant and signing the agreement. If you are just starting out, walk through the whole letting process step by step and set the deposit rules in the agreement rather than on move-out day.