My accountant claimed security deposit as rental income in 2016 which I don't think he should have from what I can tell as it was meant to be returned when the lease ends. In 2018, when the tenant moved out, I used a portion of the deposit for repairs and returned the remaining amount. Can I claim the whole deposit as expense in 2018 since I didn't benefit from it at all.
If you reported the deposit money as income when received, you can claim the refund as an expense. In your case, you would claim the repairs as a repair expense and the net refund as a miscellaneous rental expense. You cannot claim the whole deposit as an expense and also the cost of repairs as it would be double-dipping.
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