When a renter leaves and you pay them the security deposit back, can you deduct this amount back on taxes?

[Lisa995]

did you include the deposit as income when they paid it to you?

[MichaelL1 · Accepted solution]

Only if it was reported as income when you received the deposit.

If audited, this is something IRS would ask about and want to see that it was originally reported as income.

If not ever reported, as income no deduction.