Understanding Interest on Security Deposits for Landlords in Alberta

Being a landlord comes with a myriad of responsibilities, and one crucial aspect is handling security deposits. In Alberta, Canada, the laws surrounding security deposits, including the accrual of interest, play a significant role in maintaining a fair and transparent landlord-tenant relationship. Join us as we unravel the intricacies of interest on security deposits in Alberta and how landlords can navigate these legal waters.


Understanding the Legislation:

In Alberta, the Residential Tenancies Act governs the relationship between landlords and tenants, outlining the rights and responsibilities of both parties. When it comes to security deposits, Section 45 of the Act provides specific guidelines regarding the payment and treatment of these deposits.


Maximum Amount:

According to Alberta law, landlords are limited to collecting the equivalent of one month's rent as a security deposit. This amount is intended to cover any unpaid rent or damages to the property beyond normal wear and tear.


Interest on Security Deposits:

Alberta law requires landlords to pay interest on security deposits. The interest rate is determined annually by the Minister of Service Alberta and is based on the average rate of interest payable on savings accounts offered by major financial institutions. As of 2024, the interest rate is 1.6%, calculated from the beginning of the tenancy.  Since January 1, 2009, the interest rate has been 0%.


Timing of Payment:

Landlords are obligated to pay interest on the security deposit annually or, if the tenancy term is less than a year, within 15 days of the tenancy ending. The interest payment should be accompanied by a statement indicating the interest calculation method.



Practical Tips for Landlords:


1. Stay Informed About Interest Rates:

Landlords should regularly check with the Minister of Service Alberta or relevant authorities to stay informed about the current interest rate. Failing to pay interest at the specified rate may result in legal consequences.


2. Maintain Transparent Record-Keeping:

Accurate and transparent record-keeping is essential. Landlords should document the date the security deposit was received, the amount, and the interest calculations. Providing tenants with clear statements fosters trust and compliance with legal obligations.


3. Communicate Effectively with Tenants:

Open communication is key to a positive landlord-tenant relationship. Clearly communicate the interest payment process to tenants, and address any questions or concerns they may have regarding the security deposit and interest accrual.


4. Comply with the Residential Tenancies Act:

To ensure legal compliance, landlords must familiarize themselves with the Residential Tenancies Act in Alberta. Staying updated on any legislative changes will help landlords navigate the complexities of security deposit regulations.




Navigating the legal landscape of security deposits and interest accrual in Alberta is crucial for landlords seeking to maintain a fair and transparent rental relationship. By understanding the regulations outlined in the Residential Tenancies Act, staying informed about interest rates, maintaining transparent records, and fostering open communication with tenants, landlords can navigate these legal waters with confidence. Legal counsel should be sought to review compliance with rental agreements and the framework of Alberta law. JMH is here to provide further guidance and support for landlords on a tax perspective.

This blog was written using the assistance of ChatGPT.

Want to make sure it all adds up? Connect with us!
At JMH & Co., we are your partner for financial success.

Book an appointment with us or give us a call today. 

Medicine Hat (403) 527-4451
Brooks (403) 362-4004 
Calgary (403) 261-0835

Trusted for over 100 years...

"The team at JMH & Co. have looked after our accounting needs (both personally and for our businesses) for the last 15 years, and have consistently given us exceptional service. The service at JMH is outstanding. Above and beyond any other firm."

"In my 50+ years of farming I have worked with several different accountants. I rank Seamas number 1."

"Very professional and trustworthy. Great people. Would highly recommend."

"They have yet to disappoint. Fees are fair. Explanations are clear. Service is exceptional."

"Have used them over the years with many different companies. Highly recommend!"

"Excellent service, friendly and passionate staff. Highly recommend JMH for any Accountant services."

"JMH & Co has been my personal, business & my family's accountant for over 26 years. I have seen many changes in tax laws with both personal and business, and with each change JMH & Co was there to assist. The knowledge and advice they have given me throughout the years have assisted in many ways."

"What I can say, is that I'm so happy with their services/pricing ect...that I have no desire to try anywhere else!"

"Always so well cared for by the team at JMH and I love how much they support small business and new entrepreneurs. They are fantastic Ambassadors for business."

"The service at JMH is outstanding. Above and beyond any other firm."