San Francisco landlords owe tenants annual simple interest on residential security deposits, and the current rate on security deposit interest in San Francisco is 4.2% for the period running March 1, 2026 through February 28, 2027. The rule comes from Chapter 49 of the San Francisco Administrative Code and reaches nearly every residential rental in the city, including units exempt from rent control.
Current and Recent Rates
The San Francisco Rent Board sets a new rate each year, effective March 1 and running through the end of the following February. The rate tracks Federal Reserve data for certificate of deposit yields, not whatever your landlord’s own bank pays.
- March 1, 2026 – February 28, 2027: 4.2%
- March 1, 2025 – February 28, 2026: 5.0%
Rates are published each January for the March 1 cycle. The Rent Board’s website keeps a full historical table going back to 1983 if you need to reconstruct older years.
Which Rentals Are Covered
The interest requirement applies to any landlord subject to California Civil Code Section 1950.5, which effectively means every residential landlord in San Francisco. Single-family homes, condos, and buildings constructed after 1979 are all included, even though those units are exempt from the city’s rent control ordinance.
The one exception is government-subsidized rentals. If you live in a Section 8 unit or another rental where a government agency subsidizes your rent, your landlord does not have to pay deposit interest.
How To Calculate What You’re Owed
Interest is always simple interest on the original deposit amount. It never compounds, and the base never grows. What changes year to year is the rate, and if your anniversary falls somewhere other than March 1, each annual period will straddle two different Rent Board rates.
Say your landlord collected a $4,000 deposit when you moved in on June 15, 2024. Your anniversary date is June 15. For the year running June 15, 2025 to June 15, 2026, the 5.0% rate covers June 15, 2025 through February 28, 2026, and the 4.2% rate covers March 1, 2026 through June 15, 2026. You apply each rate to the $4,000 base, proportional to the days in that slice, and add the two pieces together. The arithmetic is straightforward once you break the year into its rate segments.
When and How Your Landlord Must Pay
Payment is due on your anniversary date each year, meaning the same month and day the landlord originally received your deposit. Not later in the year, not whenever the landlord gets around to it.
The landlord, not you, picks the payment method. The two options are a direct payment, usually a check, or a credit against the next month’s rent. Both satisfy the obligation as long as the money moves on the anniversary date.
Landlords are allowed to deduct the annual Rent Board fee from your interest payment, but only if they’re seeking reimbursement for that fee as the city’s rent stabilization code permits.
If You Move Out Mid-Year
Leave after at least a year of occupancy but before your next anniversary, and you’re still owed pro-rated interest for the partial year. The landlord uses the rate in effect on your move-out date and must pay you directly within two weeks of your departure. The rent-credit option isn’t available here because there’s no future rent.
If your deposit isn’t enough to cover unpaid rent, damage beyond normal wear and tear, or necessary cleaning, the landlord can reach into the accrued interest to make up the shortfall. The same deduction rules under California Civil Code Section 1950.5 that govern the deposit itself apply to the interest.
If Your Landlord Doesn’t Pay
Skipped interest payments are common, particularly with smaller landlords who may not know the rule exists. Start with a written demand. A lot of landlords will simply pay once they understand the obligation.
If that doesn’t work, you have two routes. You can file a petition with the San Francisco Rent Board for a violation of the interest-on-deposit ordinance. The process usually begins with mediation, and if that fails, an administrative law judge issues a binding decision. The Rent Board’s forms center has the specific petition.
Small claims court is the other route. In San Francisco, individuals can file claims up to $12,500, which covers even large deposit interest disputes comfortably. Bring your lease, proof of the deposit, and documentation that the interest was never paid. Filing fees are modest and you don’t need a lawyer. For most tenants owed a few hundred dollars in back interest, small claims is faster than a Rent Board petition.
Is Deposit Interest Taxable
Yes. The deposit itself isn’t taxed while it stays refundable, but any interest the landlord pays you is interest income on your federal return. If you receive $10 or more in a calendar year, the landlord has to issue you a Form 1099-INT. Below that threshold you still technically owe tax on the income, even without a form.
For most tenants the amounts are small. A $4,000 deposit at 4.2% produces $168 a year, so the federal tax hit is minor. If you’ve been collecting interest for years without reporting it, it’s worth cleaning up.