How can I collect security deposits from my Airbnb guests? Are there tools available?

Hosting on Airbnb can be incredibly rewarding, but it comes with real financial risks. Whether it's a broken appliance, a stained sofa, or a guest who throws an unauthorized party, property damage is one of the most stressful parts of short-term rental hosting. And while most hosts hope for the best, the smartest ones plan for the worst.

That's where security deposits come in.

But here's the thing, collecting a security deposit from Airbnb guests isn't as straightforward as it used to be. Airbnb has significantly changed its rules over the years, and what's available to you depends largely on how you manage your listings. Some hosts can still collect deposits; others need to rely on alternative protection methods entirely.

This guide walks you through everything you need to know: what a security deposit is, whether you can still collect one as an Airbnb host, how much to charge, and crucially, what tools are available to help you do it properly.

Key takeaways

• Most Airbnb hosts cannot collect security deposits directly through the platform since Airbnb replaced them with AirCover in 2022

• API-connected hosts using a PMS like Hostaway can collect off-platform security deposits, provided they are disclosed in the listing's fee structure

• The average security deposit ranges from $100 to $500 for standard listings and up to $1,000+ for luxury properties

• For maximum protection, combine a security deposit with guest screening, ID verification, and automated check-in controls

• If you're not an API-connected host, your best options are AirCover, third-party damage protection, or dedicated STR insurance

What is a security deposit, and what does it cover?

A security deposit is a sum of money collected from a guest before or at the time of booking to protect the host against potential damage, excessive cleaning costs, or rule violations during a stay. A security deposit serves as a financial safety net, it's not about assuming bad intent, but about setting clear expectations and having a mechanism in place if something goes wrong.

In traditional rental contexts, a security deposit is a standard part of any lease agreement. A landlord typically collects a deposit equal to one or two month's rent before a tenant moves into a rental unit. State laws dictate how these deposits must be handled, including how they are stored, when they must be returned, and what deductions are permissible. Most states require landlords to return the remaining deposit within a set number of days after a tenant moves out, along with an itemized list of any deductions made.

While short-term rental hosts operate differently from traditional landlords, the same underlying principle applies: the deposit exists to protect the rental property and ensure guests leave the premises in good condition.

Even with strong house rules and careful guest communication, accidental damage can still happen. A security deposit helps protect your business against issues like:

• Broken furniture or appliances

• Excessive cleaning needs

• Missing items

• Unauthorized parties or rule violations

• Minor damages that may not justify a longer claims process

For professional hosts, deposits are less about assuming bad intent and more about setting clear expectations and accountability.

Security deposits and the law: What Airbnb hosts should know

If you manage a short-term rental property, it's worth understanding the legal landscape around security deposits, even if you're not operating as a traditional landlord.

In the traditional rental world, state laws govern nearly every aspect of how a landlord can charge security deposits, hold them, and return them. Most states require that deposits be held in a separate account, that tenants receive written notice of any deductions, and that the remaining deposit be returned within a specific timeframe after the tenant moves out. Some states limit the deposit to a maximum of one or two months' rent, while others impose no cap at all.

For short-term rental hosts, local laws and state laws can still apply, particularly if your rental unit is subject to specific short-term rental regulations in your city or state. Cities like New York, San Francisco, and Denver have their own rules around short-term rentals, and some of these regulations touch on how hosts can charge security deposits and what they can deduct.

Before you decide how to structure your deposit policy, it's worth checking:

• Local laws in your city or municipality

• State laws that may govern short-term rental deposits

• Platform rules, particularly Airbnb's own policies on what hosts can and cannot charge

• Your lease or HOA agreement, if applicable, which may impose additional limitations

While Airbnb's platform rules take precedence for bookings made through the platform, understanding the broader legal context helps you build a deposit policy that is both effective and responsible.

Can Airbnb hosts still collect security deposits?

This is where things get important. Airbnb has largely phased out traditional security deposits, replacing them with AirCover damage protection. Most hosts cannot charge deposits, but API-connected hosts using property management software can collect them if disclosed.

Here's a quick breakdown of who can and can't collect a security deposit on the Airbnb platform:

Airbnb now actively discourages hosts from taking a security deposit. Instead, the platform expects you to rely on AirCover, Airbnb's damage protection scheme that can reimburse hosts up to $3 million in the event of guest damage.

However, many hosts find it hard to get legitimate claims approved by Airbnb under AirCover. That's why understanding your options, including third-party tools, is so important.

How much should you charge as a security deposit?

Setting the right security deposit amount requires thoughtful planning. The average security deposit amount ranges from $100 to $500 for standard listings, up to $1,000 for luxury properties. Hosts often find that keeping the deposit at 20% or less of the total booking cost works well.

Unlike traditional rentals where the deposit is often equal to one month's rent, short-term rental deposits are typically a flat sum rather than a percentage of the nightly or monthly rent. This makes them more predictable for guests and easier to manage operationally.

When deciding how much to charge, consider:

• Property type and size: a luxury villa may need a higher deposit than a studio apartment or rental unit

• Amenities: pools, hot tubs, and special equipment like bicycles may require extra coverage

• Location: urban areas and high-demand cities may carry a higher risk

• Guest profile: families and business travelers may be less likely to cause damage than younger groups

• Length of stay: longer stays tend to increase wear and tear on the rental property

• Your track record: if damage happens frequently at your property, a higher deposit may be justified

It's also worth noting that very high deposits can deter bookings. The goal is to find a sum that provides meaningful protection without creating unnecessary friction for guests who have every intention of leaving your property in good condition.

Tools available to collect security deposits from Airbnb guests

Since most hosts can't collect deposits directly through the Airbnb platform, the key question becomes, "What tools are available?" Here are your main options.

1. Property management software (PMS): The primary tool for API-connected hosts

The only way to collect a security deposit outside of Airbnb is as a "software-connected" host. Software-connected hosts use a third-party property management system (PMS) to handle guest communication and bookings. If your rental property has particularly high-value amenities, you may be permitted to collect an "offline deposit" via your PMS, but you must be transparent about this in the "Fees" field on your Airbnb listings.

How to set it up via your PMS:

1. Your listing must be connected to a channel manager or PMS on Airbnb's official API partner list

2. You can check the connection status under Listings > Listing editor > Edit preferences > Property management software

3. In your PMS, configure a security deposit under "offline fees"

4. Set the deposit amount based on your property type and risk profile

5. Choose which channels the deposit applies to (e.g., Airbnb, Vrbo, direct bookings)

6. Specify how payment is taken, e.g. via card authorization or a charge on Stripe

If damage occurs, you'll be able to withhold or charge the pre-authorized funds, depending on how payments are handled in your PMS. If your guest leaves your rental property just as they found it, their deposit is automatically refunded.

2. AirCover for hosts: Airbnb's built-in protection

Even if you don't collect a security deposit, Airbnb automatically enrolls all hosts in AirCover, which includes Host Damage Protection. AirCover for hosts covers damage caused by guests, their pets, invitees to the property, furnishings, vehicles, etc. It also covers excessive cleaning costs due to damage, stains or smoke, and income lost if you need to cancel other guests due to previous guest damage.

It doesn't cover damage due to normal wear and tear, natural disasters, or normal cleaning costs.

To request reimbursement, you have 14 days to submit a claim through the Resolution Center on Airbnb. You must give your guest 24 hours to respond before escalating your claim. If the guest is found responsible, their payment method may be charged.

Important caveat: Many hosts report difficulty getting claims approved through AirCover. "You absolutely need third-party coverage if you want to ensure you're actually covered," note experienced hosts on community forums.

3. Third-party damage protection services

A lot of hosts turn to damage protection through third-party services. This is usually a more reliable alternative to AirCover, with faster payouts and no guest friction caused by requesting or withholding a deposit. Plus, you'll be covered no matter which platform your guests use to book, which is particularly useful if you manage Airbnb listings alongside direct bookings.

These services typically offer:

• Guest screening and ID verification

• Damage protection up to $1 million per incident

• Faster claims resolution

• Coverage across all booking channels, not just Airbnb

• Rental agreement management

For hosts who take direct bookings, third-party protection is especially important since Airbnb's AirCover does not extend to bookings made outside the platform.

4. Short-term rental insurance

Deposits tend to be capped at a certain value, and AirCover doesn't cover ordinary wear and tear or damage caused by natural disasters. That's why many hosts also carry dedicated short-term rental insurance. Standard homeowners and landlord policies often exclude coverage for paid guests, so it's important to find a policy specifically designed for short-term rentals.

The limitations of relying solely on insurance include the time it takes to process complex claims; it could take weeks before you see a payout. This isn't ideal if you need to repair and re-let your rental property quickly. Think of STR insurance as essential long-term protection rather than a quick fix for day-to-day guest damage.

Managing security deposits for Airbnb with Hostaway

One of the most capable tools for managing security deposits across Airbnb listings is Hostaway. If you use Hostaway, you can manage Airbnb security deposits through refundable damage deposits and card pre-authorizations, giving you more control over property protection while keeping the guest journey streamlined.

How Hostaway handles security deposits

In Hostaway, the most common setup is a refundable damage deposit using a credit card pre-authorization hold. This means the guest is not actually charged upfront, the money is not paid upfront in the traditional sense. Instead, a temporary hold is placed on the guest's card for the deposit amount. If no issues occur, the hold expires and is released, and the remaining deposit is never actually captured.

This approach is preferred because:

• It protects the host without requiring a refund workflow for every stay

• It reduces guest frustration compared with charging cash upfront

• It creates a cleaner operational process for teams managing multiple properties

Step-by-step: How to manage security deposits with Hostaway

Here is the recommended workflow for Airbnb hosts using Hostaway:

Step 1: Decide on your deposit strategy: Choose between a pre-authorization hold on the guest's card or collecting an actual payment as a deposit. For most hosts, the pre-authorization hold is recommended because the funds are not actually captured unless needed.

Step 2: Set the deposit amount per property: Security deposits can be customized at the property level, reflecting the risk profile of the listing, guest type, or stay length.

Step 3: Configure the pre-authorization hold: Set the deposit up as a Stripe pre-authorization hold rather than a direct charge. The guest's card is authorized and funds are reserved temporarily, but the amount is not taken as a normal payment.

Step 4: Enable automatic renewal for longer stays: Because Stripe holds typically expire after 7 days, longer stays should use Hostaway's automatic renewal feature, which creates a new pre-authorization when the previous one expires, extending deposit coverage across the entire stay.

Step 5: Use the Guest Portal or payment link if card details aren't available: If the channel does not provide a usable guest payment card, the host can collect the deposit through a payment link or the Guest Portal instead.

Step 6: Gate check-in instructions until the deposit is satisfied: Hostaway message automations can be configured with conditions such as:

• Payment success

• Is paid

• Online check-in form submitted

• Pre-authorization

This allows hosts to block check-in instructions until the guest has completed the required deposit or related pre-arrival tasks, giving hosts greater control over the check-in process.

Step 7: Add screening or ID verification for higher-risk bookings: For stronger protection, hosts can combine security deposits with guest screening and identity verification tools such as:

• Autohost

• Authenticating.com

• Chekin

• Safely

These tools support workflows such as ID capture, risk scoring, rental agreements, and security deposits and are especially useful for hosts managing higher-value properties or longer stays.

Step 8: Inspect the property close to checkout: A common best practice is to keep the hold active close to checkout so the property can be inspected while the authorization is still valid. Scheduling the auto-payment trigger close to the stay, such as 1 day before checkout, ensures the hold is active when the property is being reviewed. Document any damage thoroughly with timestamped photos and receipts before making any deductions.

Step 9: Release the hold if there's no issue: If the stay ends without damage or extra charges, the pre-authorization does not need to be refunded like a normal payment because it was never actually captured. It simply expires or is released; no refund process is required.

Step 10: Capture or pursue charges only if needed: If there is damage, the host may need to capture funds or use the appropriate payment or claims workflow, depending on the booking setup and payment processor. Keep all receipts and proof of repair costs, as these will be needed to justify any deductions claimed against the deposit.

Pros and cons of charging a security deposit

Before you decide whether to charge a deposit, weigh the trade-offs.

Pros

• Peace of mind: an extra layer of protection that reduces the stress of hosting

• Attracts respectful guests: guests who intend to behave badly are less likely to book

• Encourages careful behavior: guests are more mindful knowing money is on the line

• Saves money: having funds ready means you can make repairs quickly and avoid canceling future bookings

• Reduces confrontation: a clear, pre-disclosed policy makes it easier to charge for damage without argument

• Guests may prefer it to a damage waiver: unlike a non-refundable waiver, a deposit is returned if there's no damage

Cons

• May deter some bookings: even well-intentioned guests might choose a listing without a deposit

• Added guest friction: an extra payment step can put some guests off

• More to manage: it requires setup, communication, and enforcement

• Refundable: the deposit doesn't count as income unless damage is proven and deductions are claimed

How to handle deposit deductions and refunds

One of the most sensitive parts of managing a security deposit is deciding when and how to deduct from it and how to communicate that to guests. Here's a clear process to follow:

1. Inspect the property promptly after every checkout. The sooner you inspect, the easier it is to document damage and attribute it to the correct guest

2. Document everything, take timestamped photos of any damage, and note the condition of the premises before and after the stay

3. Collect receipts for any repair costs or excessive cleaning fees before making deductions

4. Provide written notice to the guest explaining what was found, what deductions are being made, and why, this reduces disputes and gives guests the opportunity to respond

5. Return the remaining deposit promptly once deductions have been finalized. Delays in returning funds can damage your reputation and, in some jurisdictions, may have legal implications

6. Keep proof of all communications and receipts in case the guest disputes the deductions

It's important to distinguish between damage and normal wear and tear. Deductions should only be made for actual damage, excessive cleaning costs, or missing items, not for the kind of minor wear that comes with regular use of a rental unit. Attempting to deduct for normal wear is one of the most common sources of deposit disputes between hosts and guests.

How to communicate your security deposit policy to guests

Transparency is everything when it comes to security deposits. The best way to communicate about your damage deposit is to be transparent and make sure guests know what to expect. Here are some best practices:

• Include the deposit in the 'Fees' section on Airbnb so guests know exactly what they'll pay before they book

• Mention your damage policy in your listing's house rules in a friendly but firm way, explain why the deposit exists and what it covers

• Be transparent about the process, explain how much they'll pay, how it will be collected, and what damage is covered

• Clarify what counts as damage vs. normal wear, guests are less likely to dispute deductions if they understand the distinction upfront

• Repeat your rules and policies, send them again once the guest book, in a pre-arrival message, and include it in the property's house manual

• Act swiftly and keep receipts, check the property for damage as soon as the guest checks out, take timestamped photos, and keep receipts for any repairs

If you're using Hostaway, clearly explain the deposit amount, timing, and purpose in your guest messages. Guests are more comfortable when they understand that a pre-authorization is a temporary hold, not an immediate charge and that the funds will be released once the property has been inspected and found to be in good condition.

Final thoughts

Whether you're managing one rental property or an entire portfolio of Airbnb listings, having the right tools and policies in place before something goes wrong is always the smarter move. For most professional Airbnb hosts, a combination of a well-configured PMS like Hostaway, clear guest communication, and supplementary damage protection offers the most comprehensive coverage without unnecessary friction for your guests.

The strongest setup usually includes:

• A refundable damage deposit configured as a pre-authorization hold

• Automated renewal for longer stays

• Messaging rules that block check-in details until requirements are met

• Optional screening, ID verification, or rental agreements for additional protection

• A clear, documented process for handling deductions and returning the remaining deposit

Used together, these tools help hosts reduce risk, manage their properties more efficiently, and maintain a consistent, professional guest experience from booking to checkout.

Frequently Asked Questions

1. Can a guest dispute a security deposit deduction, and what happens if they do?

Yes, guests can dispute deductions they believe are unfair. If a dispute arises, the first step is direct communication between the host and guest. If no resolution is reached, the matter may need to be escalated through Airbnb's Resolution Center, a third-party mediator, or, in some cases, small claims court, particularly for larger sums. This is why thorough documentation, timestamped photos, and receipts are so critical. The stronger your evidence, the better positioned you are if a dispute escalates.

2. Does charging a security deposit affect my Airbnb search ranking or listing visibility?

Airbnb's search algorithm takes multiple factors into account, including booking conversion rates. Since security deposits can reduce the likelihood that a guest will complete a booking, listings with deposits may see slightly lower conversion rates, which could indirectly affect visibility. This is one reason Airbnb actively discourages deposits and promotes AirCover as the default protection method. Using a pre-authorization hold through a PMS rather than a visible upfront charge can help minimize this effect.

3. What happens to a security deposit if a guest cancels their booking before check-in?

If a guest cancels before their stay begins, the security deposit, whether held as a pre-authorization or collected as an actual payment, should be released or refunded in full, since no stay took place and no damage could have occurred. If you're using a pre-authorization hold through a tool like Hostaway, the hold would simply be released. If you collected the deposit as an actual payment, you would need to process a refund. Your cancellation policy governs the booking payment itself, but it does not entitle you to retain a damage deposit for a stay that never happened.

4. Can I charge different security deposit amounts for different seasons or booking types?

Yes, in principle. If you manage your listings through a PMS like Hostaway, security deposit amounts can typically be customized at the property level. Some hosts choose to apply higher deposits during peak seasons, holiday periods, or for longer stays when the risk of wear and damage is greater. However, any deposit amount must be clearly disclosed to guests at the time of booking, so last-minute changes to deposit amounts are not advisable and could create trust issues with guests.

5. What should I do if the damage exceeds the security deposit amount?

If the cost of repairs or losses exceeds the deposit amount you collected, you have a few options. You can file a claim through Airbnb's Resolution Center to request additional reimbursement under AirCover, which covers damage up to $3 million. Alternatively, if you have third-party damage protection or short-term rental insurance, you may be able to claim the difference through those channels. In extreme cases, hosts have pursued guests through small claims court, though this is time-consuming and not always practical for smaller amounts.

6. Are security deposits taxable income for Airbnb hosts?

Generally, a security deposit is not considered taxable income at the time it is collected, because it is intended to be returned to the guest. However, if you retain all or part of the deposit due to damage or rule violations, that retained amount may be considered taxable income in the year it is kept. Tax treatment can vary depending on your country, state, and individual circumstances, so it's always best to consult a tax professional familiar with short-term rental income for guidance specific to your situation.

7. How do guests typically react to being asked for a security deposit, and how can I reduce friction?

Guest reactions vary. Business travelers and guests booking higher-end properties tend to be more accepting of deposits, as they are accustomed to similar requirements in hotels and corporate rentals. Younger travelers or budget-conscious guests may be more resistant. The most effective way to reduce friction is to use a pre-authorization hold rather than an upfront charge, communicate the policy clearly and early in the booking process, and frame the deposit as a standard professional practice rather than a sign of distrust. Hosts who explain the process transparently tend to receive far fewer complaints.