Security deposit toward breaking lease penalty?

[Brian Prochaska]

Hi all! I have been a long time lurker on here, soaking up as much knowledge as possible, but was hoping to throw something past you all and see what your opinions were.

Here is my situation. We recently moved out of our first home and decided to rent it out (we figure it was a good way to get our feet wet in our RE journey). We found a tenant, fantastic credit and no red flags in background check. I ask for first full month’s rent and a security deposit equal to one month’s rent as well in order to move in. Money exchanged, all is well. She gave me a call today and asked to break the lease. My question is, am I allowed to use her security deposit as payment toward my lease penalty? I asked for 30 days notice and one month’s rent as penalty, or do I need to return it to her and bill her for the penalty?