Wow. "...we had a signed contract stating if we canceled early our money was non-refundable." Given that, you weren't entitled to ANY refund. But you got one anyway, less taxes and security deposit. Concerning taxes, none would have been owed if you had fulfilled your rental term. Taxes are only owed on rentals of 6 months or less. So your rental (Oct-Dec) had to be taxed, as did the next renter (Dec-Apr) as both terms were less than 6 months. Since you handled the arrangements for 2nd renter, did you include sales tax in the rental price? The homeowner owes the tax, whether or not he collects it from the renter(s). In my opinion, the homeowner is completely justified in withholding sales tax from your refund - and probably feels that withholding your security deposit will offset the nuisance of dealing with the sales tax issue since they wouldn't have had to do that if you had stayed for your contracted rental term. I don't think they're being "nasty and inconsiderate" at all.
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