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security deposits

My tenant informed me in April that he would be moving out May 1, 2014. He is retiring and he also went thru divorce and he couldnt afford the 1450 a month, he asked for a reduction, we gave him a $400.00 reduction for one month, h had a 2 year lease,he was watiing for a job and wanted us to wait for two weeks until he found out , we waited and no job, we showed the house and we rented the house June 1, 2014. His lease would have been up July 1, 2014, so he moved out 2 months earlier and we give him a $400.00 rent deduction. Do we have to give him his $ 1200 security deposit and do we deduct the $400.00 rent devrease for that one month?
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