Prorated rent is rent charged for part of a month instead of the whole month
A tenant moves in on the 12th. They did not have the unit for the first 11 days, so they do not pay for them. You work out a daily rate, multiply it by the days they actually hold the unit, and that is the prorated amount. Same idea in reverse when a tenancy ends mid-month.
That is the whole concept. The part that causes arguments is not what proration means, it is which daily rate you used, because there are three common ones and they do not give the same answer.
The three ways to work out the daily rate
Take $1,800 a month, a move-in on 12 July, and a July that has 31 days. The tenant holds the unit from the 12th to the 31st, which is 20 days.
| Method | Daily rate | 20 days |
|---|---|---|
| Days in that actual month ($1,800 / 31) | $58.06 | $1,161.29 |
| Flat 30-day month ($1,800 / 30) | $60.00 | $1,200.00 |
| Days in the year ($1,800 x 12 / 365) | $59.18 | $1,183.56 |
Same rent, same move-in date, a $38.71 spread. None of the three is inherently wrong, though your local rules may narrow the choice. They are different conventions, and the one you pick quietly decides who gains. Those totals split the monthly rent directly; rounding the daily rate first and multiplying moves the answer by a few cents, so charge the version you can show.
The flat 30-day method favours you in a 31-day month and favours the tenant in February. Run the same $1,800 across a 28-day February, move-in on the 12th, 17 days: the actual-days method gives $1,092.86, the 30-day method gives $1,020.00. Nothing changed except the calendar.
Pick one method and write it into the lease
The method belongs in the lease, in writing, before anyone moves in. So does the other question that causes disputes: does the move-in day itself count as an occupied day? Leases differ on it, so state your answer rather than leaving it implied.
Days in the actual month is the easiest one to defend, because a tenant can check it against a calendar without trusting your arithmetic. Whichever you choose, use the same one for move-ins and move-outs. Switching methods between the start and the end of a tenancy is what makes a reasonable calculation look like a fiddle.
When rent gets prorated
Four situations cover most of it:
- Move-in mid-month. Worth getting right, because it is the tenant's first invoice from you.
- Move-out mid-month, where a fixed term or a notice period ends part-way through a rental period.
- A rent change part-way through a period, where some days sit at the old rent and the rest at the new one.
- Aligning the due date. Some landlords prorate the first partial month so that every payment after it falls on the 1st.
Is prorating rent required by law?
Usually it is a term of your lease rather than a rule set by statute. Statutes that sound like they ought to cover it mostly do not. Three examples, quoted so you can check them yourself:
- California Civil Code section 1947 says that "when there is no usage or contract to the contrary, rents are payable at the termination of the holding, when it does not exceed one year," and that where the holding is by the day, week, month, quarter or year, rent is payable at the end of each period. That is about when rent falls due, not how to split a partial month.
- Massachusetts General Laws chapter 186, section 4 says a person in possession of land out of which rent is due is liable for "the amount or proportion of rent due from the land in his possession although it is only a part of that originally demised." It apportions rent across a part of the property, not across part of a month.
- New York Real Property Law section 232-a deals with the notice a landlord must serve to end a monthly tenancy in New York City. It says nothing about calculating rent.
One federal statute does set a proration rule outright, and it is worth knowing because it applies whatever your lease says. Under the Servicemembers Civil Relief Act, at 50 U.S.C. section 3955, a residential lease can be terminated where the tenant signed it and then entered military service, or signed it while serving and afterwards received qualifying orders for a permanent change of station or a deployment of at least 90 days.
For a lease with monthly rent, that termination takes effect "30 days after the first date on which the next rental payment is due and payable" after the notice is delivered. Unpaid rent for the period before that date "shall be paid on a prorated basis," and rent paid in advance covering any period after it must be refunded within 30 days.
Beyond that, tenancy rules differ by state and by province, and some cities add their own. Read your own lease and your own local landlord and tenant legislation before you rely on any of this, including on a partial-month rule someone told you was national.
Put the prorated amount on the ledger, not in your head
A prorated first payment is easy to query later, because it is the one number in the tenancy that does not match the rent on the lease. Record the amount, the date, the number of days it covered and the method you used, all at the time you charge it. Reconstructing it from memory a year on is far harder than writing it down now.
The free rent ledger template gives you that payment record with a running balance, so the odd first amount sits in the same history as every ordinary month after it. Issue a receipt for it too: the free rent receipt generator produces a PDF without an account, and a receipt naming a partial period is easier to explain than a bank line. For what belongs on either one, start with what a rent ledger is and how to fill out a rent receipt.
One more reason to write it down as it happens: for a cash-basis landlord, IRS Publication 527 says rental income goes in the return "in the year you actually or constructively receive it," and advance rent is included "in the year you receive it regardless of the period covered." So the prorated payment counts when it lands, not when the days it paid for are used up.
Sources
- 50 U.S.C. section 3955, Servicemembers Civil Relief Act, termination of residential leases
- California Civil Code section 1947
- Massachusetts General Laws chapter 186, section 4
- New York Real Property Law section 232-a
- IRS Publication 527, Residential Rental Property