Prorated Rent Explained: A Simple Guide for Landlords & Tenants

In a perfect rental world, tenants would always move in on the first day of the month and move out on the last day of the month. Real rentals aren't so convenient, though. Luckily, you can make allowances for days of the month when your tenant doesn't occupy the property using a calculation known as rent proration. Proration sounds complicated but it's actually just the process of making rent fair for a fraction of the month.

Prorating Per Days in the Month

Most times, you'll be prorating rent to make sure the tenant is paying for the exact number of days in the month he has access to the property. To do this, you'll have to prorate monthly, taking into account the varying lengths of the different months. Suppose, for example, a rental term officially begins on January 10 and the monthly rent is $1,200. Divide the monthly rent by the number of days in the month — 31 — to get the "per diem, or daily rental rate. Multiply per diem by the number of days in the month the tenant has possession, which here is January 10 through January 31 or 21 days. The formula, ( $1,200 / 31 ) * 21, results in a prorated rent amount of $812.90.

Prorating Based on Days in a Year

Where you have a one-year lease, calculating rent based on 365 days in a year gives the most accurate result. It's the same calculation as a monthly prorate only now you multiply the monthly rent amount by 12 — the number of months in a year — and divide by 365. Multiply the resulting figure by the number of days the tenant has possession, and you get the prorated rent amount. For example, the formula for a $1,200 rent and a January 10 move-in is ( ( $1,200 * 12 ) / 365 ) * 21, and the prorated rent is $828.49.

Using 30 Days as Basis

Another option is to opt for the 30-days rule-of-thumb, rather than using the precise number of days in a given month or the 365 days of a year. Although February has 28 days — 29 on leap years — and most months have 31 days, you can use 30 days to calculate prorated rent for any month. To calculate the rent due for a partial month, simply divide the rent amount by 30, then multiply by the number of days of days the tenant has possession of the rental. A January 10 move-in date for a $1,200 rental would then result in a prorated rent amount of $840.

Dealing With the Differences

Tenants should understand the basic method of calculating prorated rent, regardless of the specific method a landlord uses. A method may work more or less in favor of the landlord or tenant, depending on the dates. For example, if the move-in month has 31 days, using the number of days in a year yields a slightly higher rent payment for the landlord. In February and months with 30 days, prorating by the number of days in the month yields a higher rental payment.