How To Prorate Rent In 3 Simple Steps

Pro-rating rent doesn’t have to involve Einstein-like equations or a multi-level chalkboard. Here are three simple methods to easily prorate rent (Hint: It’s not as complicated as the photo above).

Three Simple Methods To Prorate Rent

#1 – Prorate based off of actual number of days in the month

This is the most common method for residential rentals.

  • Step 1 – Determine how many days the tenant will be at the property. Make sure to count the day they move in. Example: Tenant moves in on August 8th. There are 31 days in August. They did not live in your rental for the first 7 days. Subtract those 7 days from the total days and you get a prorated amount of 24 days. (31-7=24)
  • Step 2 – Calculate the daily rate by dividing the total monthly rent by the number of days in the month. Example: Rent is $1200 per month. August has 31 days ($1200/31 = $38.7096/day). Don’t round up at this point yet.
  • Step 3 – Multiply the number of days your tenant will live in your rental (24) by the daily rate ($38.7096) to get the prorated rent due. (24 X $38.7096 = $929.03). Prorated rent for your August 8th move in is done!

Method #2 – Prorate Rent based off a 30 day month (for every month)

This method used to be pretty common but has now been mostly replaced by the method above.

  • Step 1 – Determine how many days the tenant will be at the property.  Make sure to count the day they move in.  We’ll make this easy for comparison sake and use the same example as above. Example: Tenant moves in on August 8th. There are 31 days in August. They did not live in your rental for the first 7 days. Subtract those 7 days from the total days and you get a prorated amount of 24 days. (31-7=24)
  • Step 2 – Calculate the daily rate by dividing the rent by 30. Example: Rent is $1200 per month.  Even though August has 31 days, you want to divide by 30, since that’s the average length of all months. ($1200/30 = $40.00/day).
  • Step 3 – Multiply the number of days your tenant will live in your rental (24) by the daily rate ($40) to get the prorated rent due. (24 X $40 = $960).

Method #3 – Prorate based off of the actual number of days in the year

This is the most common method to calculate rent during the sale of a rental property (when transferring rent from one owner to another when the closing date of a sale takes place in the middle of the month)

  • Step 1 – Determine how many days the tenant will be at the property.  Make sure to count the day they move in. Example: Tenant moves in on August 8th.  Total days in August = 24 (31-7=24).
  • Step 2 – Calculate the daily rate by multiplying the monthly rent by 12 (to get annual rent) then divide that by the number of days in the year (typically 365). Example: Rent is $1200 per month (1200 x 12 = $14,400 per/year).  $14,400 per year / 365 days in year = $39.45/day. Again, don’t round yet.
  • Step 3 – Multiply the number of days by the daily rate to get the prorated rent due. Example: 24 days X $39.45 = $946.85.

There you have it, as promised, three simple methods of how to prorate rent for your tenants. Each method will calculate a slightly different rent amount. It’s a good idea to use one method – which for most residential rentals will be method #1.

Here’s an even easier way, use our automated prorated rental calculator (This uses method #1 above).

 
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