Prorated Rent and How to Calculate It

Prorated rent is the rental amount a landlord charges based on the days of the month that the tenant actually occupies their property, rather than the full month’s amount. This could come into play when your tenant moves in half-way through the month or moves out before the month is over. Knowing how to prorate rent and allowing your tenants to only pay for what they use is a great way to ensure that your tenants feel that they’re being treated fairly. 

There are two main methods for calculating how to prorate the rent. 

1: Based on Days in the Month

The main equation you will use for this method of rent proration is: 

Monthly rent / days in the month * days of occupancy

Step one: Divide the monthly rental amount by the number of days in the month (monthly rent amount / days in the month). This is the daily rental amount. 

Step two: Multiply that number by the total days of occupancy (daily rent amount * days of occupancy). This is the prorated rental amount.

2: Based on Days in the Year

Calculating based on days in the year is the more accurate prorate rent calculation because it takes into consideration that some months have more days than others. First, calculate the daily rent amount: 

Monthly rent * 12 (months in a year) / 365 (days in a year)

Then, use the daily rent amount to find the cost for the exact number of days your tenant will be occupying the property, following this equation:

Daily rent * number of days of occupancy

Step one: Find the daily rent amount. 

Monthly rent amount * months in a year / days in a year. 

Step two: Find the prorated rent amount. 

Daily rent amount * days of occupancy.

Things to Keep in Mind

When you’re calculating prorated rent by days in the year, keep track of leap years. Leap years are 366 days long and will throw off your final calculations. 

Also, round all numbers to the fourth digit only at the very end. You want to make sure you’re remaining extremely accurate in your calculations to maintain fairness for your tenant. 

Let’s Check for Understanding

Calculating Prorated Rent by Month 

Sally is requesting to prorate her rent. Here are her move-in details: 

Move-in Day: March 16th

Days in March: 31

Days of Occupancy: 17

Full Monthly Rent: $1000

Let’s go step by step. 

Step one: Calculate the daily rent amount (Monthly rent amount / Days in the Month)

• $1000 / 31 = 32.2581

Step two: Calculate the prorated rent amount (Daily rent amount * Days of occupancy)

• $32.2581 * 17 = 548.3871

If you round this answer to the nearest cent, Sally’s prorated rent amount is $548.39. 

Calculating Prorated Rent by Days in the Year

Let’s use Sally’s same move-in info for this example: 

Move-in Day: March 16th

Days in March: 31

Days of Occupancy: 17

Full Monthly Rent: $1000

Again, let’s go step by step. 

Step one: Calculate the daily rent amount (Monthly rent amount * Months in a year) / Days in a year

• ($1000 * 12) / 365 = $32.8767

Step two: Calculate the prorated rent amount (Daily rent amount * Days of occupancy)

• $32.8767 * 17 = $394.5204

Rounded to the nearest cent, Sally’s prorated rent amount is $558.90. 

Final Thoughts

While calculating rent by number of days in the year is more accurate, if you find the monthly method easier, feel free to go that route. The prorate rent calculation is relatively easy and ensures that you are charging, and your tenants are paying the correct amounts based on their actual occupancy. 

When your tenants request rent proration, hear them out. You most likely are not required by law to prorate rent (though you should check with your local laws to be sure), but accommodating their request is a big plus for your reputation as a fair landlord and for your tenant’s overall satisfaction. If you do plan on accommodating rent proration, explain your methods when they sign the lease. That way, you can be completely transparent and ensure that both parties are on the same page when it comes to expectations regarding proration. Specify move-in and move-out dates and be sure that any policy you establish is consistently enforced with each tenant. 

If you use quality property management software, you can either follow whatever proration values you establish, or you can adopt the suggestion amounts your software suggests. Utilizing the tools that property management software provides can streamline this process and take out any margin of error in calculating prorated rent manually.