If you are a landlord, it’s a standard business practice to track the income and expenses from each property and provide receipts for income received.
Many states require landlords and property managers to provide tenants with a receipt for their rent payment. Especially for a tenant who pays rent in cash, the rent receipt provides proof of payment if a question arises about whether or not the rent was paid.
While most tenants pay rent by check or credit card (and therefore have their own proof of payment on their bank or credit card statement), landlords in states that require rent receipts must issue receipts if asked. And if a rent check bounces, the tenant’s receipt for that bad check does not hinder your attempts to collect.
Here’s information about what you should document for a rent receipt and where you can find a template for your rental property business.
What is a Rent Receipt?
A rent receipt is simply a form (online or on paper) a landlord can use to track tenant rental payments. Also known as a rent proof of payment slip, rental receipt, or remittance slip, this document shows the due date for rent, the date the payment was made, and whether it was a full or partial payment.
Are landlords legally required to give tenants a rent receipt?
Depending on the state and delivery of payment method, some property managers and landlords are legally required to provide rent receipts to tenants when they pay their monthly rent. For example, Texas, Maryland, New York, and Washington require rent receipts if the tenant pays rent in cash. In California, if a tenant requests a rent receipt, the landlord is legally required to provide a signed and dated receipt. If tenants make payments online through bank transfer or with a credit card, these states and others, including California, require the landlord to issue a receipt if the tenant requests one.
Some states, like Alabama, do not have laws or require any type of rent receipt and will leave the decision up to the landlord. To make matters more confusing, some cities may have rent receipt requirements even if the state doesn’t. To ensure you’re complying with all legal requirements surrounding rent payments and receipts, we strongly encourage you to check with your local housing board for more information.
When should a landlord issue a rent receipt?
As a best practice, landlords should always provide the
ir tenants with a paper or electronic receipt for rent payment and keep a copy for their property records every time a tenant rent payment has cleared the bank. Paper receipts should be scanned and saved to your records, while online payments offer a digital receipt that you can download to your files.
Note: Landlords should only issue a rent receipt after the funds have cleared their account.
Five reasons why landlords need to issue rent receipts
- Implement professional business practices
Rental properties are a business, and your tenants are customers. Issuing rent receipts is a sound business practice that will help you improve tenant retention, lend your business credibility, and demonstrate your professionalism. Providing receipts for rent payments will give tenants peace of mind and build confidence that they are dealing with a reliable professional.
- Mitigate rental risks
A receipt serves as a reliable proof of payment, and can help landlords avoid a rent-related dispute down the road. If a tenant pays their rent with cash, a rent receipt provides proof of payment and creates a paper trail for landlords and tenants. If a tenant pays by check, the landlord or property manager should wait until the check clears to provide a rent receipt. If the check doesn’t clear, the landlord can note that in a rent receipt and contact the tenant.
Rent receipts document tenant disputes like delinquent, unpaid, or partial rent payments. In the worst-case scenario, rental receipts prove discrepancies between amounts owed and what the tenants pay if eviction becomes necessary.
- Manage rent in arrears
When tenants pay late, the date on the rental receipt proves the rent was not paid on time. This is important if you accept rent through multiple channels, such as online payment or bank transfers, or charge late fees. As most rental agreements state, late fees start accruing on a specific date and will continue to accrue daily, weekly, or monthly until the rent is paid. Having a documented deposit date will keep the landlord's records correct and ensure charges are accurate and timely.
For example, if an electronic bank transfer for rent was not received on time, the rent receipt confirms the actual date of the deposit. Renters are less likely to contest late payments and associated fees when they have written proof of non-timely payment.
- Good housekeeping for tax season
When preparing income taxes, rent receipts provide landlords with documentation proving the rental income they earned for the year. With a detailed rent receipt, landlords can more accurately document their expenses, deductions, and income earned come tax season.
- Benefits for multiple properties
Rent receipts also help landlords manage multiple properties. They can use the rent receipts to track any outstanding rent, calculate the total rent paid and stay organized for taxes. With this documentation, a landlord can quickly look at each tenant’s account in their records to see if they paid, how much they have paid, and if they owe back rent. When you only manage a few properties, keeping track of your finances can be fairly straightforward. However, with multiple properties, if a landlord is not careful to track all the rent receipts, one or two late-paying tenants could fall through the cracks, leading to less income and possibly a failure to charge late fees where appropriate.
Two reasons why tenants need rent receipts
- Build credit history - Tenants can use rent receipts to build their credit history. Rent receipts show their previous payment pattern (including dates) and prove that rent is current and paid on time.
- Proof of payment - For tenants who pay by check, the rent receipt only proves that the tenant wrote the check and the landlord collected it. The rent receipt should not be issued until the check has cleared the landlord's bank. In this way, the tenant knows, without a doubt, the check was deposited.
What should you include in a rent receipt?
Whether you’re using a paper, Excel, or an online rent receipt, your receipt needs to capture the following information:
- Tenant name
- Tenant contact information
- Full rental property address
- Date of completed (or partial) rent payment
- Monthly rent amount
- Amount paid
- Remaining balance
- Payment method (check, cash, credit card, money order)
- Property owner, landlord, or property manager name
- Property owner, landlord, or property manager signature
Be sure to include any late fees referenced in the signed lease agreement and the remaining balance. Once you’ve created your template, you’ll be able to quickly capture the information listed above and easily maintain an accurate record of all rent payments.
Automate rent collection and rent receipts with RentSpree
For landlords, keeping track of rent collection can be tricky, especially when you factor in all the different methods a tenant can pay their rent. Checks, for example, can take several days to clear and keeping all the documentation together for a cash receipt and deposit is time-consuming and error-prone. It can be a security risk for landlords to carry large amounts of cash to deposit at the bank, and payment platforms like Venmo or Zelle don’t offer a paper trail, allow partial payments, and carry hefty transaction fees. Given the numerous ways a tenant can pay rent, coupled with each method's delivery times and stipulations, landlords trying to manually keep track of their rent payments may be in for a big headache.
To simplify the rent collection and organization process, landlords should consider collecting rent online with RentSpree and automating their rent payment process. RentSpree’s online rent payment portal allows tenants to set up auto-pay while landlords set the rent amount and due date, and payments go directly into the landlord's bank account. RentSpree’s platform also allows landlords to set up automated rent receipts and reminders, giving both landlords and tenants a detailed and accurate record of all past and upcoming payments.
As a rental property owner, keeping track of the status of all rental payments is critical. RentSpree’s secure online rent payment software lets you track all rent payments and submit receipts electronically to ensure your records are accurate and up to date. With a rent receipt template, you’ll cut the time you spend tracking income, deposits, and late payments and be able to focus on growing your business.