With so many transactions happening every day, it’s easy to skip one or two. Both landlords and tenants can be guilty of either rushing through the monthly rent transaction or, as landlords, not having a system set up to make providing a receipt easy.
While most of the time, giving and getting rent receipts won’t matter, it only takes one dispute, one tax year, one incident to make us wish we had all our receipts handy.
Keep reading to learn about the importance of rent receipts for both landlord and tenant and how you can fill out a receipt easily.
What is a Rent Receipt?
A rent receipt is a document that acknowledges the payment a tenant makes to a landlord. Rental Receipts go by other names – Rent Payment Receipt, Rent Receipt Letter, and Rent Invoice Letter.
For both landlord and tenant, a receipt can mean the difference between having an easy time in a rental situation and having problems.
Why are Receipts Important for Landlords and Tenants?
The following are reasons why a landlord would want to issue a receipt:
- It helps a landlord track payments – who have paid their rent and who hasn’t-whether the rent was paid in full or only partially. If the tenant only paid partially, the landlord can use the rent receipt to explain any late charges that may be due.
- It can track cash rent payments and check rent payments. However, keep in mind that a rent receipt for a check only means that the landlord received a check. It does not mean that the check cleared the bank. While this is obvious for some, it isn’t for others, so take note.
- Paying attention to the law. Depending on your state and local laws, it may be mandatory that you give a receipt.
- Your tenant requests one.
*NOTE – Accepting rent payments online has many benefits, such as streamlining payment, speeding up the payment process, making rent payment easier for tenants, creating a digital paper trail, and more.
For renters, it’s crucial to get a rent receipt. It is a common suggestion that renters pay no more than ⅓ of their income on rent. However, if you’re paying at least ⅓ of your income, then you want to make sure you can prove it should the need ever arise. These are some reasons to get a rent receipt:
- If you pay in cash, you have documentation that your landlord received it.
- With a receipt, you can avoid disputes because they are proof that you paid your rent.
- A receipt will prove that you paid your rent on time.
- Receipts can be necessary for tax purposes, primarily if you work from home. If you work from home, some portion of your rent can go to business expenses (Check with a CPA).
- If you live in a state that provides a tax credit for renters, then your receipts will come in handy.
A Rent Receipt Should Include What Essential Information?
When filling out a rent receipt, be sure to start with the necessary contact information for the tenant. This essential information should include the:
- tenant name(s),
- and property address.
The data informs the landlord who the rent came from, the date received, and which property it represents. All of this is essential information for accounting purposes, taxes, and having a paper trail.
A receipt should also include the following:
- the rent amount,
- any late fees being attached,
- any balance due if the rent payment is a partial payment,
- and the payment type used, i.e., check, money order, cash, online portal, etc.
Does a Landlord Have to Give a Rent Receipt?
Not all states require landlords to give receipts to the tenants. The ones that help protect the tenants who pay in cash would have no other way of proving that they paid their rent if an unscrupulous landlord ever challenged them.
Some states require receipts if the tenant pays in cash (Washington, Maryland, and New York), some states only require receipts if the tenant requests it, and others require rent receipts in any situation.
Some cities do require receipts even if the state doesn’t. But, again, make sure you know the rules, regulations, and laws for your area.
A Final Thought
What this all means is there are no consistent rules for all states. It is up to the landlord and tenant(s) to best figure out what they need.
For landlords, if you’re not making a habit of issuing receipts, you may want to start. First, check out the PayRent app that automatically sends receipts when tenants pay rent.