However you collect rent, providing your tenant with a rent receipt is a good business practice, and in some states is a legal requirement.
There are several benefits to giving rent receipts to your tenants. From helping you to avoid potential disputes down the line to ensuring that both parties are aware of any owed rent or additional late fees.
How your tenant pays rent may also impact whether or not you give your tenant a rent receipt. For example, if you collect rent via cash or cheque giving your tenant a receipt will ensure there is a paper trail. If you use a system like Landlord Studio to collect rent online automatically you can automate the entire process, from rent collection to income tracking, and even sending rent receipts.
Whichever way you collect rent, providing your tenant with a rent receipt is a good business practice to get into, and in some states may even be a legal requirement. In this article, we explore exactly what a rent receipt is, why landlords use them and share a free rent receipt template.
The rent receipt states that the rent payment has been made. If a partial payment was made it will also outline any rent still owed, and any late fees that might be applied, as stipulated in the lease.
In its most basic form though, a rent receipt is simply an acknowledgement of a rent payment made by a tenant.
Some states stipulate that landlords must give rent receipts to tenants. For example, Washington, Maryland, and New York require rent receipts if the tenant pays in cash. If payments are made in other forms, eg. via credit card or online, these states and others, such as California, require the landlord to issue a receipt if the tenant requests one.
Other states, such as Massachusetts require rent receipts to be issued for a variety of situations. Additionally, some cities may require rent receipts to be issued even if the state doesn’t. As such, it’s important to check with your local city’s housing board to ensure you are aware of all local legal stipulations around the handling and management of rent payments.
There are several benefits to using rent receipts as a landlord. And with a system like Landlord Studio where you can automate rent receipts (and reminders), issuing rent receipts doesn’t have to be time-consuming or challenging.
Your rentals are a business, and your tenants are customers. Treating it as such will help you improve tenant retention and ultimately ensure your business is profitable and scalable. Sharing receipts of rent payments with your tenants will give them peace of mind, and shows that you’re operating a business.
2. Tracking rent record
Rent receipts can also act as a good reminder for tenants should they fall into rent arrears. The receipt will detail exactly how much rent has been received, as well as overdue rent and any late fees that have been applied.
Having quality systems to record rental payments the right way is important for both parties. By providing a proper rental receipt, landlords can ensure that they have an accurate record of payments made and can easily track any missed or late payments. Similarly, tenants can keep a record of their rent payments and use their receipts as proof of payment if needed.
3. Benefits for tenants
A tenant may be able to use rent receipts to build their credit history by showing the rent is current and has been paid on time. Additionally, with many people working from home, a tenant may want to use rent receipts as a backup in case part of the rent is being claimed as a home-office tax deduction.
4. Avoid potential disputes
Rent receipts clearly state the rent that has and hasn’t been collected and when it was collected. It acts as a record and proof of historical payments. For example, should a tenant claim to have paid on time but in actuality paid a week late, having this in writing can prevent things from escalating.
However, a rent receipt can’t protect tenants or landlords when rent is paid via check. While it’s proof that the check was written and collected but not that it cleared. This is one of the reasons it’s best to modernize systems and collect rent online with industry-specific software like Landlord Studio.
There are a few key details that should be included on a rent receipt. These include:
If you’re giving your tenants a physical copy of a receipt this should also have your signature on it.
There are a number of ways to collect rent. However, all ways of collecting rent are not created equal. For example, cash and checks are outdated, slow and insecure. And payment platforms like Zelle or Venmo don’t offer paper trail, put the power of the payment in the tenant’s hands (allowing partial payments), and may have high fees for business use.
Collect rent online with Landlord Studio to automate the entire process. Tenants can set up auto-pay, you control the payment amount, the date rent is collected, and the money is delivered directly into your bank account. Fast, secure, and easy.
On top of this, set up automated rent reminders and rent receipts to send to your tenants before and after the rent due date.
Both parties will have a detailed and accurate record of all historical and upcoming payments.