You're supposed to have a receipt for everything, but do you have receipts for what might be your largest monthly expense? If you're renting, you could be paying more than $10,000 annually without having actual proof that you paid anything at all.
There are plenty of reasons why you should request a receipt for every rent payment.
Avoid Future Headaches
Some financial advice is universal. Whether it's a rent payment, high-dollar purchase or you bought something from a friend, you should always ask for a receipt. If problems arise later, your proof of purchase could be your financial lifeline. If the matter goes to court, the judge will ask for some form of receipt.
You might rent from an individual or a large property-management company with headquarters hundreds or thousands of miles away. Your rent receipt will help you resolve disputes with all types of landlords.
For Your Taxes
Your rent payments probably are not deductible on your personal taxes unless you live in a state that provides a tax credit for renters. But if you own a home-based business, a rent receipt is a must. Most likely, the portion of your home that you use solely for business qualifies for a host of deductions requiring proof of your rent. If 10% of your home is used for business purposes for example, 10% of your annual rent payments likely qualify for a deduction. See Top 10 Home Business Tax Tips.
Beware, though: Deducting rent payments isn't as straightforward as you might think. Talk to your accountant well in advance of filing your taxes and check the IRS's home office deduction requirements.
It Proves You Paid On Time
Some landlords charge a 10% late fee, plus a daily rate or even more, if your rent payment is late. If you tend to pay on the date your rent is due or on the last day of the grace period, getting a rent receipt is a must to prove that you paid on time.
If you're unable to personally deliver the payment, pay earlier than the due date.
Because It's the Law
Some states require landlords to provide rent receipts. Contact your state's housing bureau to see if your state has such a law. If it does, ask for a copy of the statute and forward to your landlord if they refuse to create a receipt. If your state doesn't mandate rent receipts, create a receipt yourself and ask your landlord to sign it when you submit payment.
The Bottom Line
If you rent from a property-management group, it's likely that you can log in to its tenant portal to obtain an electronic receipt. If you rent from an individual or small company, you may have to ask for a monthly written receipt.
Avoid making rent payments using cash. Pay by check in order to have a paper trail to go along with your receipt. Pay a few extra dollars for a money order if needed, but don't pay with cash. If you have no choice but to pay cash, demand a rent receipt each time. It's the only proof of payment that you have. For more information, see The Complete Guide To Real Estate Renting.
