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How to split utility bills with tenants: RUBS methods, proration and taxes

One water meter, three units, one bill. Here's how to split a master-metered bill fairly with a ratio utility billing system (RUBS), prorate move-ins by the day and handle it at tax time.

Updated October 20, 2026 · by Tidy Landlord

What RUBS is (and isn't)

A ratio utility billing system, or RUBS, takes one bill for the whole building and divides it between units with a formula: the number of people in each unit, its floor area, its bedrooms, an equal share, or a mix. It's common in duplexes, triplexes, small apartment buildings, rooming houses and house hacks where water, gas or heat isn't metered per unit.

It isn't submetering. A submeter measures what each unit actually uses; RUBS estimates it. That makes RUBS cheap to set up but only as fair as the formula, so pick one tenants can understand and check.

Step 1: Put it in the lease first

Only bill back what the lease says the tenant pays. Before anyone signs, the lease should say which utilities are shared, the method you'll use, whether a common-area share comes off the top, any admin fee, how often you'll bill and when payment is due. Some states, provinces and cities regulate billing tenants for utilities, especially water, or require specific disclosures, and some don't allow certain fees, so check the rules where your rental is before you add a RUBS clause.

Step 2: Choose the split for each utility

Occupants suits water, sewer and hot water, which follow how many people live there. The IRS itself says it may be reasonable to divide water by the number of people using it (IRS Pub. 527).
Square footage suits heat and cooling, which follow the space being kept warm or cool.
Bedrooms is a simple stand-in for occupants when you don't know who lives where.
Equal shares works for flat costs like trash or internet.
A mix, such as 50% occupants and 50% square feet for water, smooths out a large family in a small unit.

Use the same method all year and for every unit, and keep the numbers you used (floor areas, occupant counts) with your records.

Step 3: Take common areas off the top

Hallway lights, the laundry room, outdoor taps and the boiler serve the building, not one tenant. Set a common-area percentage, take it off the bill first and keep it as your cost. Only the rest is shared between units.

Step 4: Prorate move-ins, move-outs and vacancies by the day

Bills rarely line up with tenancies. Count the days in the bill's service period and the days each tenant actually lived there. A tenant who was there for 59 days of a 90-day bill pays 59/90 of their unit's share. The days a unit sat empty stay with you, not with the other tenants.

A worked example

A triplex has one water bill of $450 for January 1 to March 31 (90 days). You live in unit C and rent out A and B. The lease sets a 10% common-area share and splits water 50% by occupants and 50% by square feet.

Common area: 10% of $450 is $45, which you keep. That leaves $405 to share: $202.50 by occupants and $202.50 by square feet.
Occupants: A has 3 people, B has 2, C (you) 1, so 6 in all. A's part is $101.25, B's $67.50 and yours $33.75.
Square feet: A is 900, B 700 and C 800, so 2,400 in all. A's part is $75.94, B's $59.06 and yours $67.50.
Unit totals: A $177.19, B $126.56, C $101.25, which adds back up to $405.
Proration: B's tenant moved in on February 1, so they were there 59 of the 90 days and owe $82.97. The other $43.59 for B's empty January stays with you.

Your own cost for the quarter is $45 + $101.25 + $43.59 = $189.84. Your tenants owe $177.19 and $82.97. Send each of them a statement showing the bill, the service period, their days, their share and the method, with a copy of the bill if they ask.

Taxes in the US

Utilities you pay for a rental are a deductible expense on Schedule E, line 17 (Schedule E).
Money tenants pay toward your expenses counts as rental income. Pub. 527's example is a tenant who pays the water and sewage bill and takes it off the rent: you include it in rental income and deduct the bill as a rental expense. Keep utility repayments you collect with your rent records and ask your tax preparer how they want them shown.
Live in one of the units? Divide shared expenses between the rental part and your own home with any reasonable method; the two most common are the number of rooms and the square footage. Pub. 527's example: a room of 180 sq ft in an 1,800 sq ft house makes 10% of a $600 heating bill, $60, a rental expense. Your own unit's share is personal and isn't deductible on Schedule E.

Taxes in Canada

Utilities such as gas, oil, electricity, water and cable go on line 9220 of Form T776, but only if your rental arrangement says you pay them (CRA guide T4036).
Renting part of the building you live in? Divide whole-property expenses by square metres or the number of rooms you rent. The CRA's example: rent 4 rooms of a 10-room house and you deduct 40% of the shared expenses, plus 100% of costs that relate only to the rented rooms. Enter the personal part on line 9949.
Keep what tenants repay you with your rent records, so your accountant can see the full bills and the amounts recovered.

Keep the paper trail

For every bill, keep the bill itself, the date you paid it, the split you used and the statement you sent. Then any question about a charge is easy to answer.

Frequently asked questions

What does RUBS mean for landlords?

RUBS stands for ratio utility billing system. Instead of measuring each unit's use, you split one building-wide bill between units with a formula such as the number of occupants, square footage, bedrooms or equal shares.

Can I bill my tenants for utilities?

Only if the lease says so, and only where local rules allow it. Some states, provinces and cities regulate billing tenants for utilities, especially water, or require disclosures, so check the rules where your rental is first.

How do I split a bill when a tenant moves in mid-month?

Prorate by the day. Divide the days the tenant lived there by the days in the bill's service period and apply that fraction to their unit's share. The days a unit was empty stay with you.

Is the utility money tenants pay me taxable?

In the US, IRS Publication 527 treats tenant payments toward your expenses as rental income, and you deduct the full utility bill you paid on Schedule E line 17. In Canada you deduct utilities on T776 line 9220 when your rental arrangement says you pay them. Ask your tax professional how to show the repayments.

Sources

This guide is general information, not legal or tax advice. Whether and how you may bill tenants for utilities depends on your lease and on state, provincial and local rules, which change over time. Check the rules where your rental is and the official tax sources linked above, and ask a lawyer or tax professional if you're unsure.

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