Tenant moves in two years ago, payed first month, last month, and security deposit. At lease renewal last year, rent went up $200 per month. Moving out next month. So… does the tenant owe an additional $200 rent for the last month or not?

For your sake, I hope the tenant thinks so - That they owe an additional $200.

You'll really have to check how it's worded in your lease. Is it the total last month's rent, or will be applied toward the last month's rent?

I would send them the notice that "only" 200 will be due, along with move-out instructions. Can't hurt to try.

No, that's the problem of collecting first and last. All they might owe is $200 or they can say we already paid the last months rent. Going forward collect first and a sizable security deposit.

I have a long-term (at least 10 years) tenant who is the only one I ever collected a "last month's rent" amount on.

During Covid when all leases went M2M, when I came back to sign new annual leases, which everyone wanted, I increased the Security Deposits from whatever they were to 2x the rent. For this one tenant, I offered to allow her to convert her pre-paid "last month's rent" towards the amount now due on the new Deposit. Some deposit was still due, but nowhere near as much.

She gratefully took me up on that.

This is a great opportunity to update your lease so this is specifically addressed and never becomes a problem again!

That said...great question. I suppose it could be viewed one way or the other, but my opinion is "last months rent" was paid in advance and you accepted it. Ergo, last month's rent is paid.

Think of it this way: let's say the tenant had been there 30 years and paid only 20% of current market rent way back then for last months' rent. From my understanding, prepaid rent is not treated like a security deposit because it is income just like any other and is no longer the tenant's money held in Trust for them. Therefore, the recipient would have had 30 years to use that money to do things with. The tenant spent that "value" 30 years ago, so technically there is no loss to the recipient.

That's one arm-chair guy's opinion. I am not a lawyer. Consult appropriate professional advice if you think it's worth it for $200.

I'm not a big fan of last month's rent, unless the lease does address that amounts will be updated to whatever the current lease rate is and the difference is payable during the last month. The problems get worse as time goes on and rents go ever higher. I'm guessing there are many folks who rented to tenants 3+ years ago and took last month's rent who are now kicking themselves because rents are 20%-40% higher in many places.