This article covers the Rate of Return worksheet for the following property types:
- Single-Family Homes
- Condominium Units
- Accessory Dwelling Units (ADUs)
- Two-Unit Properties
- Apartment Buildings
This article does not apply to cooperative (co-op) units. If your property is part of a cooperative association, please refer to our companion article: How to Complete the Rate of Return Worksheet — Cooperative Units
Disclaimer
This article is meant to help, not to substitute for professional advice. The math is yours — we strongly encourage you to verify all calculations independently and consult a licensed attorney or accountant before filing. RentJiffy is not responsible for errors or outcomes resulting from use of this guidance.
Overview
The Rate of Return worksheet is required as part of your DC Rent Registry filing if your property is subject to rent control. It measures the gain or loss on your rental property investment over a 12-month period, expressed as a percentage. DC RAD uses this figure to establish a baseline for your property. Understanding how to complete it accurately from the start will save you significant headaches down the road.
What You Need Before You Start
Gather the following before opening the worksheet.
From your own records:
- Your property's assessed value from DC Office of Tax and Revenue (OTR)
- Your rental income for the 12-month reporting period
- Your operating expenses for that same period (maintenance, repairs, insurance, management fees, etc.)
- Your mortgage statement(s) — specifically the total interest paid during the reporting period and the outstanding principal balance at the end of the period
- Records of any other encumbrances on the property (home equity loans, lines of credit secured by the property, etc.)
From DC Office of Tax and Revenue (OTR):
- The assessed value of your property. Search at mytax.dc.gov using your property address. For single-family homes, rowhouses, and individually deeded condominiums, you will find an assessment specific to your unit or property. Use this figure directly — no additional calculation is needed to determine your share.
Step 1: Set Your Reporting Period
DC RAD requires a reporting period of 12 consecutive months falling within the 15 months prior to registering your property. Choose your beginning and ending month and year before you start filling in any numbers. All income and expense figures must fall within this same period.
Step 2: Note Your Assessed Value
Look up your property's assessed value at mytax.dc.gov. This is the figure the DC Office of Tax and Revenue has assigned to your property for the current tax year. You will use this number directly in the equity calculation in Step 7.
For properties with multiple units on a single deed — such as a rowhouse with an English basement apartment — the assessed value covers the entire property. You do not need to break it down by unit.
Step 3: Calculate Gross Income
A. Total Scheduled Gross Income Add together all income sources for the reporting period:
- Maximum rental income at 100% occupancy
- Parking income (if applicable)
- Any other fees charged above rent (late fees, appliance fees, etc.)
- Any commissions or fees (laundry, vending, etc.)
- Any other sources of income
If a line does not apply, enter zero. The system requires a value in every field.
B. Subtract Vacancy Losses Deduct any rent that was uncollectable due to vacancy or non-payment during the period:
- Vacancy losses (rent lost due to vacant unit)
- Uncollected rents
Note: DC RAD caps deductible vacancy losses at 6% of maximum rental income. Any vacancy loss amount above that threshold cannot be deducted.
Gross Income = Total Scheduled Gross Income − Total Losses
Step 4: Calculate Operating Costs
DC RAD allows the following categories of operating expenses:
- Administrative costs (management fees, advertising, legal fees, telephone)
- Operating costs (trash collection, payroll, security, supplies)
- Fixed costs (insurance, licenses, permits)
- Maintenance and repair costs (painting, cleaning, repairs, service contracts)
- Property taxes
- Mortgage interest payments (interest only — not principal)
Important notes on two of these categories:
Property taxes. Unlike co-op owners, you receive a property tax bill directly from DC OTR. The amount you paid during the reporting period is a straightforward deductible expense. Enter the actual amount paid — do not estimate.
Mortgage interest. DC RAD allows mortgage interest as an operating expense but explicitly excludes mortgage principal payments. Use only the interest portion of your mortgage payments during the reporting period. Your lender will provide an annual mortgage interest statement — typically a Form 1098 — that shows exactly how much interest you paid. If you have more than one loan secured by the property, include the interest from all of them.
What DC RAD does not allow as operating expenses:
- Mortgage principal payments
- Depreciation expenses
- Membership fees or political contributions
- Legal fees for defending against housing regulation violations
- Maintenance costs reimbursed by insurance, a tenant, or court order
- Management fees exceeding 6% of maximum rental income
- Vacancy losses exceeding 6% of maximum rental income
- Expenses paid directly by the tenant
Total Operating Costs = Sum of all allowable expenses above
Step 5: Calculate Net Income
Formula: Gross Income − Total Operating Costs = Net Income
Step 6: Calculate Equity
This step uses the outstanding mortgage balance — not the interest paid. This is an important distinction from Step 4, where you used interest only.
Your equity is your assessed value minus the total of all encumbrances on the property. Encumbrances include any loans or liens secured by the property, such as:
- Your primary mortgage outstanding principal balance
- Any home equity loan or line of credit outstanding balance
- Any other liens or encumbrances recorded against the property
Formula: Assessed Value − Total Encumbrances = Equity
Example:
- Assessed value: $400,000
- Primary mortgage balance: $250,000
- Home equity loan balance: $25,000
- Total encumbrances: $275,000
- Equity: $400,000 − $275,000 = $125,000
If you own the property free and clear with no mortgage or other encumbrances, your equity equals your full assessed value.
Step 7: Calculate the Rate of Return
Formula: (Net Income ÷ Equity) × 100 = Rate of Return %
Example: ($10,000 ÷ $125,000) × 100 = 8%
What Your Rate of Return Means
The rate of return figure this worksheet produces tells DC RAD how your rental income compares to the value of your investment after accounting for debt. A few things worth understanding:
It is based on assessed value, not market value. DC OTR's assessed value may be higher or lower than what your property would actually sell for. This can affect your rate of return in either direction. If your property is assessed well below market value, your rate of return will look higher than it actually is in economic terms. If it is assessed above market value, the opposite is true.
It matters if you ever need a hardship increase. DC rent control allows you to petition for a hardship rent increase if your rate of return falls below a certain threshold. A higher rate of return on paper makes it harder to claim hardship, even if your actual investment returns tell a different story. If this is a concern, consult with an attorney familiar with DC rent control law before making decisions about future rent increases.
It is a snapshot, not a guarantee. The rate of return you report reflects one 12-month period. It will change as your assessed value, mortgage balance, income, and expenses change over time.
Quick Reference: Documents to Have on Hand
Before you begin, make sure you have the following:
- DC OTR property assessment (mytax.dc.gov)
- Mortgage statement showing outstanding balance and interest paid during the reporting period
- Form 1098 from your lender (annual mortgage interest statement)
- Records of all rental income received during the reporting period
- Receipts or records for all operating expenses during the reporting period
- Records of any additional encumbrances (home equity loans, liens, etc.)
This article applies to DC Rent Registry filings only. Tax and legal questions about your rental property should be directed to your attorney or accountant.