---

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, January 30, 1992                   TAG: 9201300404
SECTION: EDITORIAL                    PAGE: A10   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

---

CHALLENGE QUIRK IN STATE TAX CODE

YOUR COMMENTS on mortgage-interest deductions (editorial, "Homeowners and housing subsidies," Jan. 14) couldn't have been better timed. While the General Assembly considers the governor's call for drastic cuts in the Virginia Housing Partnership Fund, the effect of the mortgage-interest deduction on Virginia's revenues needs to see the light of day.

Virginia is one of the few states with an income tax that mimics the federal code for deductions. So homeowners who get a subsidy from the federal government also get a subsidy from the commonwealth.

In 1989, Virginia lost $276 million in revenue to the deduction, a subsidy that only one-third of Virginia households can claim. The total outlay for the poor through the Housing Partnership Fund for the same year was less than $20 million.

Virginia households with greater than $50,000 adjusted gross income took deductions from Virginia income tax of $157.76 million. In the $200,000 and above category, the state provided a housing subsidy to these 10,200 wealthy households (0.4% of all Virginia households) of $11 million in interest deduction alone.

As you pointed out, this can be applied to two homes. In addition, while two-thirds of the state's households have lost the ability to deduct interest on consumer debt, home-equity loan interest can still be deducted as mortgage interest, whether the loan is used for homes repairs, a new car or a boat. This quirk in our tax code must be challenged at a time when we are risking the loss of decent shelter, education and health care for more and more people in our commonwealth. JANAKA CASPER Executive Director, Virginia Mountain Housing CHRISTIANSBURG

---