By Sandhya Somashekhar
Washington Post Staff Writer
Thursday, October 11, 2007

D.C. tax officials said yesterday that it was their fault that a state Senate candidate from Virginia got an improper tax break on her Washington Circle condominium.

The candidate, Jill Holtzman Vogel (R), and her husband never applied for the city's homestead deduction, said Natalie Wilson, a spokeswoman for the Office of Tax and Revenue.

Wilson said the condominium's previous owner was getting the deduction, and the tax department incorrectly grandfathered in the deduction after Vogel bought the property. Earlier in the week, the tax office declined to discuss individual taxpayer cases.

"We did make a mistake," Wilson said. "I would like to acknowledge we gave the credit in error."

The tax benefit allows homeowners to cut $60,000 off the value of their home when calculating their property taxes. Homeowners are allowed to take the deduction only for their primary residence.

Vogel and her husband, Alex Vogel, live in Upperville, where she is running for office in the 27th District. Alex Vogel, a GOP strategist, said he stays in the condominium a couple of days a week when Congress is in session.

Jill Vogel is in a tight race with Karen Schultz (D), a professor at Shenandoah University. Along with independent Donald Marro, they are hoping to succeed retiring Sen. H. Russell Potts Jr. (R-Winchester).

As reported in yesterday's Washington Post, the Vogels had been receiving the deduction since they bought the condominium at the Residences at the Ritz-Carlton in November 2005. They said Monday that they had no idea why they were getting the tax break and that they had never applied for it.

District officials had said that sometimes a third party, such as the company handling the settlement of a property, will fill out the form required to get the deduction. They added that the homeowner must sign it to get the credit, although yesterday they acknowledged that they never received such a form from the Vogels.

Alex Vogel said yesterday that he was relieved and that he was planning to return the money to the tax office. He produced a document from the real estate closing that indicated that he and his wife had not applied for the tax credit.

"I'm glad that D.C. acknowledged the error," he said. "I was confident we did everything we were supposed to, and I'm glad D.C. has confirmed it."

About 90,000 District property owners receive the homestead deduction, which is designed to make homeownership more affordable, Wilson said.

Last year, an inspector general's audit revealed that the city was losing as much as $3.4 million a year because of residents taking the deduction improperly. The Office of Tax and Revenue is undertaking an audit to weed out violators and those getting the benefit unknowingly.