For the last two years the city of Alexandria has been giving a real estate tax break to developers and banks who own large blocks of unsold condominium apartments.

Alexandria officials said there were about 2,000 unsold condominiums in the city as of last Jan. 1, the last date for which figures are available. Almost all the unsold units are owned by developers or banks, and about 700 of them are taxed from 8 to 20 per cent less than comparble units that are owned by people who live in the single condominiums they have purchased.

David J. Chitlik, director of Alexandria's real estate assessments office, said the idea of granting the tax break had originated in his office three years ago when it became clear that there was a glut of condominiums in the city. Chitlik emphasized that the banks and developers were not consulted on the matter.

"They had no imput whatsoever. The decision was made entirely within this (office)," Chitlik said.

Chitlik conceded that the decision to give developers and banks a tax break is unfair to people who own only one condominium unit, but he contended that he is only following the mandate of the Virgina State Constitution that requires that all units be assessed at the fair market value.

The Alexandria assessor said a developer with a larger number of unsold units cannot be expected to receive the same price on a unit as an individual condominium owner who sells a single unit.

"We come across as being the bad guys because it seems as though we're helping the developer and penalizing the homeowner, whereas in effect we're just trying to follow the (tax) code," added Chitlik.

Chitlik admitted that the practice, apparently unique among Washington-area jurisdictions, would upset him if he was an individual condonminium owner. "I'd be ticked off. I'd be upset about it," Chitlik said. "I wouldn't want anyone else to get a break more than I was getting."

James Vinson, the director of real estate assessments in Arlington County, said there have been no court cases on the issue in Virginia and that jurisdictions must try to deal with the problem as best they can until there is a ruling from the courts.

Vinson said that although Arlington had not given developers or banks a tax break on their condominium properties, it is possible that the county could take steps similar to Alexandria's if conditions warrant if.

"There are no real hard and fast facts as to how to handle it. It almost comes down to a question of philosonphy rather than fact," Vinson said.

Chitlik said that Alexandria had to act because the city found itself with 2,600 unsold condonminium units on Jan. 1, 1975. In addition, there were other units under construction and more planned. He said his practice of granting tax breaks to developers and banks had been approved in an independent audit by the nation's largest accounting firm, Peat, Marwick, and Mitchell.

In a report on the Alexandria practice, the American Institute of Real Estate Appraisers said: "In effect, it adjusts for the time lag which will occur before revenues (from the sale of condominiums) are received as well as accounting for any costs involved. Thus, it reflects a development's true worth to an investor."

The issue has been raised in Alexandria by owners by condominiums in the Place One complex, located at 5500 Holmes Run Parkway in the heart of "Condo canyon," an area so nicknamed because of the many condominiums on both sides of Interstate Rte. 395 in Alexandria.

The place one homeowners association complained last spring to the Alexandria Board of Equalization and Appeals that their real estate tax increase were too high because 174 of the building's 300 units were unoccupied.

Jerry Wilkerson, the spokesman for the individual condominium owners, said he did not know at the time that the Union Bank of California, which owns the unsold units, was getting a real estate tax break.

"I was just interested in myself and my fellow owners, not someone from California," said Wilkerson.

The Board of Equalization and Appeals refused to lower the individual owner's taxes, but at the same time raised tha bank's assessment by $627,000. Chitlik, the Alexandria assessor, said it was certain the bank's taxes would be raised again next year because the bank has sold 74 units this year.

On Wednesday, Union Bank told the Board of Equalization and Appeals that its taxes were too high. McCloud B. Hodges Jr., a real estate investment counselor who represented the bank, said Union had bought each condominium at an average price of $40,741 and that the bank had lost an average of $22,847 on each of the 85 units it had sold since April, 1976, when it foreclosed on the developer who built the project.

Hodges said that the 85 units were sold at an average price of $47,000, but is cost the bank an average of $33,105 to maintain each unit because of sucn expenses as condominium fees, legal fees, real estate taxes, advertising, sales commissions, and interest on the bank's original $7 million dollar investment in the project. The bank has made up some of the loss by renting 28 of the unsold units in Place One.

"It's a loss, it's money out of the bank's pocket," Hodges said in an interview.

The difference between what an individual owner pays in real estate taxes on a Place One condominium and what Union Bank pays can be substantial. Wilkerson, the spokesman for the individual condominium owners, said he will pay $822.80 in real estate taxes for 1977 on his 1,240-square-foot apartment. Union Bank will pay only $758.20 for an unoccupied unit the same size, a difference of 8.5 per cent. The Alexandria assessor's office tax payments between individually owned and bank-owned units at Place One is twice that, roughly 16 per cent.

Hodges said he does not think that is unfair because a homeowner is "getting the beneficial and full use of the occupancy of that apartment. Next door the bank is getting no use out of that (empty) apartment and is paying several hundred dollars a month for letting it sit there vacant."

Hodges told the tax equalization board that the issue was not equality of real estate tax payments between the individual owners and the bank, but rather at what price the vacant units could have been sold for on Jan. 1, 1977, the date the year's tax assessments go into effect. Hodges argued the price the bank could have gotten would have been well below the $40,741 average the bank paid for its unsold units.

Wilkerson said that the terms the Union Bank was offering prospective buyers could not possibly be matched by an individual owner trying to sell his unit.

The bank, in an effort to sell the units as quickly as possible, is offering an interest rate of just under 7 per cent for the first five years of a 30-year mortgage instead of the typical mortgage rate of 9.5 per cent. In addition, people buying from the bank need to make a down payment of only 5 per cent compared to the normal 20 per cent down payment on such sales.

"If I found a buyer for my unit where could I find him financing like that? No way," said Wilkerson.