Short-term, zero-interest-rate mortgage plans have a hidden tax advantage that surprised even some of the local developers already offering the experimental programs when they learned about it this week. Even though no interest is charged under the plan, federal law provides that the buyer can take a tax deduction on the mortgage payments, according to tax experts contacted by The Washington Post.

This could make the plan economical for a larger number of people and could be a major selling point for the idea, now being advertised by three developers in the area.

With interest rates at today's high levels, the monthly cost of paying off all the principal quickly can be about the same as paying off a 30-year mortgage with interest.

The major economic drawback noted by both economists and by the developers and builders offering the plans was that there was no interest to deduct from income taxes, one of the main tax shelters relied upon by middle-income persons.

But tax experts at the Internal Revenue Service and tax accountants point to a section of the tax code that assumes a certain amount of interest on installment payments even when no interest is charged. This does not mean interest costs would be added to payments, only that a portion of the payments would be considered tax deductible by the government.

This was a pleasant surprise for some of those offering the plan here, the latest of which is The Towers at Cathedral Avenue NW. When contacted by The Post, Al Blitz, the agent for the partnership that owns the condominium, said the group was completely unaware of the tax advantage. "I just threw it out to see how it would work" without consulting the firm's tax accountant, he explained. The response in the first week to the idea was "not very good," but the tax break might help, Blitz said.

Craig Bennett, the accountant for the Bay Country community near Chesapeake Bay, one of those offering the plan, said he is trying to get the IRS to put a ruling on the deduction in writing so that customers can be assured of the break when they consider buying under the plan.

John Gornall, spokesman for The Towers in College Park, said the developers of the condominium had been aware of the possibility of the tax advantage but had not been able to advertise it because they did not have definitive word on whether the tax provision applied and did not want to make a claim that might later prove false.

Currently the assumed rate generally is 10 percent, though this is subject to change as market rates fluctuate, and would be amortized the same way a rate on a conventional loan would be, that is with more in the early years.