Members of the clergy across the country are protesting a new Internal Revenue Service rule that would close a 20-year-old tax loophole on housing deductions for the clergy, and those in the Washington area say the rule will hit here especially hard.

The new ruling would reverse a long-term policy that allows clergy who own their own homes to deduct taxes and interest on mortgages even if they receive a tax-exempt housing allowance. Although the ruling went into effect July 1, clergy who already owned their homes were given until 1985 to comply, a move the IRS made after church officials asked for a grace period to soften the blow.

For the Rev. John Falcone, the minister for St. John's Episcopal Church in Arlington's trendy--and high-priced--Glencarlyn neighborhood, the change in the tax law could mean he would have to give up his home.

"This is a small church, and they do not own a parsonage. And because it is almost a necessity for me to live close to the church, I don't have much choice in housing," said Falcone. "I got a home about five blocks away when I came here last year, and the mortage is unbelievable. The only way I can make it is with the deduction, and then just barely. I don't know what I will do."

Despite his personal concern, however, Falcone said he believed the ruling ultimately would hit some parishoners harder.

"There are many ministers who don't make more than $11,000 a year, and without the housing subsidy provided by the old IRS rule on deductions they might not be able to make it," said Falcone. "For small parishes that will have to make up the difference, that will hit the members particularly hard."

Most denominations do not keep figures on how many of their ministers own homes, but representatives from the different faiths say the days when each church had a neighborhood parsonage are over.

The United Church of Christ actively encouraged ministers in the Washington area to buy homes during the 1960s and early '70s, said the Rev. Gordon Forbes of the Westmoreland UCC church. But now the UCC takes a different tack.

"There has been a strong trend in the past of clergy owning their own homes," said Forbes. "But with the slowdown in housing and the increase in interest rates for loans and the increase in the cost of housing, that has become a mixed bag. Most ministers are now given the information and told to make their own decisions."

For the Rev. Thomas Cox of the Emmaus United Church of Christ in Vienna, the new rule will mean a loss of approximately $1,000 in deductions of interest on his home mortage, and he said that, while he didn't expect to lose his home because of the new rule, he is concerned that many churches would not be able to make up the difference in salary for their ministers.

IRS officials have defended the change by saying they are eliminating an unfair tax loophole, but many ministers argue that because they are required to pay 100 percent of Social Security, similar to self-employed people, they carry their share of the tax burden.

"The clergy are one of the lowest paid professions, and it is my belief that many other professions get more tax deductions than the clergy," said Forbes. "I certainly haven't gotten away with paying very little in taxes."

Rep. Stanford Parris (R-Va.) has introduced a bill in the House of Representatives that would repeal the IRS ruling. More than 80 members have co-signed the bill, but supporters say House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) has refused to schedule a public hearing on the issue or report the bill out of his committee.

Byron Andreson, a legislative assistant to Parris, said Sen. Paul Trible (R-Va.), among others, is considering introducing similar legislation in the Senate and that the issue might move faster in the Senate than in the House.

Complicating the issue, and upsetting many clergy, is an IRS decision to leave a similar loophole for military personnel on the books.

An IRS spokesman, who asked not to be named, said the reasoning behind the decision was that, if the loophole were closed for military personnel military wages would have to be increased to make up the difference. With the clergy, the congregations rather than the taxpayers would make up the difference in support, the spokesman said.

But many ministers are afraid their congregations won't be able to make up the difference.

"The money just isn't there for most denominations," said a local minister who asked not to be named. "It's like justifying the cutback in human services by saying private business will take up the slack. But it hasn't, and you can't depend on the initiative of the church any more than you can depend on the initiative of private business."