Lawmaker’s D.C. homestead deduction raises questions

Rep. Nick J. Rahall II is the only lawmaker among 107 in Congress who own property in the District to claim a homestead deduction, taking advantage of a tax deduction reserved for D.C. homeowners who claim their D.C. property as their “principal residence,” tax records show.

The deduction saved the veteran West Virginia congressman $573 on his annual D.C. property tax bill.

Mr. Rahall, a Democrat facing re-election in November, also enjoys a reduced owner-occupied tax rate on his West Virginia home, which cut his state property tax bill in 2012 by $2,874, records show.

In 2011, Mr. Rahall listed assets in his House financial disclosure statement of between $1.72 million and $3.55 million, not including the value of the two homes.

“Rep. Rahall should pay back the money to the District of Columbia or drop out of his race for re-election in West Virginia,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a watchdog group. “If the District of Columbia is his primary residence, I don’t know how he meets the residency requirements to serve as a representative from West Virginia.”

Ms. Sloan said the District has made it clear that members of Congress cannot claim a homestead deduction on their Washington homes.

“This issue has come up before with other members,” she said. “Nick Rahall cannot claim he did not know.”

Reached at his home in Beckley, W.Va., Mr. Rahall said he didn’t know “if I have it or not” when asked about the deduction. When told he submitted and signed an application to city tax officials claiming his District townhouse as his “principal residence,” he told The Washington Times to check with his accountant but hung up before giving the accountant’s name.

Mr. Rahall’s chief of staff, David McMaster, and his communications director, Diane Luensmann, did not respond to telephone and email messages seeking comment.

Rick Snuffer, a member of the West Virginia House of Delegates and Mr. Rahall’s Republican opponent in the election, said the congressman’s taking of the homestead deduction “just does not seem right.”

“I would think his principal residence is here in West Virginia,” Mr. Snuffer said.

The D.C. homestead deduction reduces a property’s assessed value by $67,500. Mr. Rahall has been receiving the deduction since 2004 on a four-story Capitol Hill townhouse in the 1300 block of Independence Court Southeast, which he purchased in August 2004 for $741,115, according to city tax records. The seven-room townhouse is now worth $890,320.

Natalie Wilson, spokeswoman for the D.C. Office of Tax and Revenue, said the office is auditing Mr. Rahall’s homestead deduction and has sent him a letter asking him to prove he qualifies. If he does not, she said, he can be charged for back taxes.

The District, like many local governments, gives residents a break on their property taxes for their principal residence. Homeowners must apply for the deduction, declaring that they own and occupy the property as their principal residence.

Mr. Rahall’s son, Nick Joe Rahall III, 35, is listed on city’s tax records as the owner and taxpayer on the townhouse. The original deed listed the younger Mr. Rahall as the purchaser although at the time he was in federal prison on drug charges. Records show the senior Mr. Rahall took out a $541,000 mortgage to buy the property in August 2004 and, in October 2006, recorded a document with the Recorder of Deeds saying he was the property’s sole owner and the original deed “erroneously” listed him as Nick J. Rahall III instead of Nick J. Rahall II.

A D.C. tax office memorandum says a member of Congress who owns a house in the District but maintains a residence in his home state where he votes “cannot claim the District’s homestead deduction.” The memo describes the member’s principal residence as the house in the area the lawmaker represents.

The congressman has owned a 10-room house in Beckley since 1995. The Raleigh County, W.Va., Assessor’s Office taxes that home at the lower owner-occupied rate — half the rate for houses not occupied by the owner.