As you may already know, the State Legislature extended the amortization period for major capital improvement (MCI) rent increases when the Rent Act of 2015 was passed. As a result of the Act, the amortization period for buildings with 35 or fewer apartments was increased to 96 months and the amortization period for buildings with 36 or more apartments was increased to 108 months. The purpose of these changes was to reduce the amount of the monthly rent increase for tenants resulting from the MCI.
In order to offset the impact of these changes to the law, a tax credit for MCI applications was created for rental property owners through the City Department of Finance (DOF). Properties that qualify for the abatement will receive the tax credit for one tax year only. The application is available on DOF’s website along with a guide which explains the process for completing and submitting the application. The application and guide can be found at http://on.nyc.gov/2cZyGAE.
RSA members who have been approved for the MCI tax credit over the last year have already started receiving them. RSA strongly encourages owners to take advantage of the MCI tax credit. Here are important FAQs that you should know when applying for an MCI tax credit:
When will the MCI abatement be applied?
The MCI abatement will be applied in the tax year beginning after the approval of the application. Any applications that were submitted after May 15, 2017 will be considered for Fiscal Year (FY) 2019, commencing on July 1, 2018.
Can the MCI abatement be carried over to another tax year?
The MCI abatement cannot be carried over to another tax year.
Is the abatement renewable?
The tax abatement for a specific MCI increase is not renewable in subsequent years.
Will the abatement affect other City and State tax benefits?
The MCI abatement does not reduce or offset any other tax benefit provided, calculated or approved by the City or State.
For additional information, please contact an RSA counselor at (212) 214-9200.