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MCI Tax Abatements Still Available

Program Not Affected by 2019 Rent Law Changes

Despite the drastic changes to the State rent law in Junes, those changes did not affect the City’s MCI Tax Abatement Program and the City’s Department of Finance (DOF) continues to accept applications from owners for those benefits.
As you may recall, the State Legislature extended the amortization period for MCI rent increases when the Rent Act of 2015 was passed. As a result, 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 financial impact on tenants resulting from MCIs. To offset the impact of the longer amortization periods on owners, a tax credit for MCI applications was created for rental property owners. Properties that qualify for the abatement receive the tax credit for one tax year.

Although the 2019 Rent Laws have extended the amortization period for MCIs even further, DOF continues to provide one-year tax credits through the existing abatement program. According to DOF, 668 MCI tax abatements were issued to building owners in the most recent fiscal year, with approximately $11.7 million in abatements.

As a result of the changes to the rent laws, as well as ever-increasing property taxes, building owners are strongly encouraged to take advantage of the MCI Tax Abatement Program. Here are important FAQs, courtesy of DOF, 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, 2019 will be considered for Fiscal Year 2021, which commences on July 1, 2020.

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 New York City or New York State.

The application is available on DOF’s website along with a guide which explains the process for calculating the benefit and completing and submitting the application. The application and guide can be downloaded by CLICKING HERE.
For additional information, please contact RSA at (212) 214-9200. 

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