Major Capital Improvements - Current HCR MCI Rules

Eligibility and Approval

An MCI is a building-wide improvement to a major system that benefits the building, is essential for preservation, energy efficiency, functionality, or infrastructure, and is depreciable under the Internal Revenue Code. Ordinary repairs and unnecessary cosmetic work do not qualify. The replaced item generally must satisfy HCR's Useful Life Schedule unless HCR grants a waiver.

The owner must apply to HCR using the current RA-79 process and cannot collect the temporary increase until HCR issues a written order. HCR states that an MCI application must be filed within two years after installation. The application record includes contracts, proof of payment, municipal approvals, and other current form requirements. Tenants receive notice and may respond.

Current Calculation Rules

• buildings with 35 or fewer units use a 12-year amortization period;
• buildings with more than 35 units use 12.5 years;
• annual collection is capped at 2% of the actual rent in place;
• an approved increase is collectible beginning on the first day of the first month after 60 days from mailing of the order; and
• the MCI increase, including related Rent Guidelines Board increases, must be removed from rent 30 years after it became effective.

HCR also states that MCI increases are prohibited for buildings with 35% or fewer rent-regulated units and where specified hazardous or immediately hazardous violations remain on file. Use the current Fact Sheet and application instructions for the building's facts.

Operating Procedure

1. Confirm the work and building are eligible before treating any rent increase as project revenue.
2. Check the Useful Life Schedule and open-violation record.
3. Preserve bids, contract, invoices, proof of payment, permits, approvals, completion evidence, and allocation workpapers.
4. File within the current two-year period.
5. Collect only after the HCR order and subject to the 2% cap.
6. Record the effective date and schedule removal at 30 years.

Verified Sources

Fetched and read August 7, 2026:

• New York HCR - Apartment (IAI) and Building (MCI) Improvements
• New York HCR Fact Sheet #24 - Major Capital Improvements, April 2025

Work With Botway

Botway may track the project record and HCR order. It must not include an MCI increase in rent until the approved order and apartment-specific collectibility are recorded.