The State is expected to lose tax revenue of €11m due to schemes designed to encourage investment in property, according to documents disclosed under Freedom of Information.

The documents analysed the costs to the exchequer of Real Estate Investment Trusts (REITs).

The information was obtained by Sinn Féin's finance spokesman Pearse Doherty, who criticised REITs for adding to property inflation.

The documents show the Department of Finance expected that the tax foregone by REITs would reach €11m in 2016.

The structures are exempt from paying 25% tax on non-trading rental income if they distribute 85% of their profits to shareholders. Instead investors pay 20% dividends withholding tax.

There are three REITs in Ireland: Hibernia, Green and IRES and they had a combined profit of €280m in 2015.

Investors were paid €238m but only paid tax of €5.27m in 2015.

However, the department said: "It is likely that there would be significant timing differences in relation to the payment of dividend withholding tax relative to the calculation of the profits per the REIT’s accounts."

Deputy Doherty said that the REITs had the "fire power" to outbid other house buyers.

"These funds are in direct competition with first time buyers and families seeking a move yet they have huge advantage because of these tax loopholes," Mr Doherty said.

"The Government needs to immediately act to close these loopholes to level the playing field for ordinary people who are being priced out of the market," he added.

However, the department said the "minimal" loss of tax brought new sources of capital into the Irish property market.

It said it reduced the dependence of the property market on bank finance and freed up bank lending for other industries.

The department also said it facilitated the collective investment in property which brought the benefit of risk diversification to investors.