Changing the Stamp Duty rules relating to residential properties could boost Exchequer tax take, while also reducing house prices and increasing the number of properties available to owner-occupiers, according to the Tax Strategy Group.
However it also warns that the changes could also see rent costs increase for tenants, while a potential change to discourage foreign buyers may fall foul of EU rules.
In its paper on Stamp Duty, the Tax Strategy Group considered three potential changes to the residential property regime, some of which borrow from the system used in the UK.
They include lowering the threshold at which properties are charged the higher 2% rate, from the current €1m to €750,000.
The group also looked at the impact of applying the 2% rate to the entirety of the property's value once it moved into the higher bracket. Meanwhile it looked at the introduction of a surcharge on residential properties acquired by non-residents.
The Tax Strategy Group said that all three changes could lead to an increase in the amount of revenue generated through stamp duties on residential property. However it said a lack of detail meant it was unable to estimate the scale of the difference.
On the potential lowering of the cut-off point at which the 2% rate is applied, the Tax Strategy Group also said it could lead to a small reduction in prices, as buyers would seek to avoid falling into the higher rate.
However it said any change would also impact sales in a small number of areas of the country, in particular south county Dublin. And it said any increase in the cost of acquiring a buy-to-rent property could ultimately be passed on to tenants.
On applying the 2% duty to the full value of a qualifying property, the group said it would lead to a "much more significant increase" in the duty charged on properties that fall within the higher band, which buyers could try to find ways to avoid.
"This cliff edge effect may in turn create an increased perverse incentive for market participants to find ways to keep quoted property values below the trigger level, with other ways being found to transfer additional value from the purchaser to the seller outside the scope of stamp duty," it said.
Meanwhile, it said a surcharge on purchases by non-residents could discourage people from buying Irish properties as holiday homes, potentially making more homes available to local buyers.
However it said such a rule could be in conflict with EU rules on the free movement of residents, and could act as a disincentive to workers seeking to relocate to Ireland.
It said the change could also discourage overseas investors from building here, and could ultimately lead to a reduction in Exchequer revenue if it proved to be difficult to regulate.