So-called cuckoo funds will be exempt from paying 10% stamp duty if they lease the homes to local authorities.
The measure was voted through in the Dáil last night.
The tax was announced in May after concerns were raised about institutional investors bulk-buying homes.
Sinn Féin's housing spokesperson, Eoin Ó Broin, is strongly criticising the government.
"The decision of Fianna Fáil, Fine Gael and the Green Party to give an enormous tax break to buy up houses and duplexes is an absolute disgrace.
"Only four or five weeks ago Micheál Martin said this wouldn't happen - they've broken their word and I have to say there are a lot of very very angry people out there."
