Business and professional people who have been availing of generous tax write-offs by investing in office blocks in designated areas will be hit by the Government's decision to cap the capital allowances that they can claim.
Mr McCreevy has set a ceiling of £25,000 per year on what an individual investor can claim against personal income.
The cap will apply to the capital allowances not availed of by the taxpayer as an offset against rental income.
Mr McCreevy said the availability of the capital allowances was a prime factor in certain high-income earners being able to reduce their tax by substantial amounts.
The newly-announced restriction is expected to affect both office and residential buildings in designated areas. However, investors will still be able to offset the allowances against rental income.
Up to now, investors have been able to claim up to 100 per cent capital allowances on new office buildings in Dublin's International Financial Services Centre, and in enterprise areas such as Eastpoint Business Park in the Dublin docklands.
In other designated areas, the allowances on new buildings have covered 50 per cent of the purchase price.
The new restrictions are likely to curb the activities of wealthy passive investors who have become dominant players in the commercial property market over the past two years.
Last night the Irish Auctioneers and Valuers Institute predicted that the changes in the capital allowances would curtail investment.
"Much of the development in the designated areas was fuelled by such investment. We hope that the Minister has not thrown the baby out with the bath water."
The IAVI said the change also reflected a perceived shift in Government policy towards improving the availability of new housing to owner-occupiers rather than investors.
In the case of hotels, investors will not in future be able to claim capital allowances against personal income unless they are actively involved in running the business. However, in an effort to generate tourism in some western and Border counties, the Minister is not to impose the restrictions on hotels "of at least three-star standard" located there.
The counties are Cavan, Leitrim, Monaghan and Roscommon "and those parts of counties Donegal, Mayo and Sligo which are not designated areas under the Seaside Resort Scheme".
The restrictions will apply to areas designated under the Seaside Resort Scheme and the Enterprise Zone Scheme.
The Irish Home Builders Association expressed disappointment that the reduction in the capital gains tax from 40 to 20 per cent would not apply to development land, which would still incur tax at the higher rate. Mr Michael Goggins, the director of the association, said this could exacerbate the already acute scarcity of house-building land.