When you buy a house with a mortgage, you are valuing the property as X, and the lender is also valuing the property as X. That's your cost, and no gain yet. If the value increases in a few years, it's unrealized gain.
Now, if you want to use the increased value to get a HELOC, that would be considered 'realizing the gains'. If eventually you pay off the mortgage and either sell the property or use it as a collateral to buy another property, that is also 'realizing the gains'.
Indeed, now the sticky part of this, user takes a loan out in the same line as a HELOC, either on real property or securities - they pay the loan off, what do they do?
My answer is to give them tax credits, transferrable tax credits, they could sell those credits and then pay the tax again, apply the credits to the tax cost of the underlying asset at the time of liquidation, or even transfer them with the asset to a third party as part of a sale. They could also even apply those credits as a rebate in the event they sell the asset for less than the original taxed amount.
When you buy a house with a mortgage, you are valuing the property as X, and the lender is also valuing the property as X. That's your cost, and no gain yet. If the value increases in a few years, it's unrealized gain.
Now, if you want to use the increased value to get a HELOC, that would be considered 'realizing the gains'. If eventually you pay off the mortgage and either sell the property or use it as a collateral to buy another property, that is also 'realizing the gains'.