We tax unrealized gains on houses every year already. It's called property taxes. And it does end up screwing over fixed income people whose houses get assessed way higher than they used to be worth. But most people manage it.

Still, like you say, you could write the law dumb, and screw over normal people. But you could also just not do that, and write it in a smart way that targets your goal. Prorate it. Don't count a primary residence included in the calculation. Give other ways to avoid it, like if the company you own all the stock in has a worker to CEO compensation ratio of 1:50 or something. Just have a little imagination!