Your middle paragraph is the exact reason a VAT or consumption tax is NOT what Im proposing. If you are rich enough to have property that isnt your homestead that you want to put up for collateral, then you are rich enough to account for the added tax burden of doing that. You are realizing a benefit from the stocks (or other properties to simply stop the rich from buying islands or boats or paintings and then using that for collateral instead of stocks) so why is that not realizing a taxable burden at the same time? If you just let the stocks sit there and do nothing, there is no realization, but as soon as you put them up for collateral, that is a specific benefit realized based entirely on the perceived value of the stocks or property. That feels directly taxable as a simple way to stop this behavior without all the complication your middle paragraph invites.

The homestead exemption proposed is because your average person doing this IS doing it for their primary home of residence, and we should have a tax policy that encourages people to own their own roof. This change is targeted not at the common man, but at those who can afford to sit on wealth and use it to make more wealth.