Wealthy people would never sell their houses. Keep them in the family or rent them out.

Anyone who had to move for a job or wanted to downsize their house for retirement years would be screwed, though.

Unfortunately that doesn't really help. It has the effect of eroding the asset value such that it quickly means the owner can't sell.

In other words, if selling removes much of your capital, you then don't gave capital to spend on the next place.

Conversely investors become even more motivated not to ever sell. They can defer the LVT forever, and just use the property as collateral for loans (ie getting liquidity without selling.)

And LVT just becomes an expense built into the cost of rent. The investor never pays it anyway, the tenant ultimately pays it.