It's not clear to me why they should be able to sit on $500k of shares, but not $500k of house.
For my part, I would just tax income the same regardless of its origin. $50,000 in wages, $50,000 in rent payments, $50,000 in share dividends, $50,000 in profit after selling your house $500k house for $550k, $50,000 coming from $20,000 pension and $30,000 super, $50,000 inherited from your dear old gran... it's all $50k. And no deductions whatsoever :)
A few years back Simon Crean was our local member. He was out during a community festival, and I asked him, "If the average person is taxed at a rate of, for example, 20%, but then get deductions taking it to 5% - if virtually everyone does this, why not just abolish all deductions and tax them at 15%? It can still be progressive, of course."
He looked thoughtful for a moment, and then said in genuine confusion, "But what would the tax accountants and lawyers do?" and went on to talk to the next person.
So there you have it from a former Treasurer and leader of the Opposition: the taxation system is a Keynesian employment scheme for accountants and lawyers.