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Luxury homes over $5 Million are going to have a larger proportion of their capital value tied up in the building, fixtures and fittings rather than land content compared to the average family home, and all those are depreciating assets that would have to be written off against any capital gain. Seems like a great way for the wealthy to accumulate tax losses on personal spending that they can write off against other investment capital gains. At the end of the day the government earn GST and stamp duty when we build and renovate our personal homes, its best just to leave it at that.

It would be a very messy tax to bring in, its basically the reason the government allows us to keep earnings from home solar systems tax free, because if they tried to tax the out put of solar panels, they would have to allow us to claim the capital costs back. It's easy for them to just avoid ignore any gains made on personal items, so then they don't open themselves up to hoards of deductions coming in.