When you collateralize an asset at an appreciated valuation, we're not even talking about about unrealized gains. The gains are literally realized through the c

When you collateralize an asset at an appreciated valuation, we're not even talking about about unrealized gains. The gains are literally realized through the collateralization process. The only reason it's not treated as a taxable event is because (arguably) ownership is not transferred, and the folks in power like the loophole. I say "arguably" because the process gives another party a claim against the asset, which means you no longer own it in the same way. You're no longer free to use or dispose of it as you wish.