> If I hadn't sold my investment for 3 years, I have net gain $0 and I should pay $0 tax. However, taxing unrealized gains means I will have to pay tax on addit

> If I hadn't sold my investment for 3 years, I have net gain $0 and I should pay $0 tax. However, taxing unrealized gains means I will have to pay tax on additional $1000 that I never had. The suggestion was tax on unrealized gains used to back loans. You'd only be taxed on $1000 if you used $1000 of your unrealized gains to back a loan. That should also raise your basis by $1000, so sometime later when you sell the property you wouldn't be taxed on that $1000 unrealized gain again.