I think the best idea I've heard would be to excessively tax capital gains for the LAND appreciation. We don't' want to discourage people who actually provide value by buying properties and making them nicer or creating more units.

A neighboring city of my suburb has large swathes of ranchy style homes on half an acre, those can easily be converted to triplexes or at least large family homes rather than tiny 3 bedrooms. We don't want to discourage investors from that sort of development.

However, we do want to discourage investors from 'flipping' homes and riding up appreciation, or even worse, investors buying houses that just sit empty.