The comments here have been very focused on the case of implementing some system like this for housing (which to be fair was the example the book used), but as I said in the original comment, I actually don't think this is a workable or desirable system for property taxes on owner-occupied housing for roughly the reasons that you dislike it. Someone's home is not just some financial asset and economic efficiency is not the only important consideration in society.

I brought it up specifically in this context (and article about patent litigation) because I think it is potentially a good idea in some domains (like patent law) where the overriding consideration should legitimately be economic efficiency. I think it is entirely reasonable to design our intellectual property rights around the idea that the person or firm that can derive the most economic value from any piece of IP is the most desirable owner of that IP.