To expand your analogy to the house on how the rich used their unrealised gains.

You buy a house and it appreciates in value. You bowwow money against the capital gains and use that to live on. Your house price goes up further, generating more capital gains that you can now bowwow against to pay back your previous loan.

edit: also since you’re so filthy rich the banks give you really low interest rates, way less than tax would have been.