I don’t see inheritance as a right, and I definitely don’t think the kids having a small amount of tax owing on the house they inherit as “penalisation”.

Any tax change will involve some changes in who and how much people pay and needs to be handled carefully, but protecting inheritances should come far below paying for services: things like hospitals, schools and nursing homes. The next gereration will hurt a lot more from proposals like an income tax levy, and that will also hurt those who are not priveleged enough to inherit a house.