Their efforts had literally no bearing on its price appreciation, nor was there likely any intelligent investment decision. And I suspect your parents would otherwise have paid rent. It’s also different from equity investments where there are winners and losers - almost everyone who bought any real estate in the 1980s is sitting on a windfall. Almost all of the appreciation was due to government action making it easier to invest as well as cheaper cost of funding, and governments doing their utmost to keep property values elevated.

So while you may not like the answer, they are definitely not more deserving of their windfall (they would have beaten almost every asset class since the 1980s) than any employed person. I don’t mean to be flippant about your fathers health, so won’t comment on specifics, but policy should be built on the average, not individual cases. It may sound callous, but no more callous than telling someone to pay 40+2+12.5 (stealth taxes make the number much worse than headline numbers) of earned income even if they have crushing debts or family obligations that are ruining their financial lives.

While a house cannot be partially sold down, they can use debt on the asset to raise cash. Or they can sell the entire house and move elsewhere.