> it incentivizes investors to form multiple legal entities to own multiple properties

How it could work is that a residential property must be registered to an individual's social insurance number, not to a corporation.

So then they will have to start inventing people if they want to shelter their activities.

These people can be audited. How did you get the title to this property? From whom? Where is the mortgage in your name? How come you're not actually paying the mortgage? Etc.

You can't hide the fact that you didn't buy that property from the tax man.