The mansion tax was a ‘nightmare’ for luxury real estate in Los Angeles this year,

You may know her as the Barbie-like figure landing multimillion-dollar deals for a Los Angeles–based luxury real estate firm on Netflix’s hit TV series Selling Sunset. But Emma Hernan was a real estate investor long before she was an agent selling properties to superstars.

This self-made multimillionaire, former model, entrepreneur, and real estate investor earned her fortune investing in the stock market and startups before she bought her own home in 2017. The following year, she started working for the Oppenheim Group, the firm she had used to buy her house, focusing on selling luxury real estate to and for many celebrities. In 2023, she fought off many of the challenges facing the local housing market—namely the newly introduced city mansion tax—by helping pop star Harry Styles sell his L.A. estate for $6.7 million. 

All the while, she’s also been running Boston-based vegan food manufacturing company Emma Leigh & Co., best known for its plant-based empanadas. The company also supplies other food companies, which she says has equally been a boon for her real estate business in terms of her rubbing elbows with CEOs and other executives—i.e., folks likely to buy luxury homes. This bicoastal money maven owns several residential and commercial properties in both LA and Boston, and calls her rental income as “mailbox money.”

“When I’m renting my home out, someone’s paying my mortgage, and my mortgage is paid off,” she tells Fortune. “And now I’m just receiving a check every month. So for me, it was a natural transition from the stock market into real estate.”

Even with some big wins in 2023, being a luxury real estate agent to the world’s rich and famous isn’t as effortless and opulent as it may seem. High mortgage rates that peaked at 8% in October hurt business, but the real obstacle was the introduction of the mansion tax, which tacks on between 4% to 5.5% to the price of selling multimillion-dollar properties.

The mansion tax spells trouble for real estate in L.A.

The so-called mansion tax in L.A. applies to property sales of at least $5 million. Properties over $5 million incur an additional 4% tax, while properties costing more than $10 million have an extra 5.5% tax—with the tax typically being paid by the seller. The cost of the tax is separate from a home’s sale price and can be a “massive amount of money,” Hernan says. 

“If I could describe the mansion tax in one word it would be ‘nightmare,’” she says. “It’s taken a lot of business away from us as agents, but also [from] developers. Developers are less likely to go purchase another home to try and do a flip because the numbers aren’t going to add up when you add in this mansion tax.” 

In addition to Los Angeles, mansion taxes are in effect in New York, New Jersey, Connecticut, and Vermont.

The issue of the mansion tax is a double-edged sword, though. Introduced as Measure ULA, the…