Sarasota ranks third in capital gains wealth

A study of federal tax returns shows Sarasota is home to the largest percentage of Americans paying capital gains taxes and, by extension, one of the best places in the country to maintain wealth. 

MagnifyMoney, a media entity owned by commercial borrowing service LendingTree, analyzed IRS data from 2012 to 2016 to find the American metropolitan areas that pay the most capital gains taxes, which are rendered on sales of investment vehicles such as stocks, bonds, real estate and businesses. Using a formula that considered the per capita number of residents paying such taxes and the average amount they paid, MagnifyMoney then created a ranking system for the 100 largest metro areas in the country where Americans cashed in the most wealth. 

In that ranking, Sarasota finished third in the country, behind Fort Myers and San Francisco. 

“Sarasota is an underrated place," said MagnifyMoney analyst Brian Karimzad. "It’s good to see it pop up on this kind of ranking. It’s notable that Southwest Florida is right up there with traditional wealth centers like San Francisco and New York."

The analysis found 25% of Sarasota residents paid capital gains taxes in 2012-2016, the highest such percentage of any surveyed metro region in the nation. The average resident in Sarasota who paid these taxes paid about $56,000, which put it near the middle of the pack among the cities surveyed. 

Fort Myers had a slightly lower percentage of residents paying capital gains taxes, but those who did paid nearly double, $103,000.

Karimzad said people with high levels of capital gains were attracted to Southwest Florida, and Sarasota in particular, in large part because of the relatively low state taxes and property homestead exemption. He said that has extended overseas, where a growing number of foreign nationals have seen the area as a reliable location to grow their wealth. 

Sarasota also presents a middle ground between cost of living and opportunity, Karimzad said. While other larger metros such New York and San Francisco provide higher salaries, they in turn have significantly higher costs of living. Karimzad said an increasing number of people in fields that allow them to work remotely are taking advantage of the lower cost of living in cities such as Sarasota while still being able to stay connected to high-wage industries in more expensive locations. 

Though this wealth has contributed to rising housing costs in Sarasota, they are still significantly lower on average than properties in many other larger cities. Karimzad said even waterfront properties in Sarasota are often more attractive to investors because of lower prices, even when compared to cities like Naples.

"Sarasota doesn’t quite have the same wealth level as Naples, but a lot of folks who are good with managing their money have made it here," Karimzad said.