Accredited Investor Net Worth: Exclusions, Spouses, and Verification

To qualify as an accredited investor by net worth, your total assets minus your total liabilities must exceed $1 million, and the value of your primary residence is left out of the calculation entirely.¹ You can reach the threshold on your own or jointly with a spouse or spousal equivalent, and you have to clear it on the date each investment is sold to you, not just once.²

Adding Up the Right Numbers

The math is simple. Everything you own on one side, everything you owe on the other, and the difference has to top $1 million.¹ What people get wrong is what belongs in each column.

On the asset side, count brokerage and cash accounts, retirement accounts like 401(k)s and IRAs, investment real estate, business interests, and personal property with meaningful value. Assets held outside the United States count too; the SEC guidance draws no geographic line.¹

On the liability side, include every outstanding debt: credit card balances, auto loans, student loans, and personal loans, plus any mortgage on investment property. The number that matters is what you owe on the date of the investment, not what you plan to owe after next month’s payment. Revolving balances you intend to clear soon still count today.

Why Your House Doesn’t Count

The Dodd-Frank Act removed the primary residence from the net worth calculation in 2011.¹ Before the change, someone with a valuable home and modest savings could clear $1 million on paper. Now the home comes off both sides of the ledger, and a few specific rules govern the edges.

The fair market value of your primary residence is excluded from assets.
Debt secured by your primary home, including a mortgage or home equity line of credit, is excluded from liabilities as long as the total secured debt is less than the home’s fair market value.¹
If you owe more than the home is worth, the excess is added back as a liability. A $400,000 house with a $450,000 mortgage puts $50,000 in your liability column.
Any increase in debt secured by the home within the 60 days before your investment counts as a liability, even if the home is still worth more than the total debt.¹

That last rule is where people get caught. Drawing $100,000 on a HELOC to pad your brokerage balance right before verification doesn’t help you. The $100,000 gets counted as a liability regardless of how much equity remains behind it.

Combining Net Worth with a Spouse or Partner

You can combine your assets and liabilities with a spouse or spousal equivalent to reach the threshold. The SEC defines a spousal equivalent as someone you live with in a relationship generally equivalent to a marriage.²

Assets don’t need to be held jointly. If one partner has $800,000 in a brokerage account and the other has $400,000 in retirement savings, the combined figure reflects both, minus combined liabilities. You also don’t have to buy the securities together. One partner can invest alone while relying on the joint calculation to qualify.²

Qualifying at Each Investment

You need to be over $1 million on the date the securities are sold, every time.² Clearing the bar last year doesn’t help you if a market drop, a divorce, or a large purchase has pulled you back below it before the next deal. Status is not a permanent designation. It’s a snapshot the issuer relies on at the moment you subscribe.

How Your Net Worth Actually Gets Verified

The paperwork you’ll see depends on which type of private offering you’re investing in.

Rule 506(b): Self-Representation

Most private placements are done under Rule 506(b), which forbids general advertising. The issuer needs a “reasonable belief” that you’re accredited but isn’t required to take affirmative verification steps.³ In practice, you fill out a questionnaire or subscription agreement representing your own status. Simply checking a box isn’t enough on its own, but the process is much lighter than under 506(c).

Rule 506(c): Documentation Required

Rule 506(c) lets issuers advertise publicly, but every buyer has to be verified through “reasonable steps.”⁴ Self-certification will not do it. The SEC provides safe-harbor verification methods that, if followed, cover the issuer.⁵

For net worth verification under the safe harbor, the issuer reviews documentation of your assets and liabilities dated within the prior three months and obtains your written statement that you’ve disclosed all liabilities. Acceptable asset documentation includes bank statements, brokerage statements, certificates of deposit, tax assessments, and independent appraisals. For liabilities, the issuer needs a consumer credit report from at least one of the major national reporting agencies.⁵

Third-Party Verification Letters

If you’d rather not hand personal financial records to the company selling the securities, you can have a qualified professional verify your status and provide written confirmation. The SEC accepts letters from registered broker-dealers, SEC-registered investment advisers, licensed attorneys, and certified public accountants.⁵ The professional has to confirm that within the prior three months they took reasonable steps to verify your status and determined you qualify.

Fees vary. A CPA or attorney who already knows your finances might charge a few hundred dollars. Automated online verification platforms sometimes charge under $150 and generally work through document review rather than an existing professional relationship. Either route satisfies the safe harbor.

How Long a Verification Is Good For

A verification letter lasts three months from the date the professional confirmed your status. Invest in another deal five months later and you’ll need a fresh letter.³

There’s an exception for repeat investors with the same issuer. Once a company has taken reasonable steps to verify you, it can rely on your written representation that you still qualify for up to five years from that original verification, provided it has no reason to think your status has changed.³ Follow-on investments with the same fund manager get considerably simpler.

If You Don’t Clear the Net Worth Bar

Net worth is one path among several. If you fall short, you can still qualify through income: $200,000 individually or $300,000 jointly in each of the two most recent calendar years, with a reasonable expectation of the same in the current year.⁶ One strong year isn’t enough; the two-year lookback confirms a pattern.

You can also qualify by holding certain securities licenses in good standing, regardless of net worth or income: the Series 7, Series 65, or Series 82.⁶⁷

One caution on the paperwork you’ll sign either way. Subscription documents include legal representations about your status. Overstating your qualifications strips you of the regulatory protections designed for non-accredited investors, and if a deal goes wrong, a misrepresentation on those documents can complicate your ability to pursue legal remedies. The accreditation framework exists to keep people out of investments that could wipe out their savings, and the honest answer is the useful one.

1
U.S. Securities and Exchange Commission. Accredited Investor Net Worth Standard
2
eCFR. 17 CFR 230.501 – Definitions and Terms Used in Regulation D
3
U.S. Securities and Exchange Commission. Assessing Accredited Investors Under Regulation D
4
U.S. Securities and Exchange Commission. General Solicitation – Rule 506(c)
5
eCFR. 17 CFR 230.506 – Exemption for Limited Offers and Sales Without Regard to Dollar Amount of Offering
6
U.S. Securities and Exchange Commission. Accredited Investors
7
eCFR. 17 CFR 230.501 – Definitions and Terms Used in Regulation D