How to Calculate Net Worth for Accredited Investor Status

To calculate net worth for accredited investor status, add up everything you own, subtract everything you owe, and leave your primary residence out of both sides of the equation. If the result tops $1 million at the moment you buy the securities, you meet the net worth test under SEC Rule 501.¹ The arithmetic is simple. The rules about what counts, what doesn’t, and how home equity and recent borrowing are treated are where people get tripped up.

The $1 Million Threshold

Rule 501 of Regulation D lets you qualify as an accredited investor if your individual net worth, or your joint net worth with a spouse or spousal equivalent, exceeds $1 million.¹ That number has held since 1982 and remains in place for 2026.²

You measure net worth at the time of purchase, not at year end. So a valuation you pulled together in January can be stale by the time you actually write the check in November.

Assets to Add Up

Everything you own with a measurable value goes on the asset side, with one exception (your primary residence, covered below).³ That includes:

Cash in checking, savings, money market accounts, and CDs.
Taxable brokerage holdings: stocks, bonds, mutual funds, and ETFs.
Retirement accounts at their full current balance. 401(k)s, traditional and Roth IRAs, and SEP-IRAs count in full; the fact that you’d pay tax or a penalty to withdraw early does not shrink the number.
Real estate other than your primary home: vacation properties, rentals, and land at fair market value.
Ownership stakes in privately held businesses or LLCs, valued at what your share is reasonably worth today.
Personal property such as art, jewelry, or collectible vehicles, if you can document value through an appraisal or comparable sales.

Vested stock options and exercisable equity compensation count because you have a present right to their value. Unvested grants generally don’t, because you don’t yet own them.

For anything not publicly traded, expect to back up your number. Bank and brokerage statements speak for themselves. A business interest, a rental property, or an art collection needs an appraisal or another credible valuation, and the issuer selling you the securities will often ask to see it.

How Your Primary Residence Is Treated

Since the Dodd-Frank Act took effect in 2011, you must leave the value of your primary residence out of the asset column entirely.³ In exchange, the mortgage on that home generally doesn’t count as a liability either, as long as the balance stays at or below the home’s fair market value.⁴ The home and its ordinary mortgage simply drop out of the calculation.

Two exceptions to that clean cancellation matter:

If you owe more on the home than it’s worth, the underwater portion counts as a liability. A $400,000 home with a $450,000 mortgage produces a $50,000 subtraction from net worth.³
If you increased the debt secured by your primary residence within the 60 days before purchasing the securities, the entire increase counts as a liability, even if the home is worth more than the total debt. The SEC added this to stop investors from drawing on a home equity line to inflate their bank balance right before investing.³⁴

The one carve-out from the 60-day rule is borrowing used to acquire the residence itself. A purchase mortgage or a straight refinance won’t trigger the penalty, as long as you don’t pull out extra cash.

Liabilities to Subtract

Everything you owe, other than a qualifying primary residence mortgage, comes off the total.³ That typically covers:

Federal and private student loans, regardless of repayment status.
Auto loans, at the outstanding balance.
Credit card balances (the amount owed, not the limit).
Personal loans and unsecured lines of credit.
Margin loans against a brokerage account.
Mortgages on rental properties, vacation homes, and any other real estate. Since those properties count on the asset side, their debt counts on the liability side.

The most common oversight is margin debt. Your brokerage statement shows a total account value, but if part of that value is financed on margin, only the net equity is actually yours. Count the full securities value as an asset, and subtract the margin balance as a liability.

Joint Net Worth With a Spouse or Partner

You can combine finances with a spouse or spousal equivalent to reach $1 million. A spousal equivalent is someone with whom you share a relationship generally equivalent to marriage; the SEC added this category in 2020 so unmarried partners aren’t disadvantaged.⁵

When you calculate jointly, you pool qualifying assets from both people and subtract combined liabilities. Assets don’t need to be held in both names; one partner’s IRA or separately titled rental still counts toward the shared total.⁶ The securities themselves don’t have to be purchased jointly. One partner can make the investment while relying on the couple’s combined net worth to qualify.

A Worked Example

Assume you and your spouse own a primary residence worth $600,000 with a $350,000 mortgage you’ve had for years, no recent draws. Everything else looks like this.

Assets, excluding the primary residence:

Combined checking and savings: $85,000
Your 401(k): $420,000
Spouse’s IRA: $195,000
Taxable brokerage account: $310,000
Rental property at fair market value: $275,000

Total countable assets: $1,285,000.

Liabilities, excluding the primary mortgage:

Student loans: $42,000
Auto loan: $18,000
Rental property mortgage: $165,000
Credit card balance: $4,500

Total countable liabilities: $229,500.

Joint net worth: $1,285,000 − $229,500 = $1,055,500. The couple clears the threshold. The $600,000 home and $350,000 mortgage drop out entirely. Had they opened a $50,000 home equity line of credit within the last 60 days, that $50,000 would come off the top, dropping the total to $1,005,500. Still above the line, but only just.

Documentation You’ll Likely Need

How closely your numbers get checked depends on the offering. For a Rule 506(b) placement, the issuer needs a reasonable belief that you’re accredited, which often means completing a questionnaire and providing supporting information. A checked box on its own isn’t enough.⁷

For a Rule 506(c) offering, which allows public solicitation, the issuer must take reasonable steps to verify.⁸ For net worth verification, that usually means producing:

Bank statements, brokerage statements, or CDs dated within the prior three months to document assets.
A recent consumer credit report to document liabilities.
A written statement confirming you’ve disclosed all relevant debts.⁷

Alternatively, a written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney, or CPA verifying your status within the prior three months satisfies the verification requirement.⁸ Many investors find that route easier than gathering a stack of statements.

Whichever path applies, inflating figures to squeeze past the line is a bad idea. Statements you make on an investor questionnaire or in supporting documents are subject to federal anti-fraud rules, and misrepresentation can carry civil or criminal exposure.⁹

If You Don’t Clear $1 Million

The net worth test is only one path. You can also qualify by income: at least $200,000 individually, or $300,000 jointly with a spouse or spousal equivalent, in each of the two most recent years, with a reasonable expectation of the same this year.²

Holders of certain securities licenses qualify regardless of net worth or income. The current list covers the Series 7, Series 65, and Series 82.² And trusts, corporations, and LLCs can qualify on their own with more than $5 million in total assets, provided the entity wasn’t formed specifically to buy into the offering.¹⁰ The tests are independent, so you only need to satisfy one.

1
eCFR. 17 CFR 230.501 – Definitions and Terms Used in Regulation D
2
U.S. Securities and Exchange Commission. Accredited Investors
3
U.S. Securities and Exchange Commission. Accredited Investor Net Worth Standard
4
U.S. Securities and Exchange Commission. SEC Adopts Net Worth Standard for Accredited Investors Under Dodd-Frank Act
5
U.S. Securities and Exchange Commission. Accredited Investor Definition
6
Investor.gov. Accredited Investors – Updated Investor Bulletin
7
U.S. Securities and Exchange Commission. Assessing Accredited Investors Under Regulation D
8
eCFR. 17 CFR 230.506 – Exemption of Limited Offers and Sales Without Regard to Dollar Amount of Offering
9
U.S. Securities and Exchange Commission. Frequently Asked Questions About Exempt Offerings
10
eCFR. 17 CFR 230.501 – Definitions and Terms Used in Regulation D