What is an Accredited Investor

An accredited investor is someone who meets financial or professional tests set by the U.S. Securities and Exchange Commission (SEC). Meeting them lets you be offered private investments that aren’t registered with the SEC and aren’t open to the general public.

Who qualifies

You only need to meet one of these.

• Income: you earned at least $200,000 on your own, or $300,000 together with a spouse or spousal equivalent, in each of the last two years, and you reasonably expect the same this year.
• Net worth: over $1 million, alone or with a spouse or spousal equivalent, not counting your primary home.
• Professional license: you hold a Series 7, Series 65 or Series 82 license in good standing.
• Knowledgeable employee: you work at the private fund itself in certain roles, such as an executive or someone who takes part in its investment decisions. This only applies to that fund.
• Entities: a trust, LLC, partnership or company with more than $5 million in assets that wasn’t formed just to buy the investment, or an entity where every owner is accredited. Some family offices with $5 million or more under management also qualify, along with their family clients.

How the net worth test treats your house

Your primary home doesn’t count toward the $1 million, and neither does the mortgage on it, up to the home’s value. Two exceptions catch people. If you owe more than the house is worth, the underwater part counts against you. And if you raised your mortgage balance in the 60 days before the investment (a cash-out refi to fund the deal, for example), that new debt also counts against you.

Retirement accounts, brokerage accounts, rentals, business equity and cash all count. Most of the doctors and engineers I meet hit the net worth test before they think they do, because their 401(k) and home equity in rentals add up.

What accredited status changes

Being accredited doesn’t make an investment good or safe. It changes what you’re allowed to be offered: private placements such as real estate syndications, private credit funds, private equity and hedge funds. These skip SEC registration, so you get less standardized disclosure. They’re hard to sell early, and you can lose the money you put in. The rules assume you can afford to take that risk and do your own homework.

How you prove it: 506(b) and 506(c)

Most private real estate deals are raised under Regulation D, Rule 506. Which version the sponsor uses decides how you show you qualify.

In a 506(b) offering the sponsor can’t advertise to the public, and you usually self-certify, which means you sign a statement in the subscription documents saying you qualify. The sponsor needs a pre-existing relationship with you.

In a 506(c) offering the sponsor can advertise publicly, but has to take reasonable steps to verify that every investor is accredited. That usually means a letter from a third party. Several online services will review your tax returns or statements and issue one, often for $40 to $100. There’s some debate over how long a letter stays good, and about three months is the common practice.

What we see work best is a letter from your own CPA or attorney. Most will write it at little or no cost because they already know your finances. If you want a simple form letter to make their job easier, email team@thewealthelevator.com.

In March 2025 the SEC staff issued guidance saying a high minimum investment can count as a reasonable step. If the minimum is at least $200,000 for an individual or $1 million for an entity, and you confirm in writing that you’re accredited and the money isn’t financed by a third party, the sponsor may not need a letter. Not every sponsor uses this, so expect to still be asked for a letter sometimes.

Questions I hear a lot

Can I invest if I’m not accredited? Some 506(b) offerings allow up to 35 non-accredited investors who are financially sophisticated, but the sponsor then has to give them much more disclosure, so most sponsors don’t accept them. There are also registered options such as public REITs and Regulation A offerings.

Does a joint account with my spouse count? Yes. You can combine income or net worth with a spouse or spousal equivalent, and the investment doesn’t have to be held jointly.

Can my self-directed IRA or solo 401(k) invest? Generally yes. If you direct the account yourself and you’re accredited, the account can usually invest, but check with your custodian and CPA.

The definition changes

The SEC reviews these rules every few years. The 2020 update added the professional licenses, knowledgeable employees and family offices. The dollar thresholds haven’t been adjusted for inflation since the 1980s, so more people qualify every year, and that could change. Check sec.gov for the current rules.