How do I calculate my net worth?

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Calculating net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth. For purposes of crowdfunding, the value of your primary residence is not included in your net worth calculation. In addition, any mortgage or other loan on your home does not count as a liability up to the fair market value of your home. If the loan is for more than the fair market value of your home (i.e., if your mortgage is underwater), then the loan amount that is over the fair market value counts as a liability under the net worth test. Further, any increase in the loan amount in the 60 days prior to your purchase of the securities (even if the loan amount doesn’t exceed the value of the residence) will count as a liability as well. The reason for this is to prevent net worth from being artificially inflated through converting home equity into cash or other assets.

While your individual circumstances will vary, the following table sets forth examples of calculations under the net worth test in order to determine crowdfunding investment limits:

Jane Doe

John Smith

James Lee

Primary residence
(not included except for related liabilities below):
Home value

$300,00

$300,00

$300,00

Mortgage

200,00

200,00

330,00

Home equity line:
– more than 60 days old

20,000

– less than 60days old

10,00

Included assets:
Bank accounts

$20,000

$20,000

$20,000

401(k)/IRA accounts

100,000

100,000

100,000

Other investments

50,000

50,000

50,000

Car

20,000

20,000

20,000

Total included assets

$190,000

$190,000

$190,000

Included liabilities:
Student and car loans

$100,000

$100,000

$100,000

Other liabilities

20,000

20,000

20,000

Portion of mortgage underwater

30,000

Home equity line
(less than 60days old)

10,000

Total included liabilities

$120,000

$130,000

$150,000

Net worth

$70,000

$60,000

$40,000

 

Source: SEC Investor Bulletin: Crowdfunding (Updated: February 16, 2016)
Additional Resource: “Know Your Net Worth”

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