Zakat and Islamic home loan
|As salamualykum ,
JazakAllah kahir for your detailed lecture on the zakat it was very informative Alahmdulliah.
Can you please clarify/elobrate regarding the calculation of the zakat if one have a long term home loan, from your lecture i came to an understanding that one can deduct 12 months of advance payment from the total zakatable $.
I currently own a house which we use for our primary resident on which i am paying monthly installments which are due for next 28 years.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Your understanding is correct that the loan amount that you owe within the next 12 months will be deducted from your total Zakatable wealth. Thereafter, you will be pay 2.5% of the remaining amount for Zakah.
For example: If one’s Zakatable wealth is equal to $100,000 and each month’s installment towards the house is $3,000, then total $36,000 will be deducted from the $100,000. Hence, 2.5% of $64,000 will be due as Zakah. That is $1,600 total Zakah.
Note: The following are Zakatable wealth:
- Cash (Including money in the bank, at home, and all receivable loans that one expects to be returned)
- Business merchandise (Any item purchased with the intention to sell)
And Allah Ta’āla Knows Best
(Mufti) Abdul Azeem bin Abdur Rahman