Question:

I recently bought a house and renovating it.in order to spread costs I took a few interest free loans for windows (3 yr interest free) and appliances (1 yr interest free) which I intend to pay off within 12 months InshaAllah.

do I pay zakat on these amounts included or deduct them from my net liquid assets?

example:zakatable – liquid assets: $10,000 windows loan  = $2000appliance lan  = $1000
do I pay 2.5% on $10,000 or on $7,000

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, debts that are to be repaid within the next 12 months are deductible. Debts which do not have to be paid within the next 12 months are not deductible. If debts are paid by installments, then 12 months installments are deductible.

Therefore, the debt for appliances will be deducted since it is to be repaid in full within the next 1 year.

However, with regards to the debt for windows, if it is to be repaid in installments, then the installments due for the next 12 months will be deductible. And if it is not repaid in installments, rather the total amount is due anytime within the next 3 years, then none of the debt amount will be deducted, since no amount is technically due with the next 12 months. This ruling is applicable whether your intention is to repay the debt for windows within the next 1 year or not. This is because the amount deducted is not based on your intention, rather it is based upon the actual amount due within the next one year.

And Allah Ta’āla Knows Best

(Mufti) Abdul Azeem bin Abdur Rahman