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Zakaah while in debt

Fatwaa ID: 1011

Assalamualaikum wrwb,

Considering zakah does not have to be payed if a person has debt more than his saved up wealth, would the following be considered as debt?

1: a house you have to pay off, which you bought through guidance residential.

2: a car that you are required to pay off within a set amount of years.

In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

At the outset, we wish to clarify that zakaah is not savings only but rather ALL zakaatable assets including gold, investments, cash in hand and spare/pocket change. Nevertheless, when calculating for zakaah, debts are generally deductible. However, if the debt is a long term debt, then only that amount which is payable in the next 12 lunar months will be deducted. The entire loan will not be deducted.

In regards to your queries,

  1. It is not clear which model was used for purchasing the house. In most cases, diminishing mushaarakah is used. This is not a loan but rather a partnership. Accordingly, this will not be deductible. You may however deduct the upcoming payment as an immediate expense if it is payable in the next few days from your zakaah date.
  2. Kindly provide details regarding the mode of financing. Also, elaborate if there is any interest involved.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York

09/19/1444 AH – 04/10/2023 CE | AML1-7507

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين


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