Answered by Sidi Faraz A. Khan
Question: I have a question relating to the calculation of zakat when there is debt involved.
To sum up my situation, my father has loaned money to me to help me purchase a house. When calculating the zakat due on my wealth, reading the Seekers Guidance answer, I believe I only deduct the monthly amount. Please confirm.
Based on this ruling, my father also needs to know if he should include the total loaned amount into his zakat calculations, or only on the repayments he receives.
Answer: Assalamu alaikum wa rahmatullah,
I pray this finds you in the best of health and faith.
(1) You are correct – for long term debts that one owes, only the monthly installment is deducted when calculating zakat.
(2) With respect to your father’s zakat for the money he lent out, he does not have to pay zakat on it while it is lent out, yet when he receives an installment, he must retrospectively pay zakat on that installment for all the years it was lent out.
If he chooses instead to pay its zakat each year while it is lent out, before he receives it, then that is valid.
[Ibn Nujaym, al-Bahr al-Ra’iq]
Checked and Approved by Faraz Rabbani