Zakat & Long-Term Debts

Hanafi Fiqh

Answered by Sidi Waseem Hussain

Question: I have a considerable sum of gold. Unfortunately, I was not earning enough to be able to pay zakat on it. I put aside some of the gold for zakat, and made note of the zakat amounts which I still owed. Once I started earning, I put that money aside to make up for the back-zakat. I also am unable to fast due to a medical condition, so I made note of fidya amounts and also put that aside. I recently donated the above mentioned zakat and fidya, alhamdulillah. But right after I donated, I learned that debts are to be deducted from my zakatable assets. I have a very large student loan debt, and based on Islamic Relief’s zakat calculator, I actually don’t owe any zakat after all. Now that I have already donated, would it be possible for me to view the amount of money I mistakenly donated towards zakat as the fidya which I would owe for missed fasts in the future? My medical condition is such that I will not be able to fast again for the rest of my life.

Answer: Assalamu Alaykum Warahmatullah,

The scholars differentiate between two types of debts:

  • Long-term debt: Which is a debt repaid on fixed installments for more than a year. Mortgages from studying, buying a house, car and the like would be of this kind.
  • Short-term debt: Which is a debt immediately due within a year.

This differentiation is important when it comes to zakat, since one can only subtract the entire amount if it is a short-term debt.

Long-term debts are not dedcutable, except for the immediate installment.

Consider the following example:

Assume the zakatable-minimum (nisab) is $2000.

One’s zakatable assets amount to &5000.

One has an outstanding mortgage of $50.000 with fixed monthly installments of $500. This would be a long-term debt. As such one can only subtract the upcoming installment of $500, and has to pay zakat on $4500.

A student-loan would be a long-term debt. Hence the entire debt is not deductable.

However, if you have started repaying the debt, then it would be possible to dedcut the upcoming installment.

Considering the above, the money you have donated has in fact been zakat.

Waseem Hussain

Checked & Approved by Faraz Rabbani