Question
(#008)
I have a house that has a mortgage on it, I have some cash in the bank which is far less than the mortgage due amount, so was wondering if there will be Zakat payable on the cash that I have in the bank.
Answer
بسم الله الرحمن الرحيم
السلام عليكم و رحمة الله و بركاته
حامدا و مصليا و مسلما
Muhtaram
We have received your query with regards to Zakaat when one has a long term debt, our response is as follows:
Firstly, if the mortgage is an interest bearing loan than it should be noted that interest is Haraam. One should quickly escape from the shackles of this calamity and make sincere Tauba.
Secondly, when calculating Zakaat, the liabilities are subtracted from one’s assets and Zakaat is payable on the remaining amount if it reaches the Nisaab threshold. However, assuming the loan being a long-term loan, you cannot consider the entire loan as a Zakaat liability to be deducted from your Zakaatable assets. In such a case, some Ulama hold the view that the person may only deduct the instalment of the month in which his Zakaat becomes due. Other Ulama grant leeway of deducting a full year’s instalments as a Zakaat liability. In both views, there is no leeway of deducting the entire loan as a liability because the entire loan is not a current liability as its payment stretches over a lengthy period.
Therefore, it is best that you only subtract the instalment of one month and thereafter you should determine whether the remainder reaches Nisaab or not; if it does, then Zakaat will be incumbent on the cash etc.
And Allah Ta’ala knows best
(Mufti) Muhammad Irshad Motara
8th Ramadan 1441
2nd May 2020
