(#141)
Question
ASWRB Mufti Sahib
I have several questions on different senario’s that I like your advise;
- X- (Father) owned a property for 30 years which has 3 flats. X lives in one flat and rents out 2 Flats.
Value of the property is $300,000
Mortgage is $150,000
Annual Rental Income after expenses (nett) $ 10,000
Living Expenses paid from Rental Income $ 8,000
Cash at bank after paying for living expenses
from rental Income $ 2,000 (1 Lunar Year)
Question: What is the Zakaatable amount from the above scenario?
- X has 3 children (2 boys and 1 girl). X makes a “will” to distribute the wealth equally amongst 3 children after his death but tells his children of his intention before death. After 30 years X sells the property for $350,000 and puts the money in a bank account. The bank account this time is in the name of X and the children. They all can access the money in the bank. The children decide to buy a property in another country for $600,000. The purpose was to house X and rent out the rest. X agreed to put the $350,000 from his property sale towards buying the $600,000 house. The new property has 2 flats, one is rented out (rental) and X lives in the other flat. The nett annual income from the rental is $ 20,000.
New Property cost – in children’s name and possession only $ 600,000
Proposed inheritance money from X $ 350,000
Nett mortgage $ 250,000
Annual Rental income from one Flat $ 20,000
Annual Rental income $20,000 is put against $250,000
mortgage to reduce the loan amount each year.
Therefore, no cash in the bank only loan.
Question: Is X liable for Zakaat or the children? What will be the Zakaatable amount if any?
- Further to no. 2 above, the children have their own houses and mortgages.
Question: Can each child offset their portion of the $250,000 mortgage against the cash in their bank account to arrive at their nett Zakaatable amount?
Please carefully consider the above senario’s and advise as I want to get to the individuals correct Zakaat obligations and the Zakaatable amount.
Wasalaam
Answer
بسم الله الرحمن الرحيم
السلام عليكم و رحمة الله و بركاته
حامدا و مصليا و مسلما
Muhtaram
We have received your query dated 15/04/22, we apologise for the belated reply, this was due to the Darul Uloom break in Ramadaan and Eid, our response is as follows:
Please note the following answer is in accordance to the information furnished by you.
1) First and foremost, the following needs to be kept in mind, if ones Zakaat is due on e.g. 20th of Ramadhan for example then one will give Zakaat on the entire amount which is in one’s possession on the 20th of Ramadhan. [1]
Secondly, there is no Zakaat on property purchased without the intention of re-sale. Zakaat will only be necessary on property which has been purchased with the intention of reselling it. Furthermore, in all cases Zakaat is incumbent on the rental income accrued via the property.[2]
Finally, Zakaat will be given on all assets minus short term liabilities. However, it needs to be kept in mind that an interest bearing mortgage/loan is Haraam. This is a clear injunction mentioned in the Noble Qur’an and Ahadeeth. One should quickly escape from the shackles of this calamity and make sincere Tauba. Due to the loans of the bank being long-term, one cannot consider the entire loan as a Zakaat liability to be deducted from ones Zakaatable assets. In such a case, one should only subtract the instalment of one month and thereafter one should determine whether the remainder reaches Nisaab (the Zakaat threshold)[3]or not; if the balance does reach the Nisaab then Zakaat will be incumbent on the remaining balance.
Thus, from the above points we can deduce that you will need to add all your income i.e., rental income and cash at bank etc and minus all liabilities (one month for long term debts, we do not know the exact amount this will be therefore we cannot give an exact calculation). If the balance reaches the Nisaab then one will handover 2.5% of the total amount to a valid recipient of Zakaat.
2) The same ruling mentioned in question number 1 will apply here as well.
However, one point should be kept in mind, you had mentioned regarding drawing up a Will whereby the wealth of person X will be distributed equally amongst his heirs. An important aspect worth mentioning here is that many Muslims are mistaken in believing that, writing a Will means distributing one’s wealth and estate amongst the inheritors during one’s lifetime.
This is incorrect, as making a Will does not mean one must divide one’s wealth amongst the various inheritors in one’s life; rather, one must merely stipulate in the Will that “upon my death, my executors will distribute my wealth according to Shariah”. One may also state that this will be determined by a local Alim or Mufti, who will be contacted and appointed by my executors upon my death.
The reason behind this is that the inheritance portions have been determined and allotted by Allah Ta’ala in the Qur’an. These portions vary according to who is alive at the time of one’s death. Death with leaving parents behind will differ from passing away after the parents have passed away, in that the inheritance portions will be different in both cases.
As such, one cannot determine in one’s lifetime as to how much percentage of one’s wealth will be exactly allocated to each individual, for one is unaware who will be alive at the time of one’s death. Even the death of one person can make a big difference in the division and distribution of the estate.
The beauty of Shariah is its simplicity and certainty. When you are writing your Islamic Will, you do not have to try and figure out which of your relatives will still be alive when you die in order to make sure that they will receive something. Whoever administers your estate will ascertain (in collaboration with a knowledgeable Alim/Mufti) which of your relatives are still alive and what fixed shares they are automatically entitled to inherit by applying the criteria of Shariah.
However, if a person wishes to distribute his assets during his lifetime then this will be termed as a Hiba (gift) in Shariah. Inheritance only comes into effect after a person passes away whilst a gift takes place whilst one is alive. If required, one may contact the Darul Ifta for more information regarding the rulings of Hiba (gifts).
3) No they may not offset the total amount as mentioned in answer 1.
And Allah Ta’ala knows best
Answered by:
Muhammad Irshad Motara
8th Zhul Qa’dah 1443
8th June 2022
Checked and approved by:
(Mufti) Musayyab Sahib
8th Zhul Qa’dah 1443
8th June 2022
[1] Darul Ifta Archives, See: Ad-Durrul Mukhtaar vol. 2 pg. 293, Fataawa Alamghiri vol. 1 pg. 176 Kitaab-uz-Zakaat- Aap ke Masaail aur Unka Hal vol. 5 pg. 103, Maktabah Ludhyanwi
[2] Aap ka Masa’il Aur Unka Hal pg. 370, Vl 3, taken from Mukammal Wa Mudallal Masa’il Rif’at Qasmi pg. 118, Vl 5.
[3] One may refer to the Darul Ifta website for the Nisaab amount.
