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Zakah on loan money

Zakah on loan money

Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

my husband borrowed money to buy land on which we are now going to build a house. we have had enough money to repay the loan for a year but we have decided to use it to finance the expence of the actual construction. should we be paying zakat on the amount saved? my husband is of the view that if we have borrowed money then we dont have to pay zakat on our savings (which are geared towards building the house). please clear up the confusion for me since i`m of the view that zakat be paid on the money we have not been using for a year regardless of the loan we`ve takien. 

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Zakah on loan money

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is no one (no idol, no person,  no grave, no prophet,  no imam,  no dai,  nobody!) worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

The principle in Shariah is that zakat should be paid on the nett worth of the person which has been in one’s possession for a period of one calendar year.  Thus in the situation described by you, you should add all your assets including the amount saved, subtract all the liabilities including the loan amount, and pay the zakat of 2.5% on the balance amount.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me.  Allah Alone Knows Best and He is the Only Source of Strength.


Your Brother in Islam,