# How to calculate zakat while in debt?

I recently bought a house and got Shariah loan (Mortgage). The only difference is that in the Shariah loan they don't use the word "interest". They say I am paying them "rent" at a fixed percentage which is same as today's interest rate.

Now how do I calculate Zakat on my wealth if I am still in debt? Because if I do so, my net-worth will be negative.

• Great question - please note however that we have not yet attracted experts in fiqh of transactions to this website. In any case, answers on this website should not be taken as juristic rulings. You may however get links to such rulings in the answers. Jul 25 '12 at 17:22
• so let me get this right, you are gonna pay a fixed amount of money each month, and by the end of a year, what you have paid is more than your wealth?
– K''
Jul 25 '12 at 19:06
• well, if i calculate the net, it does. in the books i own the house but technically i don't as i am paying "rent" to live in. Jul 25 '12 at 19:08
• Things in your personal use is exempted for zakat, so you don't have to pay any zakat on the house, if your living in it
– goto
Jan 17 '14 at 5:16

Zakat is meant to help those in poverty, by distributing the wealth from those who have much more than they need, which is why most forms of Zakat are applied on those who have maintained more than a certain amount of money in their bank accounts.

There's a Nisab on Zakat which means that you have a minimum amount before you are obligated to pay Zakat. If your net worth would be negative, or below the Nisab amount, you're not obligated to pay (Zakatguide.org).

c) In long term, instalment debts, like housing instalments, and other debts that finance fixed assets, which are not counted for Zakat, the payer deducts the amount of annual instalment all at a time, then calculates the total sum of the remaining property and pays Zakat on it if it reaches the Nisab of Zakat.

For example, someone might have US\$100,000 in their bank account (which is above the Nisab level) and holds a \$200,000 loan. They pay \$15,000 of that loan a year.

The debtor would have to pay Zakat on their \$85,000 (savings minus installments) in their bank account, despite having a negative net worth. Which would mean that they pay \$2,125 of Zakat (2.5% of \$85,000).

On the other hand, let's they were to pay \$98,000 off their loan off that year, leaving them with a loan of \$102,000. This puts their savings at \$2,000 (below the Nisab level). They wouldn't have to pay Zakat on this, despite having the same net worth.

This is to the best of my understanding; if someone can confirm or correct this, it would be helpful.

• Actually, I'm not sure if this is true. You can have a debt (say, \$250k mortgage) but you still have savings in your bank account. Unless you mean that you should subtract your savings from your debt? Jul 27 '12 at 3:25
• Sorry, that could be worded better. I mean you subtract what you're paying for loans from your savings. If your savings after paying for those loans are below the Nisab level, you do not need to pay Zakat. I'm uncertain if it's possible to "evade" Zakat by paying a little extra in order to stay below Nisab level, but it would make sense because you're not hoarding the money by using it to pay off debts.
– Muz
Jul 27 '12 at 6:39
• Okay, please update your answer to qualify. Based on this, someone who gets a mortgage would probably never pay zakah then? Jul 27 '12 at 8:57

From reading above, I took away that you calculate the total amount of installments you made on your mortgage for the year and deduct that from your total worth and pay Zakat on the difference. So if you pay \$2000 per month of mortgage then for the year (Ramadan to Ramadan) you pay \$24,000 for that year and thus you subtract that from your net worth for that year. So if your worth is \$100,000 then you owe Zakat on \$76,000 which would come out to \$1900.00.

The amount you paying in a oneach full year will not be included in Zakat rest you have to pay... For example total debt amout 50000 but only paying let say 5000.. The 5000 will be consider debt in zakat calculation

God says:

Establish worship, pay the poor-due, and bow your heads with those who bow (in worship).

Kuran-i Kerim: BAKARA:43

That which ye give in usury in order that it may increase on (other) people's property hath no increase with Allah; but that which ye give in charity, seeking Allah's countenance, hath increase manifold.

Kuran-i Kerim: RUM:39

To give zekad means, to give from your own money for someone else, who needs it.

If you have debts, you can not! pay zekad. You can't fulfil the requirements of Islam. So don't do debts. For a solution ask your Imam.