How to give Zakat of rental properties and gold

Fatwa ID: 02528

Answered by: Maulana Javed ibn Nazir Kachhalia

Question:

I have 8 rental properties 
I have Gold around 15.tolas
I owe almost $2,50,000 
Which I have been making payments every month 
How much Zakat I owe

Answer

The rentals received will form part of the other cash and thedecision of Zakat payable on the cash will depend upon theindividual’s financial calculation. Broadly, if there is onlycash and no liabilities or the cash exceeds the liabilities, thenthe cash will be subject to Zakat. (Contemporary FatawaPg 47-48)

Calculating Zakah:Zakah will become compulsory on a sane and matureMuslim when his / her wealth exceeds the Nisab and thisamount of wealth is maintained for the duration of oneentire lunar year.

The Nisab is 20 Mithqals (87.479 g) for gold which is estimated £2922.62 ($3954.88) and 200Dirhams (612.35 g) for silver which is equal to approximately £239.43 ($324). Any currency equal to theamount of any of these Nisabs will also render Zakah binding. If one’s wealth decreases below the Nisab during the year butbefore the expiry of the year, it reaches the Nisab, Zakah will be binding contrary to the case of the wealth notrebounding to amount of Nisab upon the expiry of the year.

However, if one loses his entire wealth, a new lunar cycle will begin after reaching the Nisab for the second time. All debts and liabilities will be deducted from his wealth before calculating his estate.

Only that particular year’s liabilities will be deducted fromlong-term debts such as car / home financing. Loans givenand other receivables into one’s estate will be accounted foreven if the person is not paid by his debtor for several years.

Any gold or silver items such as jewelry, ornaments etc willalso form part of Zakatable assets.

If the percentage of gold or silver in the item is more thanthe metal alloy with which it is amalgamated the entire itemwill be considered as gold or silver. If the percentage ofalloy is greater, if there is enough gold or silver where it ispossible for it to be extracted, then Zakah will be compulsory only on the value of the gold or silver thereinand not on the entire item if the Nisab is reached.

Similarly, any items purchased for trade will be subject to Zakah and must be accounted for in the calculation. A person should add his / her cash savings, values of gold and/or silver, value of the merchandise of trade and anyreceivables from debts etc. Thereafter, he / she should deduct the amount of debts owed to others. If the value ofthe net total equals the Nisab of gold or silver, he / she willhave to pay 2.5% of the amount in Zakah.

Hereunder a small chart is available for easiness and give you an estimation of your Zakah

Amount of Saving at home or Bank

$2,000.00

Current value of Gold (15 Tolas)

$7,354.32 (approximately)

Value of assets or merchandise (trade)

$200,000.00 -this is just illustration

Receivable and loaned amount to others

$5,000.00 – illustration

 

 

Total

$214, 354.32 (illustration)

Amount Debt to be paid: $2,500.00 (approximately)

  • Subtract the total amount of debts for the year fromthe above amount
  • Net Total of Zakatable Wealth: $211,854.32(Illustration)
  • From the above 2.5% Zakah will be payable. So approximately $5,296.35Zakah will be payable.

Only Allah knows best.

Written by Maulana Javed ibn Nazir Kachhalia

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham

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