In the name of Allah, the most Beneficent, the most Merciful.
The answer will be given under the following questions:
• I have been paying Zakat for the last few years and my zakat payment date is Ramadhan.
It is best to discharge the zakat as soon as possible. To unnecessarily delay the zakat through laziness etc… is considered disliked. (Fatawa Mahmoodiyah p.33.v.3) • I currently own a house with a value of approximately £100,000.
Zakat is not wajib upon that wealth and goods which are for a persons needs and necessities. For example a home for living in, clothes for wearing, household furniture and means of transport. There is also no zakat upon books used for personal research or reading or upon equipment used for ones trade. (Ilmul Fiqh p.14 v.4 & Fatawa Hindiyyah p.172 v.1)
I am purchasing a house to the value of £185,000. We get possession of the house on the 31st August. The house will be financed by £122,000 Islamic mortgage and £30,000 loans from family – the mortgage is in both my wife and my names. My mortgage repayments will be around £580 a month. We have not agreed repayment yet for the personal loans but we are planning to start paying back after 1 year.
As you have not brought the house yet, the money, which you need to pay, will be considered a debt. (Fatawa Hindiyyah p.172 v.1) Regarding short-term and long-term loans, the preferred opinion is that only short-term loans will be deducted and not the long-term loans. Therefore, with regards to your question only the monthly mortgage repayments, which will calculate to £6,960, should be deducted from your zakatable assets and not the £122,000 Islamic mortgage. Similarly, with regards to the loans borrowed from the family only the payment that is currently due within the year should be deducted from the total. You should avoid deducting the whole sum. Therefore, as you not planning to pay back the loan this year the £30,000 should not be deducted from this years zakat. (Jadeed Fiqhi Masaail p.213 v.1)
When we move into the new house we plan to refurbish the old house at a cost of around £10,000. Once the house is refurbished we will either rent the house out or sell it to cover the loans borrowed.
Even though you plan to save £10.000 for the refurbishment of house, Zakat is still obligatory as long as the conditions of zakat are found. The conditions are:
- To be owner of zakatable goods to the value of nisab, and to have it for a full year
- One has to have the nisab amount at the beginning and end of the year
- Free of debt
- Ones wealth has to be in excess of his necessities
- Has to be in ones ownership and possession. (Ilmul Fiqh p.21 v.4)
• I own shares that are currently valued at £3,300
Zakat will be obligatory on the market value of the share. (Jadeed Fiqhi Maqalaat p.155 v.1)
Do I have to pay Zakat on the value of the old house considering I have personal and mortgage loans to pay?
Zakat is not obligatory on the old house. Zakat is not wajib on houses unless it is intended for resale. (Bahrur Raaiq p.225 v.2)
Only Allah Knows Best
Mohammed Tosir Miah
Darul Ifta Birmingham.