Is Advance received from tenants is to be treated as debt which is to be returned when they leave the property?
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:
Is Advance received from tenants is to be treated as debt which is to be returned when they leave the property? If so while calculating zakath on our income or savings which remained for one year do we need to deduct the above amount? Pls answer.
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Advance rent zakah determination
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 none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.
If the total net worth of any believer (man, woman, or child) is more than the prescribed ‘nisaab’ of 7.5 ‘tolas’ of gold (app. 85 grams or app. Value US$2,100.00), then the person is liable to pay the obligatory annual ‘zakah’ of 2.5% on their excess wealth which has been in their possession for a full calendar year.
If the total net worth of any believer is less than the prescribed ‘nisaab’, he/she is not liable to pay any ‘zakah’ until their net worth exceeds the prescribed ‘nisaab’.
For the purpose of determining ‘zakah’, the ‘Net Excess Assets’ would be the current market value of all of one’s assets (properties, investments, jewelry, cash, etc.) except:
- the value of the house one owns and actually lives in
- the value of the car/vehicle one uses on a regular basis
- the value of the furniture and fixtures one uses on a regular basis.
Your Question: Is Advance received from tenants is to be treated as debt which is to be returned when they leave the property?
Firstly, the annual ‘zakah’ is not determined from the annual income or rent of the premises; but rather the owner of the premises will be liable to pay his zakah on the market value of the property.
Secondly, it all depends what exactly is meant by ‘advance received’…..if it is merely a deposit which has to be returned back to the tenant when they vacate the premises, then the tenant will be considered the inherent owner of that wealth and it is they who would be liable to pay its zakah.
But if by ‘advance received’ you mean to imply that it is the rent of the premises owned by you which the tenant has paid in advance….then indeed you would be the owner of this wealth, and if that wealth has been in your possession for a period of one year, you indeed would be liable to pay its zakah.
Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.
Your brother and well wisher in Islam,