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Zakah determinations.

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:

What is the zakath to be paid on house bought, after making a partial payment?

The balance amount is being paid in monthly installments.

The house at present is on rent, which in turn is used to make the balance payment.

 

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

 

Answer:

 

Zakah determinations

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 ones assets (properties, investments, jewelry, cash, etc.) except:

  1. the value of the house/s one owns and actually lives in
  2. the value of the car/vehicle one uses on a regular basis
  3. the value of the furniture and fixtures one uses on a regular basis.

 

Your Question:

What is the zakath to be paid on house bought, after making a partial payment?

The balance amount is being paid in monthly installments.

The house at present is on rent, which in turn is used to make the balance payment.

Lets assume you bought the house a year ago the value of which was 100,000.00; lets assume you made an initial partial payment of 25,000.00 and over the course of the year you paid another 5,000.00 towards the house (regardless of whether from the rental income of the house or any other source). Today, one year after you purchased the house, the fair market value of the house is 110,000.00.

 

In such a scenario, you will be liable to pay zakah for this year on 25,000.00 (your initial investment) + the 5,000.00 (your subsequent payments towards the house) + 10,000.00 (the increase in the value of the house); thus for the year your zakah for the property will be 2.50% of 40,000.00 or 1,000.00.

 

Whatever written of Truth and benefit is only due to Allahs 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,

 

 

Burhan

 


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