Paying zakaah on loans

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When should zakaah be paid on money that is loaned out?
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Answer:

Praise be to Allaah.

This matter may be summed up as follows:

1.   The lender has to pay zakaah annually on the money lent, if the borrower is rich and is known to repay debts promptly. In this case, because it is possible to recover the money readily, it is like money that is in one's possession.
2.   The lender has to pay zakaah one full year after recovering the money if the lender is in difficulty or is known to delay repayment. He does not have to pay zakaah before he gets the money back, because it is not readily accessible and this is not like money that is in one's possession.

Whatever written of Truth and benefit is only due to Allah's Assistance and Guidance, and whatever of error is of me. Allah Alone Knows Best and He is the Only Source of Strength.

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