Seriously? This is the state of most muslim students in the Western world these days, people take out loans for their education, and then spend some years, sometimes up to 10 years, paying them off. So, if you’re worth net negative, do you pay zakat?
It would be best to consult an actual scholar on this because Zakat being one of the pillars of Islam; you would want to be absolutely sure on how to proceed about it.
Personal opinion; if you’re following a repayment schedule and a part of your earnings goes towards that repayment, then just subtract that+your living expenses from your earnings, and pay zakat on what you’re left with on a monthly/yearly basis. Plus I believe there’s a minimum in excess that you must have to pay Zakat.
Zakat is on wealth or net savings. So lets say today your actual liabilities are more than your assets, then there is no wealth to pay zakat on.
But then again I am not a scholar of religion, and am told simple logic does not address these issues. Makes sense to me and I have not seen a good enough argument against the approach.
TLK - but your liability is not the total of your payments for the year, you owe the total amount which is a real liability. That real liability has to be compared to your real assets. An argument can be made of total current value vs future value for payoff and what amount needs to be compared to your current total assets.
The issue that I see is that someone can be paying zakat on some supposed wealth, but in any situation where there is an impact to the income stream, the liability does not go away barring a bankruptcy.
The argument is not against giving, but to me that becomes sadqa and given at a level an individual is comfortable, but zakat obligation seems a bit too much
Well, that means I might have had to pay zakat for the past 2 years which I didn’t do. Because I was in debt overall.
If I pay up my zakat then by guestimating for the past two years should I pay that lump sum now or wait? Or pay it slowly off as I can in the near future?
Again, use this information for reference purposes, but please do seek advise from a Mufti/Scholar, any person of knowledge that’s accessible to you for best course of action.
You can give Zakat to help out anyone who’s in dire need. Be it blood relations, or people that you know are in need. Edhi of course is an excellent organization, and best recipient for zakat.
true but zakaat can NOT be given to non-Muslims. parents can NOT be given zakaat money but siblings can be. there are guidelines where you can spend zakaat monies. best way is, as you mentioned, to give it to needy people you know. there are a lot of poor people in North America and that can be your own city.
our masjid gives out zakaat money to local families who are below poverty line. same goes with fitra money.
Zakat is paid on Savings. If one is under loan, he/she should really be paying as much payment of the loan as possible, not just the bare-minimum. If you do that, you should not have a significant amount of savings for which to pay zakat on. Hope that clarifies.
X2 yaraa, in that case people who have 30 years loan on their house will never be eligible for many many years to pay zakat. His loan will always be greater than his savings.
Yeah I was thinking just this thought, which prompted me to open the thread. If long term loans applied, most muslims in the west wouldn’t be paying zakat, we’re all in debt ourselves. To some bank or the other.
Yes. Savings may be less than the loan amount for a long time. Assuming we are not factoring in equity which grows with time as well.
If your savings are less than what you owe then I don’t see wealth.
Person A has a mortgage- he just bought a house. The final price of the house would be 500K, he can pay it off today for 350K, and has 20K equity in the house.
He has 40K in his savings account.
Some people would say he owes zakat on the 40K
Others would say its 40K minus payments due this year. Some may say its his
If he dies tomorrow, what is the total wealth he is leaving behind for his kids? Zakat is on wealth…assets-liabilities. Plus it’s not due on your house anyways. So even if he has 80% equity that can’t be used in this calculation to complicate it a bit. It will be savings minus loan amount.
Why make it more complicated. Once the place is paid off or assets are higher than liability and the individual has wealth then zakat on wealth is needed. Until then pay sadqa as much as you want.
Again just my view. But it’s really based on a net worth perspective. Net worth minus asset value of house to be specific
Now people may go on a tangent and talk about interest being haram, and fine, even if we go by that. Loan is not haram.
If I have you a million dollars to but a house. Do you not owe me a million dollars? However long the period of repayment is does not matter. What matters is when what you owe is less than what you have saved.
