Loan
 Bismihi Ta`ala 
Question:
1.As an individual, does my loan for my house will be deducted from my assets in due course of my Zakaat calculation?


2. As a company owner, I have long term loans (fixed liabilities) that I bought the company building. And I have my current assets and liabilities.


Answer:
Hamidan wa musalliyan,
1. As an individual, your whole house loan will be deducted from your assets because it is a strong loan that may engulf the house you stay. I am aware that some ulamas have said that only 12 months instalments should be deducted from your assets in your zakaat calculation, but this is not applicable to your house loan. This may be applicable for businessmen that are involved much in investments and loans. Because the house loan is not a light loan like mahr or paying blood ransom. In fact house loans is mortgaged by the land of the house or some other assets. We have seen house loans that resulted in sale by levy by pity less creditors and loan institutions. It is wrong to treat these loans as light because they jeopardize the debtor`s assets wholly. In view of benefitting the poor, one should equally protect every muslim individual port folio and we should not impose what shariah has not imposed. In fact all loans in our modern times are subject to high liabilities to the company and personal belongings. The original formula of calculation of Zakaat is to deduct your loans from your assets that are taxable by Zakaat(see on article of zakaat) and calculate 2.5% from the net value.

Hence the remaining total payable instalments loan of the house you are staying in should be deducted from your assets. Bearing in mind that when you don’t pay 3 to 4 instalments of these loans, then you will receive legal pursuit of seizure of the house you are staying in. We have seen hundreds of muslim houses being sold by levy in court due to non payment of a few instalments and accumulated punitive interests.


2. But in the case of business loans, then we will treat them differently. Because businessmen take loans for business motives and also to hide taxes. As such, the yard stick of necessity and zarourat will be adjusted. Instead of setting 12 lunar months, etc of instalments, better take the Net Current Assets of the balance sheet. Because fixed liabilities feed normally Fixed assets. Fixed assets are not accounted for Zakaat. So offset it with Fixed liabilities-long term loans. In case long term loan was for stocks, etc, then it will be reflected in that item in the balance sheet. So Ignore both Fixed assets and Fixed liabilities. And for Zakaat purposes, take the NET CURRENT ASSETS value.

It is the value of Stocks, cash, debtors minus the short term creditors. The NET CURRENT ASSETS value as at 1st Ramadhaan will reflect better the company`s Zakaat. 2.5% of NET CURRENT ASSETS. This formula can be used also for personal companies. And also for share holders. The share holder will find his capital ratio in the company. Then take the Net Current Assets and divide it by his capital ratio. Then multiply that sum with the

Zakaat denominator: 2.5%.

Tuhfatul fuqaha samarqandi

ثم إنما تجب الزكاة في مال الزكاة إذا لم يكن مستحقا بدين، مطالب من جهة العباد أو شئ منه.

فأما إذا كان مستحقا به، فلا تجب الزكاة بقدر الدين، لان المال المستحق بالدين 
محتاج إليه، وسبب وجوب الزكاة هو 

المال الفاضل عن الحاجة المعد للنماء والزيادة.

ثم الديون على ضربين: دين يطالب به ويحبس، من جهة العباد، كديون العباد، حالة كانت أو مؤجلة، وهو يمنع، لما ذكرنا من المعنى.

وكذلك مهر المرأة يمنع، مؤجلا كان أو معجلا، لانها إذا طالبت، يؤاخذ به وقال بعض مشايخنا: إن المؤجل لا يمنع، لانه غير مطالب به عادة، فأما المعجل فمطالب به عادة، فمنع.

وقال بعض مشايخنا: إن كان المعجل على عزم من قضائه يمنع، وإن لم يكن على عزم الاداء لا يمنع، لانه لا يعده دينا، والمرء يؤاخذ بما عنده في باب الاحكام، وهذا غير صحيح.
 
 
     
 
 
 
 
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