Should I Include Loans When I Calculate My Zakat?

Answered by Ustadh Tabraze Azam

Question: Assalam alaykum

I needed money, and one of my relatives helped me out. He is happy to get the money back (if I can ever repay), and he is happy if I don’t repay.

Is zakat calculated on this? It is a confusing matter as I’m not financially well off, and while I pray I can repay, it is possible I may never be able to. If Allah opens my income gates, I may be able to. No clue. It is a very very large amount.

Time passes. What to do about this?

Answer: Wa alaikum assalam wa rahmatullah,

If he loaned the amount of money to you, it would be considered a debt owed to him.

If he merely gifted the amount to you, or forgave the “loan,” then it would be owned by you fully. Consequently, you would add it to your other financial assets and pay zakat the next time your due date comes around.

If you did not own the zakatable minimum (nisab) before this gift, or you did not have a zakat due date, the date the money was received would be your new zakat due date, assuming you have no other debts and the like. Hence, you would owe zakat the following lunar year.

[Shurunbulali, Maraqi al-Falah, with Tahtawi’s Gloss (2.391)]

Please also see: Is Your Zakat Due? – A Reader and Resources on Giving Zakat and: Zakat: A Comprehensive SeekersHub Reader and: Zakat Calculator

wassalam,

[Ustadh] Tabraze Azam

Checked and Approved by Shaykh Faraz Rabbani

Ustadh Tabraze Azam holds a BSc in Computer Science from the University of Leicester, where he also served as the President of the Islamic Society. He memorised the entire Qur’an in his hometown of Ipswich at the tender age of sixteen, and has since studied the Islamic Sciences in traditional settings in the UK, Jordan and Turkey. He is currently pursuing advanced studies in Jordan, where he is presently based with his family.