Paying Zakat on Money Lent Out

Answered by Shaykh Faraz A. Khan

Question: My brother took an interest-based house loan from the bank (to buy a house). In order to help reduce this loan I lent him a sum of money.

He pays back a small sum to me every month, but he can’t pay back the whole sum without taking another bank loan. My question is: should I pay zakat on the money I lent him?

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health states. I apologize for the undue delay in answering your question.

Zakat is due on the money lent out. You may either (a) pay zakat every year on the amount owed to you at that time, or (b) pay zakat retrospectively, once money is collected, for the previous years it was lent out. [Ibn Abidin, Radd al-Muhtar]

And Allah knows best.
wassalam
Faraz

Checked & Approved by Faraz Rabbani