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Fatwa CenterDeducting the Value of Debt from the Nisaab When Paying Zakaah
Question
AoA
I need some clear advice on my zakat calculation.
1) Do I pay zakat on my current bank balance or the amount that has been in my account for the entire lunar year?
My bank balance has been fluctuating between £3000 and £10,000 over the year so I have had £3000 consistently over the year but only accumulated additional funds over the last few months so do I pay zakat on £3000 or £10,000?
2) I have lent some money to a family member that I was otherwise going to use to pay off my mortgage. Now that I don’t have that money, I cannot pay off the mortgage until I get the money back from the person I have lent it to. I will get that money back but I don’t know how long it will take. It might take 5 years to get my money back. Do I have to pay zakat over the 5 years until I get my money back, considering that I have the mortgage debt.
Jazaka’Allah for your advice
Answer
All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad, 
is His slave and Messenger.
Our answer is summarized in the following points:
First: Zakaah is due on the amount in your bank account that has reached the Nisaab (the minimum amount of wealth liable for Zakaah) and has been in the account for a full lunar year. As for the amount that has reached the Nisaab but has not been in the account for a full lunar year, Zakaah is not due on it before the lapse of one lunar year, unless it is profit earned from the other amount that has reached the Nisaab and has been in the account for a full lunar year. It is permissible for you, though, to pay Zakaah in advance on the amount that is not yet liable for Zakaah for not completing a lunar year along with the amount that is liable for Zakaah. In this case, you would be paying Zakaah on it in advance, and there is nothing wrong with that.
Second: it is not obligatory to pay Zakaah on the loan you gave to your relative before you receive it. Zakaah becomes due on it when you receive it, and you should pay Zakaah on it for one year only. If you pay Zakaah on this loan for all the previous years, it would be safer and more prudent in terms of clearing your liability from the obligation in this regard.
Third: it is permissible for you to deduct the value of the mortgage debt from the total wealth that amounts to the Nisaab and is liable for Zakaah if you do not have any surplus properties that can serve as debt collateral, such as cars, real estate, or other possessions that exceed your basic needs. If this surplus wealth is sufficient to pay off the debt, then you must not deduct the amount of the debt from the wealth liable for Zakaah. If the surplus wealth is sufficient to cover part of your debt only, then the remaining part of the debt should be deducted from the wealth liable for Zakaah, and then you pay Zakaah on the residue if it reaches the Nisaab. Ibn Qudaamah 
said: “The debt prevents the payment of Zakaah only when its value consumes the Nisaab or the remaining amount left after deducting it is less than the Nisaab, and the debtor cannot afford repaying the debt except with the wealth liable for Zakaah or wealth with which he cannot dispense.” [End of quote] In this case, it is permissible for you to deduct the value of the debt that you owe (from the wealth liable for Zakaah) and pay Zakaah on the remainder unless it does not amount to the Nisaab.
Allah Knows best.
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