Excluding mortgage and car-loan balances from zakāh

Question

السلام و علیکم و رحمۃ اللّٰہ تعالیٰ و برکاتہ

I have questions regarding Zakat

- The most common mortgage period in the USA is 30 years. Can we exclude the remaining mortgage amount from the total asset for Zakat Calculations?

- The most common car loan period in the USA is 4 years. Can we exclude the remaining loan amount from the total assets for Zakat Calculations.

- Credit Card companies offer 0% interest rates for 12-24 months. Can we deduct the amount owed from the total assets.

- In the USA companies offer retirement perks where they let employers set aside pre tax amounts which the employees cannot access till they are 59.5 years old. Can this 401 amount which a person will only access at a given time period be considered as an asset when calculating the Zakat.

— Isfahan Bhimani, Wylie, Texas, USA

Answer

وعليكم السلام ورحمة الله وبركاته

Answers 1, 2, and 3:

The assets upon which zakāt is paid are those excess of debts. In mentioning the conditions which necessitate zakāt upon a person, Sayyidunā Ṣadr al-Sharī`ah writes in Bahār e Sharī`at:

نصاب کا دین سے فارغ ہونا

“…for the niṣāb (threshold of zakāt) to be excess of debt.”

[Bahār e Sharī`at, Vol. 5, Chapter of Zakāt]

In the cases of mortgages, car loans, and credit card debts as mentioned in the query, all are such loans which would be deducted from the assets when calculating zakāt. The remaining amount which one owes in all three forms of debt will be subtracted from the total assets.

Answer 4:

Such earnings set aside in retirement plans are amongst the assets and zakāt will be due upon them, and Allāh knows best.

May he be pardoned

Faqīr Sayyid `Abdul Ṣamad al-Qādirī · Ramaḍān 10, 1445 AH

Verified by Muftī Zāhid Ḥussain al-Qādirī