Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Assalam-o-Aalikum

I have the following questions and need your advice and guidance:

Q: 1. More than a year ago, I sold a house in my native Pakistan and brought money to Canada where now I live with my family. My intention was to buy a house here with that money. But unfortunately I could not buy the house because I did not have a job since then and have to spend from this money. I am still looking for a job and have to continue spending from this money to support my family and myself. In addition we have jewellery on which we pay zaka`h. My question is: Do we have to pay zaka`h on the money we got by selling our house and wanted to buy a house with that money but because of the circumstances have to spend from it for our needs?

Q: 2. Now I have about $50,000. But I also borrowed about $11,000 from a person during the last year. So, if I have to pay zaka`h, do I have to pay zaka`h on the whole amount or I have to minus the loan. Please take into consideration that the person who had lent me the money will not pay his zaka`h on the amount I had borrowed.

Q: 3. When we buy jewellery, it is not pure gold as it is made by adding some other substances. For example, if jewellery weighs 20 grams, it will not be 20 grams pure gold – it may be 12 grams gold and 8 grams of addition. So, how we will pay zaka`h on such jewellery – on the total 20 grams or on 12 grams of the gold quantity?

Please send reply to these questions at the earliest as I want to pay my zaka`h in Ramadan which is about to end.

Zajak Allah!

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Zakah determination

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

If the total net worth of any believer (man, woman, or child) is more than the prescribed ‘nisaab’ of 7.5 ‘tolas’ of gold (app. 85 grams or app. Value US$2,100.00), then the person is liable to pay the obligatory annual ‘zakah’ of 2.5% on their excess wealth which has been in their possession for a full calendar year.

If the total net worth of any believer is less than the prescribed ‘nisaab’, he/she is not liable to pay any ‘zakah’ until their net worth exceeds the prescribed ‘nisaab’.

For the purpose of determining ‘zakah’, the ‘Net Excess Assets’ would be the current market value of all of one’s assets (properties, investments, jewelry, cash, etc.) except:

1. the value of the house/s one owns and actually lives in (no zakah)
2. the value of the car/vehicle one uses on a regular basis (no zakah)
3. the value of the furniture and fixtures one uses on a regular basis (no zakah)

Your Question: …..My question is: Do we have to pay zaka`h on the money we got by selling our house and wanted to buy a house with that money but because of the circumstances have to spend from it for our needs?

As long as you had that house and lived in it or used it yourself, you were exempt to pay ‘zakah’ on your house, for a house one lives in or uses oneself is exempt from ‘zakah’ in Shariah.

But if you sold that house, regardless of what your intentions might have been to do with that money…..that money will be considered your excess asset; and if that money has been in your possession for one full lunar calendar year, indeed you would be liable to pay 2.50% of that wealth as your ‘zakah’ for the year.

Your Question: …. Now I have about $50,000. But I also borrowed about $11,000 from a person during the last year. So, if I have to pay zaka`h, do I have to pay zaka`h on the whole amount or I have to minus the loan. Please take into consideration that the person who had lent me the money will not pay his zaka`h on the amount I had borrowed.

Lets assume that you sold your house for $100,000.00 a year ago; lets also assume that you spent $50,000.00 of that money for your needs and expenses; and lets also assume that your total assets today are $50,000.00 that you hold in cash (ie. you have no other investments, savings, properties, etc.). And you have $11,000.00 loan outstanding.

In such a situation, provided your savings of $50,000.00 have been in your possession for a year, you would be liable to pay your ‘zakah’ for the year as follows:

Total excess assets ($50,000.00) minus your total liabilities or loans ($11,000.00) = $39,000.00. You would have to pay 2.50% on $39,000 or $975.00 as ‘zakah’ for the year.

Your Question: ….Please take into consideration that the person who had lent me the money will not pay his zaka`h on the amount I had borrowed.

Respected brother, the $11,000.00 which you borrowed from the person is not your wealth, but rather the wealth of that person; and it is that person who is liable to pay ‘zakah’ for it. If for any reason that person chooses not to pay ‘zakah’ on his wealth, he is the one who will be held accountable for his negligence.

One who borrows the money is not liable to pay ‘zakah’ on the amount he has borrowed in Shariah; the one who lent the money is the actual owner of the wealth, and it is he who is liable to pay ‘zakah’ for his wealth.

Your Question: …. When we buy jewellery, it is not pure gold as it is made by adding some other substances. For example, if jewellery weighs 20 grams, it will not be 20 grams pure gold – it may be 12 grams gold and 8 grams of addition. So, how we will pay zaka`h on such jewellery – on the total 20 grams or on 12 grams of the gold quantity?

One is liable to pay ‘zakah’ on the fair market value of one’s excess asset in Shariah, regardless of how much one bought one’s asset for!

Lets say one bought some jewelry of gold or precious stones, etc. for $5,000.00, and the value of actual gold in that jewelry was only $2,000.00; and lets assume that that jewelry has been in their possession for a period of one full lunar calendar year.

When determining ‘zakah’ on that jewelry, one would need to estimate the fair market value of that jewelry, regardless of the amount of gold in that jewelry. If the fair market value of that jewelry is only $3,000.00 after one year, one would be liable to pay their ‘zakah’ on only $3,000.00.

Allow us to relate another example to make the matter clearer…..Lets say one buys a ‘Picasso’ painting for $1-million; and after one year, the value of that painting is $5-million! It is obvious that the paint or the raw materials used in that painting could be worth only a few Dollars, but the fair market value of that painting today is worth $5-million……that person would be liable to pay zakah on $5-million and not the value at which it was bought, nor on the value of its raw materials!

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan