Q: 1. Before the start of Ramadhan, we agreed on the purchase of a house from Al-Rayan Bank. The property price has already been agreed and the solicitors are already involved with paperwork Insha’Allah to go through soon. I have money in my bank account but of course I am also liable to pay to the money towards the 20% deposit that I have already agreed with the bank Insha’Allah and the solicitors have already sent me an invoice for their bills which includes stamp duty. May I humbly ask if the deposit and the amount due to the lawyer as agreed can be deducted from the Nisab as liabilities which I have to pay as agreed with the two?
2. Non-interest principal portion of the mortgage debt can be deducted from the amount on which Zakah is payable. However, can you clarify what will be the stance when it comes to islamic mortgage since the system is different whereby I am renting the house from the bank and I buy part of the house with each monthly rent.
الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب
A: 1. A simple way to determine whether the deposit and stamp duty may be deducted from your zakatable amount is if the property was to be destroyed in a fire who would suffer the loss (notwithstanding any insurance that may exist)? You or the vendor? If it is the vendor then you cannot deduct the deposit and stamp duty from your zakatable assets. If it is you then you may deduct them as the sale has been completed and you have incurred a debt. The solicitors fees may be deducted as they have fallen due for services already rendered.
2. For further information regarding zakat on Islamic Home Purchase plan please read the following article: http://alqalam.org.uk/research-papers/zakat-on-islamic-home-purchase-plans/