Do I have to pay Zakat on my mortgage?
Without going into the discussion surrounding mortgages and whether conventional (or otherwise) mortgages are Islamically valid, when calculating zakat this should be on the liability column. Since mortgage is a non-current debt and it is payable over a number of years the zakat payer should only deduct the one month’s payment at his or her zakat due date. Only the principle amount of the month’s mortgage payment and not the interest (riba) should be deducted. All interests (riba) should be given away to charity without intending any rewards from it. It should be reminded that one should move away from interest (riba) based transactions as soon as possible.
It will not be allowed to deduct the full mortgage amount as that would mean mortgage owners do not pay zakat for 25-30 years even though they have wealth and money they use for other matters. There is an opinion that one may deduct the 12-month’s payment. However, the view I advocate and promote, which is the safest position is that only the payment at one’s zakat due date may be deducted. So one subtracts only one month’s mortgage payment – the principle amount, not any interest.
When it concerns Zakat payment it is better to be on the safe side.
Sheikh A. Hasan (Zakat Specialist)