Answered by Shaykh Ilyas Patel
Since starting work about ten years ago, I have always had the nisab – I cannot remember my wealth going to zero. On the 15th of Ramadan every year I take whatever amount I have in the bank and give 2.5% as zakat. Is this correct?
I lived in an apartment, which I fully own in England. I am now working abroad and have let the property out. I understand that I have to pay zakat on the rent received. I am planning to purchase another apartment, with the intention that if I return to England some time in the future (and I have children-inshAllah) I MAY sell both apartments and buy a house. So you could say that the new apartment that I will purchase is an investment property. Do I pay zakat on the value of the new apartment (minus the halal mortgage amount) or do I pay zakat on the annual rent that I receive from the new apartment.
(the rent that I do receive from the new apartment will go directly to the bank to pay off the halal mortgage (in the form of monthly payments) – so at no time will the rent that I receive be in my possession for a year)
After the new apartment has been paid off – and there are no longer any payments to the bank. Will I have to pay zakat on the annual rent received or the value of the actual property?
In the Name of Allah, Most Compassionate, Most Merciful
Yes it is correct that you give Zakat of the funds that you have in the bank each year, but you need to take into account of cash-in-hand too.
In your second case, you will have to pay Zakat on the rent received in both cases; when the rent is going towards paying off your mortgage and when there are no longer payments to the bank.
And Allah Knows Best