Q: A person owns an extra house which he is renting out. However, he owes people money which is less than the value of the property. Can this person receive Zakaat? With rental and everything the man barely survives.
A. The income he receives does not suffice for his needs and he has debts. Although he has an extra house which he receives a rental income from, because the income is not sufficient, it will be permissible for him to accept Zakaat and he does not have to sell that extra house to settle his debts. (Raddul Muhtaar V7 P238, 239)
Allah Ta’aala knows best.