I have Debts, do I Pay Zakat?
Examples: Zubair possesses assets worth £10,000, but owes his creditors a total of £7,000. When his zakat year has elapsed, he will pay zakat on £3,000.
Shuayb has savings of £2,000, and an £80,000 mortgage which he pays in monthly instalments of £400. His zakat date comes round just as his monthly payment is due, so he pays zakat on £1,600.
Shuayb has savings of £2,000, and an £80,000 mortgage which he pays in monthly instalments of £400. His zakat date comes round just as his monthly payment is due, so he pays zakat on £1,600.
The basic principle is that debts are deducted from wealth, and if the remainder is still over the nisab threshold, zakat is payable, otherwise not.
However, if a person has a large debt that is being paid off in instalments, such as a mortgage or a large credit card debt, then one should only deduct the payment that is currently due from one's assets.