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Fatwa CenterZakat on installment payments
Question
I constructed a commercial Building in 1995. In 1997 and after 2 years I managed to sell it to a company receiving my money over 5-years installments (20%) each year ending in 2001. Now, how do I calculate the Zakaat?
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.
The Zakat on instalments that people owe to you, has to be calculated by you at the elapse of every lunar year, as if it is in your possession. So if it reaches the minimum amount liable for Zakat by itself or with other money or tradable items added to it, then 2.5% has to be paid if the debtor is not procrastinating in the repayment of instalments and is not in difficulties. But if the instalments are not expected on time because the debtor is procrastinating or in difficulties and cannot pay you, then you are not obliged to pay the Zakat until you receive this money even if the period is long. When you receive the amount of money on all the previous years, then there is a difference of opinion whether or not you have to pay the Zakat on all the previous years or on one year only. To be on the safe side, it is better to pay the Zakat on all the previous years.
Allaah knows best.
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