The profit one gets from selling an item he sold with interest
Fatwa No: 92668

  • Fatwa Date:25-12-2006 - Thul-Hijjah 5, 1427
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Question

Assalamu Alaikom Warahmatullahi Wabarakatoh. The question is regarding usury and its "kaffarah." Given the following scenario please advise on whether this is forbidden or not and if it is forbidden how can one repent. A man deceides to buy land and build a house upon it and then sell the house as an investment. He then invests 100K from his own money and borrows 500K from a bank with interest to cover the cost of the land and the construction. During construction he pays 50K in interest to the bank. He later sells the house for 800K thus realizing a 150K in profit. What should he now do to absolve himself of this knowing that he did something wrong. The verse states, and God knows best, that one should keep his capital. The rest should be given to good public islamic use. However, what if he wasn't collecting interest but he is paying interest and still realizes a profit? In this scenario he sells the house for 800K and pays 500K to the bank to repay his debt and he retains 300K, of which 150K are profit. Q1: Does he give up the entire 150K or does he give up only 50K? which equates to the 50K he paid in interest. Q2: How does the judgement differ if he only sold the house for 650K and thus realizing no profit at all? Please advise and provide "daleel" or "shahed" if possible. Thank you and God bless your deeds.

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.

 Borrowing money with Ribaa (interest and / or usury) is one of the grave major sins, therefore, you are obliged to repent to Allaah and be determined not to do this again. Allaah Says (what means): {But whosoever repents after his crime and does righteous good deeds (by obeying Allaah), then verily, Allaah will pardon him (accept his repentance). Verily, Allaah is Oft-Forgiving, Most Merciful.}[Quran 5:39] For more benefit, please refer to Fataawa 88238, 85578 and 82102.

You are not obliged to get rid of the profit which you got from selling the house, because once the loan is possessed by a person, it becomes his property and a debt, whether or not it is a loan with Ribaa, however, a person is sinful for taking a loan with Ribaa.

The ruling does not change if you sell the house without a profit, nonetheless, if you give some money as charity then this is good for you, because charity is a good deed, and Allaah Says (what means): {Verily, the good deeds remove the evil deeds (i.e. small sins).}[Quran 11:114]

Allaah Knows best.

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