Besides Haul and Nisab, another condition of Zakat is that the wealth you Zakat must be yours. This does not mean money that you physically have; rather it means money that you have the ability to obtain and use without any restrictions. We often use the term “full ownership” or “milik sempurna” to explain this concept.
For example, the money in your bank account is in your full ownership. Although it is not physically in your hands, but you have the ability to obtain it by going to the nearest ATM or bank and use it without any restrictions. Hence you need to Zakat the money when it reaches the Haul and Nisab. However if the money is locked in some sort of scheme in which if you were to obtain it your usage is restricted, then no Zakat is due on that wealth. Here we stress the condition IF you obtain it as we are testing the criteria “ability to obtain”, like the case of insurance whereby IF you were to stop the insurance policy, you can then obtain the surrender value, and if the surrender value has satisfied the Nisab and Haul condition, then Zakat is due.
So for the case of money you have lended to a friend or a loved one, the wealth will be counted as yours when you are counting your Zakat if you are confident that you will get the money back. If you are able to contact the person you lended the money to, and he gives you the guarantee that he will pay off the loan. and you are confident, then Zakat on that wealth is due on you. When calculating your Zakat, you will count that borrowed money along with your wealth as though you have it. Like “virtual money” so to say. As you Zakat, you will contact the person and tell him that he need not Zakat on that money lended to him, as there is no “double Zakat” on the same wealth (sounds like double counting doesn’t it!).
But if you are not confident that the loan can be settled, then no Zakat is due on that money lended. It’s as though you’ve spent the money, and as you know, money spent is not obligated for Zakat. However if one day the money is returned to you, then it’s considered like a new wealth, and is counted like any other addition in your normal savings. The normal calculation for Zakat Savings is applied.
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