If you are a collector and reseller of antiques etc., then Zakat may be due upon it, like business inventory. However, if you are not involved in the trade and just do it for your own leisure and enjoyment or personal use, then Zakat is not due upon it. And Allah knows best.

The mortgage on the principal residence (the house you live in) is deductible. Meaning the payments toward the principal loan over the next 12 months can be deducted from your Zakatable assets when calculating Zakat. However, as for the investment properties, or properties you have rented out, this allowance is not applicable. 

The example you have one property mortgaged in which you live in and two more that are mortgaged and rented out. You would not pay any zakat on the 2 rental properties, nor deduct anything from the mortgage loans applied to them. However, if you have surplus revenue from the rental income after expenses, which you have accumulated, then that cash is part of your overall asset pool, and thus Zakatable at 2.5%

The calculation of Zakat on long term investments held for one lunar year or more is as follows:

From the balance sheet of the company (in which you hold shares), use the following formula:

1. Amount Y =      Cash + Cash Equivalent + Accounts Receivables + Inventory
                                      Total Number of Shares Issued By Your Company
2. Your Zakatable Amount = [(Amount Y) x (Number of shares you own)]

Please note, if you are receiving dividends, please add the full amount to your Zakatable assets.

Long-term investors are considered part of the ownership, and so you must calculate this looking at the balance sheet of the company.

If your intention changes with the asset that is owned, then the Zakat due also changes. 

If you decide to cash out or become a short term trader, which means the investment is held for less than one lunar year, then you must include the entire value of your portfolio and pay Zakat on it.

If you can pay the person back (meaning you have cash available to return the borrowed funds), and your zakat payment date arrives then you are liable to pay Zakat on all the money borrowed. There is only one condition under which you are not liable to pay and that is if you are paying back the loan within the lunar year you are paying your Zakat.

It is by the consensus of all four schools of thoughts that it should be given locally. This is determined by the following Hadith:

Abdullah Ibn’ Abbas (May Allah be pleased with him) narrates: “The Prophet sent Mu’adh to Yemen and said, ‘Invite the people to testify that none has the right to be worshipped but Allah and I am Allah’s Messenger, and if they obey you to do so, then teach them that Allah has enjoined on them five prayers in every day and night (in twenty-four hours), and if they obey you to do so, then teach them that Allah has made it obligatory for them to pay the Zakat from their property and it is to be taken from the wealthy among them and given to the poor.” (Sahih Al-Bukhari)

Zakat is only due on gold and silver, and is not due upon any other metals or precious stones.

In order to calculate Zakat on silver and gold you must take into consideration the following:

• The purity of the gold and silver within the jewelry.
• 24K gold is considered pure gold
• To find the purity percentage of your gold, you must divide the karat value of your gold by 24 (the karat value of pure gold)
• The weight of the gold and silver within the jewelry.
• This is the true grammage of the amount of gold or silver within the jewelry and is based on the purity percentage
• To find the true grammage of your gold or silver, you multiply the total weight of gold or silver in your jewelry by the purity percentage
• The value of the gold and silver within the jewelry.
• This is determined by the current value of gold and silver on the Zakat calculation date

For example, if you have 100g of 18K gold, you would calculate as follows:

• Purity Percentage = 18/24
• True Grammage = 100 x Purity Percentage
• Value = True Grammage x Current Value of Gold (per gram)
• Zakat Due on Jewelry = Value x 2.5%

The requirement to pay Zakar on Mehr that is owed would follow the good debt or bad debt rule. If you are certain you will collect the Mehr, then Zakat would be due on it. However, if you are uncertain you will collect the Mehr, then Zakat would not be due on it.

This is a common occurrence since most of us don’t know when we passed that threshold. If you don’t know your Nisab anniversary date it is advised that you select a Hijri Calendar date that is easy to remember and just make that your anniversary date moving forward.

For calculating zakat on your inventory you have to consider the following items and then proceed. 

• Is the inventory marked for sale? If it is, then zakat is only due on sellable inventory. 
• The inventory has been available for sale for one lunar year. The same SKU or products. It can be general or specific if you like. Example, phone cases or a specific phone case. It can become really complex the more specific you get so to generalize inventory items together might be easier to manage in the calculation. 
• Inventory price can be selected as either the wholesales price you would see the inventory for or the retail price you have it marked for. Our opinion is that the wholesale prices would suffice.

Once Zakat is liable upon you as an individual then all your assets, including jewelry and gold, are included in your Zakat calculation regardless of the weight of gold, silver or jewelry owned.

How is giving Zakat locally better than sending it abroad?

As Muslims living in Canada, it is important to balance our giving between local and international, but we have to remember that our collective accountability for the poor and destitute within Canada is paramount and must not be forgotten. As the number of eligible Zakat recipients increases in Canada day by day, they have a right over Canadian Zakat payers.

Linguistically, Zakat is a mandatory act of worship that requires Muslims who own wealth at or above a certain threshold (called Nisab) to donate a portion of that accumulated wealth, typically 2.5% for those who are eligible. Zakat is a right that the poor have over the rich.

In order to be eligible to pay Zakat, your asset value must be above the Nisab threshold. Once you have determined you are liable to pay Zakat then you would take the following steps:

1. Assets:  Add up all your Zakatable assets which encompass your liquid assets or cash generating assets including:

1. Cash 
2. Gold and/or Silver
3. Investments (zakatable)
4. Properties (zakatable)
5. Debt Owed to You (zakatable)

2. Liabilities: You would then deduct all liabilities that are deductible

1. Any payments you are to make within one lunar year (bills etc.)
2. Any debts you plan on paying back within one lunar year
3. Get the net amount from 1 and 2. (Assets minus Liabilities)
4. Take the amount from 2c and multiply by 2.5%

Regarding livestock and agriculture, calculate the Zakat on these separately in accordance to their own Nisab and payment methods/times.

No, you cannot give Zakat to your children. This is because supporting your children is already your responsibility. One cannot give Zakat vertically in the family tree (to parents, grand parents, children, etc). However, one can give Zakat horizontally across the family tree (to siblings, cousins, etc).

If you do not have any access whatsoever to this money until retirement, you are not required to pay Zakat on it until you actually have access to this wealth. However some scholars say that if the money is invested (which a pension fund likely is), then this is money one is benefiting from, and Zakat should be paid on it regardless of access. Allah knows best.

Yes, you can give Zakat to your brother if he is Zakat eligible. One can give Zakat horizontally across the family tree (to siblings, cousins, etc). However, one cannot give Zakat vertically (to parents, grand parents, children, etc).