Answer
Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.
In the Name of Allah, the Most Gracious, the Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
It should be known that expenses, debts, and loans are not subject to Zakah, and mortgage is a kind of debt.
Shedding more light on the matter, Prof. Dr. Monzer Kahf, a prominent Muslim economist and counselor, stated,
Zakah is the third pillar of Islam. It is considered a purification of one’s wealth, and it is always correlated with Prayer in the Quran; wherever you read (Perform Prayer) in the Qur’an, it is followed by (And pay Zakah).
It is known that only those who own nisab (the minimum amount requiring Zakah) have to pay Zakah. In calculating Zakah, a Muslim should first deduct all his or her expenses and loans, as these items are not subject to Zakah.
You do not deduct the mortgage amount at all. In other words, you add whatever you have of cash, gold or silver, investment, and other Zakatable items on the day of their hawl (passage of 354 days), including any money you just may have earned one day before, deducting all that you have to pay during the month or the period until your next earning (including any amounts coming due during this period on the mortgage and household expenses) and pay Zakah on the rest at 2.5 percent.
The reason is that the rest of the mortgage is in fact a debt on your future income, not on your present property; it is not going to be paid out of the present property.
Almighty Allah knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.