Do Tenancy Deposits Require Zakat Payments?

No, Zakat is not typically required on tenancy deposits because the tenant does not have full ownership or access to the funds. 

Since the deposit is held as security by the landlord, it does not count as the tenant’s wealth for Zakat purposes. Instead, the Zakat obligation applies to the landlord’s rental income if it meets the Nisab threshold.

The following are the keys to remember:

• Not in Your Possession:
• A tenancy deposit remains with the landlord as security and is not readily available to the tenant.
• Since Zakat is only due on wealth that one fully owns and controls, the deposit is not included in the tenant’s Zakat calculation.
• Landlord’s Responsibility:
• The landlord, as the recipient of rental income, must calculate Zakat on their total earnings.
• If their rental income, along with other assets, reaches the Nisab threshold, they are required to pay Zakat.
• When the Deposit is Returned:
• If the deposit is refunded to the tenant, it becomes part of their wealth.
• If the deposit is still held at Zakat's due date and meets Nisab, Zakat applies.

Thus, a tenancy deposit does not require Zakat payment from the tenant while it remains with the landlord. The responsibility lies with the landlord to pay Zakat on their rental income, provided it meets the Nisab threshold.

And Allah knows best!