How is Zakat Calculated on an Asset Owned by Two People?

For assets owned by two individuals, Zakat is divided according to their ownership percentage. 

Here's a breakdown of how it's calculated:

Steps for calculating Zakat on jointly owned assets:

• Determine the total value of the asset (e.g., business, property, etc.).
• Subtract liabilities or debts associated with the asset to calculate the net zakatable value.
• Multiply the net zakatable value by 2.5% to find the total Zakat due.
• Divide the total Zakat due according to each person's ownership share.

Example:

Imagine two people owning a business together. One holds 60% of the business, while the other owns 40%. 

Here's how Zakat is calculated:

• Total value of zakatable assets: PKR 100,000,000
• Liabilities: PKR 20,000,000
• Net zakatable assets: PKR 80,000,000 (after subtracting liabilities)
• Zakat due (2.5% of PKR 80,000,000): PKR 2,000,000

Now, the Zakat is divided based on ownership:

• The person owning 60% of the business will pay 60% of PKR 2,000,000, which is PKR 1,200,000.
• The person owning 40% will pay 40% of PKR 2,000,000, which is PKR 800,000.

Key Points:

• Whoever owns the money is responsible for paying Zakat for it. This means that if one person sells their share or transfers ownership, they are still liable for the Zakat on their share until that transfer occurs.
• Zakat is calculated based on the net value of zakatable assets after liabilities.
• The payment is due once a year after meeting the Zakat nisab threshold.

When calculating your Zakat, it's vital to ensure it reaches those who truly need it. If you're paying Zakat on jointly owned assets, consider using a portion of it to uplift vulnerable lives. A heartfelt orphanage donation to institutions like Pakistan Sweet Home can turn your calculated obligation into a lasting impact for orphaned children across Pakistan.

And Allah knows best!

Other Zakat Questions You May Have

• Is Zakat Due on Properties and Other Fixed Assets?
• Is Zakat Applicable to All Assets in a Pension Fund?
• Is Zakat Applicable to Industrial Tools and Equipment?
• Can Benefits from a Zakatable Asset Change Zakat Payments?
• What Assets Are Subject to Zakat in Islam?
• Is a Lunar Year Necessary for Zakat on All Zakatable Assets?