Should a mortgage be treated as loan and hence be deducted from net worth when calculating zakat?

In Islamic finance, the treatment of a mortgage in relation to zakat can be understood through the teachings found in hadith literature. A mortgage is indeed considered a type of loan and should be treated accordingly when calculating one's net worth for zakat purposes.

In Al-Kafi, it is stated: I asked Abu Abdullah (peace be upon him) about mortgage. He said: If the amount is more than the mortgager's wealth, it is proper to pay the excess to the mortgage owner. If the amount is less than his wealth, the mortgage is invalid, and the owner must pay the excess to the mortgager. If the mortgage is balanced, then there is no problem. Al-Kafi 2:796Shia. This guidance indicates that the status of the mortgage relative to the mortgager's wealth is crucial for determining how it should be handled in calculations of zakat.

Moreover, Ali (peace be upon him) remarked: A loan of wealth is a protection for zakat. Al-Kafi 5:237ShiaMuwaththaq. This suggests that loans, including mortgages, are relevant when assessing one's zakatable assets, as they can influence the calculation of net worth.

Thus, when computing zakat, one should consider the mortgage as a liability that may reduce the overall wealth subject to zakat, especially if the mortgage amount exceeds the mortgager's assets.