Question

Assalamu alaikum,
I am seeking guidance. I am a working professional who has a small LLC company (Lets call it XYZ) XYZ invested roughly 20% into a rental property, and the remainder of the money is expected to be paid by the bank through conventioanl mortgage.

I have no niyyah to gain any monetary benefit through that property until it gets paid off by its self income generated, the income generated through the rents (as per the market conditions and I will not charge them anything extra to compensate the mortgage premiums) will be able to pay off the mortgage payments, property taxes and income tax levied and the reaminder of the income shall be kept in the XYZ bank account for property upkeep & maintenance and technicians (who are non-muslim).

Since I live in Quebec, which is the most highly taxed province in North America, I get taxed exhorbitantly high (say 40% of what I & my wife earn through regular 9-5 jobs annually). Is this strategy shariah complaint as I (the owner of XYZ)am not paying the interest on mortgage or receiving any benefit through higher than normal market rent or ribah. Please clarify this situation. I am a hanafi madhab follower. May Allah give you jaza and khair.

Assalamu alaikum

Answer

Based on the information provided in the question it seems that you are paying 20% towards the property and then you yourself are taking out a conventional mortgage for the remaining 80%. If this is correct then this would not be permissible as a conventional mortgage will include interest charges. Engaging in a contract involving interest is unlawful. It would not matter whether you pay the interest from your own personal income, or through the rent received from the property. In all these scenarios taking out an interest-based mortgage and making interest payments will be unlawful.

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel