Profits accrued from a bank loan
Question
Yusuf purchases a building and thereafter, he sells it. He buys the building for R300 000. He gets R200 000 from the bank, which is basically interest funds, to purchase the property. I invest R100 000 of halaal money with Yusuf hence, my share is 33% and Yusuf’s share is 66%. Since his money is from the bank, his profits will be considered as interest. Since I invested Halaal money, will my investment be in order, and will it be okay to use the profits?
Answer
We understand from your query that Yusuf and you jointly purchased a building for R300 000.00. Yusuf took a bank loan of R200 000.00 (which is interesting bearing) to purchase his portion of the building (which is two thirds), and you purchased the remaining one third for R100 000.00 hence, Yusuf owns 66.66% and you own 33.33%, based on the capital that each one invested.
Yusuf is definitely sinful for acquiring an interest-bearing loan to purchase two thirds of the property. Rasulullah Salallahu Alaihi Wasallam cursed the one that consumes Riba, the one that pays Riba, the one that records the transaction and those that witness the transaction.
Yusuf should therefore, try and settle the bank as soon as possible since he has now sold the property, so that he may be protected from further sin. However, this does not make his income Haraam even though he is sinful for paying interest. The finance provided by the bank is not always ‘interest’ as mentioned in your query, but rather, the banks use funds belonging to clients to finance their customers. In conclusion, your investment in the property with Yusuf and the profit accrued from the sale of the property, is in order.
- Answered by
- Mufti Mohammed Desai
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