Is Zakat obligatory on the price of the rest house after selling it to pay off a debt, or if a Hawl (one year) passes on it before the sale, and is Zakat obligatory on the debtor?

For trade goods, it is a condition for Zakat to be obligatory that they are owned with the intention of trade and earning profit. Zakat becomes due on them every lunar year at one-quarter of one-tenth of their value, even if their sale is delayed for years. However, if the intention of ownership was for personal use (qinya) or rental, and then the intention to sell arose to repay a debt, there is no Zakat on them. When they are sold, their price is subject to Zakat if a lunar year passes on it and it reaches the nisab.

Some scholars are of the view that an item becomes trade goods merely by intention, and this is the more cautious approach. So, the rest house should be valued after the completion of a lunar year from the time of the intention of trade, and its Zakat should be paid. If liquidity is not available to pay the Zakat, there is no harm in delaying its payment until funds become available.

As for deducting debt from wealth subject to Zakat, this is a matter of scholarly disagreement. The more cautious approach is for the debtor not to deduct his debt from the wealth on which Zakat is due.