Is Zakat obligatory on both parties (the lender and the borrower) for the amount of a debt, knowing that it was spent immediately and a hawl (full lunar year) did not pass on it for either party, and if it is obligatory, for how many years is Zakat calculated?
The debt you lent to your relative, if she is unable to repay it, is not subject to until you receive it. At that time, you pay zakat on it for one year, provided it reaches the (minimum threshold) or completes the nisab. However, it is more cautious to pay its zakat for five years.
If the amount has been in your possession for the duration it remained as a debt owed by your sister, then a hawl (one lunar year) has passed over it more than once.
As for the debtor sister, she is not obligated to pay zakat if she does not possess the nisab after deducting the debt, because debt prevents the obligation of zakat on hidden wealth, according to the majority of scholars.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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