Is it permissible to take a loan of 8,0 dinars without interest, and then lend 7,0 dinars of it to a brother before repaying the original loan?
The concerning the issue of deducting debt from is that whoever possesses wealth on which zakat is not obligatory, such as a house he rents out, should consider it against his debt and pay zakat on the wealth he holds. If he does not have a surplus asset beyond his needs that can be used against the debt, then he should deduct the debt from what he holds and then pay zakat on the remainder.
Therefore, you should deduct the borrowed money from what you hold and then pay zakat on the remainder if it reaches the (minimum threshold). This applies if you do not possess any unnecessary assets. However, if you possess assets that you do not need, then you should pay zakat on all the wealth you hold when the year (hawl) passes, including the money you borrowed.
As for the money you lent to your brother, its zakat is obligatory upon you because it is wealth you own. If your brother is solvent (able to pay), you should pay zakat on this money along with your other wealth. If you wish, you can pay its zakat upon receiving it for the past years. If your brother is in hardship (insolvent), then you should pay zakat on the money when you receive it for the past years.
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