Mortgage Financing for Muslim Americans

Abstract

Islamic economics is a rapidly growing discipline seeking to redirect econmomic behavior under the umbrella of Islam. This field combines malleable modem economic concepts with immutable moral principles in its attempt to address the economic climate of a given society. The most significant differences between Islmaic economics and the world’s more prevalent economic systems are the Islamic ban on rihl (usury) and the Islamic institution of zakah. The ban on usury is based on the verse: 0 you who believe, fear Allah and give up what remains due to you of usury if you are indeed Believes. And if you do not, then be warned of war (against you) by Allah and his messenger, while if you repent you shall have your capital. Do not wmng and you shall not be wronged (wan 2:278-9). This paper addresses mortgage firiancing problems on real property that Muslims face as a result of Islam’s ban on interest. The United States has a unique tax system designed to enmurage investment in real property. Congtess allows property owners to deduct all mortgage interest, along with operating expenses and depreciation writeoffs, from income taxes. This is an indirect form of government subsidy ...