Fatwa: # 34677
Category: Charity, Obligatory (Zakaat)
Country: United Kingdom
Date: 16th December 2015

Title

Can you please clarify if Zakah is due on the value of the land purchased? And when will Zakah be due on land or houses once built?

Question

 

 

Four of us have got together and bought some land in March 2015 (Equal shares) with a view to obtaining planning permission to build 9 houses to sell once they are built.

 

We are still in the process of obtaining planning permission. The land still derelict, we will start building when planning has been approved Insha Allah.

 

This may take one or more years.

 

Can you please clarify if Zakah is due on the value of the land purchased?  And when will Zakah be due on land or houses once built.

 

Your help is much appreciated.

 

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh

If you purchased the land with the intention of re-selling immediately and making a profit, it would be considered as stock in trade; hence you are obligated to pay Zakaat on the current market value of the land if it reaches the amount of Nisaab.

 

If you purchased the land with the intention of keeping the land and then re-selling after some time and making a profit, then you are not obligated to pay Zakaat on the land in reference since it is not considered as being stock in trade.

 

You state that you purchased the land with the intention of building and selling plots in the future, since you do not have an immediate intention to re-sell and profit from the land, you will not be obligated to pay Zakaat on the land.  However, you will be obligated to pay Zakaat once you sell the land and receive the profits accrued from such a sale.

 

And Allah Ta’āla Knows Best

 

Ismail Desai,

Darul Iftaa

 

Checked and Approved,

Mufti Ebrahim Desai.

 

 

 

 

DISCLAIMER - AskImam.org questions
AskImam.org answers issues pertaining to Shar'ah. Thereafter, these questions and answers are placed for public view on www.askimam.org for educational purposes. However, many of these answers are unique to a particular scenario and cannot be taken as a basis to establish a ruling in another situation or another environment. Askimam.org bears no responsibility with regards to these questions being used out of their intended context.
  • The Shar's ruling herein given is based specifically on the question posed and should be read in conjunction with the question.
  • AskImam.org bears no responsibility to any party who may or may not act on this answer and is being hereby exempted from loss or damage howsoever caused.
  • This answer may not be used as evidence in any Court of Law without prior written consent of AskImam.org.
  • Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
The Messenger of Allah said, "When Allah wishes good for someone, He bestows upon him the understanding of Deen."
[Al-Bukhari and Muslim]