Fatwa: # 44901
Category: Jurisprudence and Rulings...
Country:
Date: 25th July 2020

Title

How do I discharge Zakaāh on land?

Question

Assalam o Alaikum.I wanna know about the zakat rulings on land. I have searched many general answers on the internet but I wanna know about my specific circumstances. JazakAllahAs of today 15 April 2020 I have1x residential plot (fully paid but didn't get the possession yet)1x residential plot (bought a plot file in May 2019 on 3 years payment plan, paid only 10% so far)1x residential plot (bought a plot file in May 2019 on 3 years payment plan, paid only 20% so far)1x residential plot (bought a plot file in May 2019 on 5 years payment plan, paid only 10% so far)1x residential flat (bought on 2 years payment plan, paid only 30% so far)


I live in Australia and all of these properties are in Pakistan. My intention is to sell all of these properties after 10 years and buy 1 house here in Australia to live and to inherit to my children. There's no intention to sell and buy properties for business purposes. Because I live in a renting property and cant afford to buy a house on cash and dont wanna 
get involved in Riba, that's why i thought to invest in few properties in overseas 
with the intention to sell them later to buy a house here for personal use. 


Please guide about the zakat rulings on these lands. Do I need to pay zakat on these lands, if yes then on what amount because I have only paid part payments?what if I sell any land to use the money for any emergency? JazakAllah

Answer

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

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, discharging zakāh is compulsory on a sane and mature Muslim when his wealth equals to or exceeds the niṣāb amount, provided this amount of wealth is maintained for one lunar year, without depleting to $0. If one's wealth is completely lost at any point, a new cycle will begin once he reaches niṣāb again. Any items purchased for trade will be subject to zakāh[i] and must be accounted for in the calculation.[ii]

Property bought with the express intention of keeping and/or personal use, rather than selling, is not considered stock-in-trade, and therefore zakāh is not due on such property. This stands even if, after purchase, one firmly decides to resell the land.[iii] Therefore, if the intention at the time of purchase is for commercial purposes such as leasing, zakāh will not have to be discharged.

However, property purchased with the express intention of resale is considered stock-in-trade.[iv] Therefore, if the land is purchased with the explicit purpose of reselling, then zakāh would be due every year upon that property at the time of his niṣāb due date, provided he gains complete ownership of the property.

One will pay 2.5% of the current market value of the stock, not on the profit/appreciation alone. Therefore, if the market value fluctuates every year, you will have to discharge the zakāh based on the new market value.

Regarding contracts purchased with the express intention of resale:

If, at the time of a contract, complete ownership of the land is transferred to the purchaser, who then pays its price over time in installments, then zakat is due every year on the current market value of the land itself. Again, this is assuming the property was purchased with the firm intention of resale alone. However, if complete possession is not attained, one will not pay zakat on the property.

Accordingly, you will not have to pay zakat on the first residential plot that you paid off as you did not attain possession of the property.

As for the remaining properties which you paid off partially if you intended to purchase them for later resale, retaining them only for the purposes of selling it "at the right time" when you can make more profit (i.e., speculation), and not necessarily ten years, then they will be considered to be a stock-in-trade. Therefore, 2.5% of the current market value of the properties will have to be discharged, provided you attained complete possession of these properties. However, if these properties remain in the seller's possession until the full amount is paid, you will not have to pay zakāh.

If you intend to purchase these properties, using them as either an investment (e.g., deriving income from leasing) and only selling them off when you are "done with them," in ten years, it would not be considered a stock-in-trade, and you do not have discharge zakāh on these properties.

And Allah Ta’āla Knows Best

Abrar Habib

Student - Darul Iftaa

New York City, New York, USA

Checked and Approved by,

Mufti Ebrahim Desai.

 

06-12-1441|6-07-2020

 


[i] الجوهرة النيرة على مختصر القدوري (1/ 124)

(الزكاة واجبة في عروض التجارة كائنة ما كانت) أي سواء كانت من جنس ما تجب فيه الزكاة كالسوائم أو من غيره كالثياب والحمير

 

[ii] مختصر القدوري (ص: 57)

وتضم قيمة العروض إلى الذهب والفضة

 

[iii] درر الحكام شرح غرر الأحكام (1/ 175)

مثلا اشترى أمة للتجارة فنواها للخدمة بطلت الزكاة لاتصال النية بالإمساك للاستخدام، وإن نوى التجارة بعده لم تكن للتجارة حتى يبيعها فيكون في ثمنها زكاة إن كانت دراهم أو دنانير لعدم اتصال النية بالعمل؛ لأنه لم يتجر فلم تعتبر نيته

 

الدر المختار شرح تنوير الأبصار وجامع البحار (ص: 128)

ولو نوى التجارة بعد العقد أو اشترى شيئا للقنية ناويا أنه إن وجد ربحا باعه لا زكاة عليه

 

عمدة الرعاية بتحشية شرح الوقاية (3/ 150)

ثم هذه النية إنما تعتبر إذا وجدت زمان حدوث سبب الملك، حتى لو نوى التجارة بعد حدوث سبب الملك لا تجب فيه الزكاة بنية التجارة

 

[iv] المرجع السابق

 

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