Is Land Subject to Zakah? Is Land Subject to Zakah?
Home > Ask the Scholar > Zakah and Charity > Is Land Subject to Zakah?

Is Land Subject to Zakah?

Questioner

Umm Suleiman

Reply Date

Jul 14, 2018

Question

As-salamu `alaykum. I have a question about Zakah on a residential land owned by me and my husband. My husband and I do not own any other house or land of our own. As such, we collected money and we could afford to buy this residential plot which is still in an underdeveloped suburb of our city. Our intention for this investment is that we will build a house on this particular plot or may sell it later on for a better price and when we can afford, buy a plot or a house which is in an area more suitable for living. We bought this plot of land in 2011 and paid back the loan we were given by a helpful uncle in 2013.Could you, please, advise us, if we should pay Zakah on this land even if we plan to sell it in the future to buy another residential plot or a house itself? If Zakah is incumbent on it, then should we give Zakah from 2014 which is after we paid back the loans or from 2012 (i.e. 1 year since ownership)?

Mufti

Answer


Land

Wa `alaykum as-Salamu wa Rahmatullahi wa Barakatuh.

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

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

1- If you buy this land to build a house for residence, then you don’t have to pay Zakah on it.

2- But if your intention is to invest, then you have to pay Zakah on the assets after deducting any loans or expenses on this asset.

3- Zakah is due after a lunar year from buying the asset.


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states: 

Buying a piece of land for residence is a first step to obtain a residence as such this land should not be subject to Zakah if this intention is the main one.

On the other hand, buying land (i.e. any property real or personal) for the purpose of selling it later in order to accumulate wealth for buying a residence or any other purpose, this action puts you in the category of a trader who buys with the expectation of sale at a higher price.

In this case, you are subject to Zakah, even though your intention is to accumulate sufficient amount to buy a residence (which is obviously exempted from Zakah).

Traders are required to pay Zakah on their trading net worth, i.e. market value at the end of the year minus any debts on the trading inventory/assets.

It is you who decides; if you think that the intention of building a house is dominant, there is no Zakah. But if you think that your intention is buying in order to sell at a higher price, then it is subject to Zakah from one lunar year after you buy on the net worth only (assets and liabilities).

Allah Almighty knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.




About Prof. Dr. Monzer Kahf

Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey

Add Comment


find out more!