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General Advice discussions and advice. Participate in ongoing dicussions and get invaluable General Advice advice from people who are experts in their industries or start a new General Advice discussion.
PAKISTANI-1
( 3019 posts )

[23 Replies]
Zakat - my understanding
(please confirm with your aalim based on quran & sunnah):

-zakat is levied on savings that a muslim has maintained for a period of one year (hijri year) - if it is in excess of nisab (i.E. Minimum of 85g of value of gold).

-rate of zakat is generally 2.5% and in some cases 5%.

- agricultural land:
There is no zakat on land itself. Zakat is levied on the production from zakat.
(2.5%) if expenses were incurred to produce the crops.
(5%) if none or very little expenses were incurred for producing the crops.

- plots:
(i)*there is no zakat on plot purchased to make your house.
(ii)*there is no zakat on plot(s) purchased to make houses for giving out on rent and earning income. But there will be zakat on the savings (if excess of nisab) from the rental income just as any other income.
(iii)*there is zakat on those plots which you have purchased in order to sell and earn profit
I.E. If plots are a 'goods in trade', then there is zakat at the rate of 2.5% on the value of such plots that have been in your name for a period of one hijri year.

    2462 days ago In General Advice
    Post Answer
    Saleem ahmad..
    (2 posts)
    Best Reply
    Question
    Last year i sold a house at lahore to buy a house at Islamabad where i am staying since more than 25 years.I tried to buy a house in Islamabad with the money i received after the sale of the Lahore house but was unable to get one due to high prices.I spent 9 months but all my efforts were invain.The money i had stated to devalue and i then immediately purchased 3 plots with the money so that i thought i would construct a house on one plot and the other 2 plots will be sold out to raise necessary funds required to build the house.I am an old man of 69 years of age and the intended house was to be built to put it on rent and the rent thus would suffy my livlihood.
    I need to know about the zakaah,whether i have to give on all the plots or on the 2 plots set to sale to raise funds for the construction of house on the 3rd.Or i am exempted to any zakaah as the intention was to save the money from inflation and the basic intention was to make a house for the livlohood.
      2154 days ago 

      PAKISTANI-1
      (3019 posts)
      -plots:
      (iv)*also there is zakat on those plots which someone has purchased for the purpose of constructing house for selling.

      - Gold
      At the rate of 2.5% of value of gold and gold jewelry kept for a year

      - Diamonds
      Exempt from zakat (there is general consensus of fiqah of various schools that diamonds are not liable to zakat)
        2462 days ago 

        Mohamed Shar..
        (1 post)
        Zakat on landed property
        Zakat is not payable on personal residential house even if you have more than one and meant for residential purpose only. Also zakat is not applicable on property given on rent irrespective of how many. However zakat is payable on the rental income.
        However if your intention of holding properties is to sell at a future date for a profit or as an investment, then zakat is payable on the market value. Also, if your intention of holding properties changes in the current year, i.E. From self use to business then you need to pay zakat on that property value
          2211 days ago 

          Saleem ahmad..
          (2 posts)
          Thanks a lot for answering my question so amazingly quick. You dont,probably,know how worried i was, regarding the zakat on these plots ,which were kept saved to help me to raise necessary funds to construct a house on one of them so that i could let the so constructed house on rent to earn my living at this old age of mine (69 years)
          May allah reward you with it jazah.Saleem ahmad siddiqui
            2153 days ago 

            Hanan ali
            (1 post)
            Salam,

            I have a Job. My salary is $6000/month.

            Today I have $45000 as cash in my bank. The bank balance was $3000 at the start of Islamic year.



            Should I pay Zakat on $3000 or $45000. I have saved $45000 by saving some amount from pay each month.

            =======

            I have Another business, in which I make home and sell it. The process takes around 8 months to make home and sell it. Is zakat payable on profit made, actual cost on home, or sale price of home? Because if I pay 2.5% on price of home my profit will be reduced and I might have to change business.



            A house development costs ($100000 including land) & sold for $110000.



            Please advice.
              1795 days ago 

              Tanzeel Aziz
              (47 posts)
              Dear Hanan WSalam,

              1. The convinent way to pay Zakal on full bank bal of 45k.

              Becz the zakat is due on any saving which has remain with for more than 11 islamic months and should be due and paid in 12th month. E.g if u pay zakat on 3k in ramadan on the opening bal. Then u need to calculate/pay zakat on each subsequent month after Ramadan on the 2nd month saving (e.g 3.5k).

              So if u want to close everyzakat year in Ramadan then pay zakat on everything in Ramadan in this way u might end up paying little bit more but then u are saved from complex calculations.

              2. In case of zakat on biz..it should be on the market value (land+material) at the close date of zakat assessment year. E.g 1st Ramadan if u want to calculate and pay zakat of full year in Ramadan.

              ALLAH will guaranteed barkat and increase in weatlh on which zakat has paid.

              BR,

              Tanzeel
                1795 days ago 

                Zubair Irfan
                (3 posts)
                Is Zakat due on plots, I hope to pass on to my children after I die?
                  1687 days ago 

                  PAKISTANI-1
                  (3019 posts)
                  Zubair, zakaat will be due if the intention is to resell in order to make a profit.

                  I think if your intention is to make houses for them and then give to them, then no zakaat.

                  But check with an Aalim who advises based on Quraan, Hadeeth and Sunnah.
                    1687 days ago 

                    Iftikhar
                    (2 posts)
                    I have a property worth 80,00,000 which is given on rent 3,74,000 per annum ( this money is not saved and is used throughout the year). This is in addition to the house I live in. Please guide me regarding zakat on this property.
                      1449 days ago 

                      Khan33
                      (284 posts)
                      10823: If a person has land and other property, does he have to pay zakaah on it?

                      If a person has land and other property that is not invested and that does not bring in any income or returns, does he have to pay zakaah on it?.

                      Praise be to Allaah.

                      No zakaah is due on this land and property unless he has prepared it for sale.



                      The way in which its zakaah is calculated is that its value should be calculated after one (Hijri) year has passed, then one-quarter of one-tenth should be paid as zakaah, i.e., 2.5%.



                      But if this property is prepared for a person to use, or he uses it for business purposes such as renting it out and the like, and he is not trading in it, then there is no zakaah on it in this case.



                      Shaykh Ibn ‘Uthaymeen said, discussing the issue of zakaah on stores:



                      Trade goods refers to wealth that is prepared for trade. The dealer does not seek these goods for themselves, rather he seeks their profits. Hence we are obliged to pay zakaah on their value and not on the goods themselves.



                      So the phrase “trade goods” refers to anything that is prepared for trade, whatever type it is. This heading covers most of the things on which zakaah is to be paid, because it includes real-estate, fabric, vessels, animals, and everything else.



                      Zakaah is obligatory on trade goods, and the evidence for that is as follows:



                      1 – It is included in the general meaning of the verse in which Allaah says (interpretation of the meaning):



                      “And in their properties there was the right of the Saa’il (the beggar who asked) and the Mahroom (the poor who does not ask others)”



                      [al-Dhaariyaat 51:19]



                      And the Prophet (peace and blessings of Allaah be upon him) said to Mu’aadh ibn Jabal when he sent him to the Yemen: “Teach them that Allaah has enjoined upon them charity (zakaah) from their wealth, to be taken from their rich and given to their poor.”



                      Undoubtedly trade goods are a kind of wealth.



                      If someone were to say that the Messenger (peace and blessings of Allaah be upon him) said, “The Muslim does not have to pay zakaah on his slave or his horse,” our response would be yes, that is correct, but he did not say that there is no zakaah on trade goods that are not sought for themselves but are sought for their value. The phrase “his slave and his horse” refer to his own possessions, i.e., things that are his own property and that he uses and benefits from, like his horse, or his slave, or his clothes, or the house in which he lives, or the car that he uses even if it is for hire (i.e., a taxi). On all of these things there is no zakaah, because a person acquires them for his own use, and he does not acquire them in order to trade them in the sense of buying them today and selling them tomorrow. Based on this, whoever quotes this hadeeth to say that there is no zakaah on trade goods is making a far-fetched claim.



                      Secondly:



                      The Prophet (peace and blessings of Allaah be upon him) said, “Actions are but by intentions, and each person will have what he intended.” If we were to ask the trader or businessman what he wants from this wealth, he would say “I want gold and silver.”



                      If I buy the goods today and sell it tomorrow and make money on it, the objective is not to acquire the object itself at all. Based on this, we say that zakaah on trade goods is obligatory according to the texts and according to analogy, even though the texts are not specific, rather they are general in meaning.



                      Al-Sharh al-Mumti’, 6/141-142



                      Then he said, giving an example of that:



                      A man bought a car in order to make money from it (i.e., to sell it and make a profit from it). This is trade goods whose value reached the nisaab and he intended to sell it when he bought it, so he has to pay zakaah on it. But if he bought the car in order to use it, then it occurred to him that he should sell it, then there is no zakaah on it, because when he took possession of it, he had no intention of doing trade. So he has to have the intention of doing trade at the moment when he acquires it. If he buys something for the purpose of trade but it does not reach the nisaab, and he does not have anything else he can add to it, there is no zakaah on it, because one of the conditions of zakaah is that the wealth should reach the nisaab.



                      Al-Sharh al-Mumti’, 6/142.



                      Shaykh Ibn Baaz (may Allaah have mercy on him) said:



                      Land that is prepared for sale is subject to zakaah. The evidence for that is the well-known hadeeth narrated from Samurah ibn Jundub (may Allaah be pleased with him) who said: “The Messenger of Allaah (peace and blessings of Allaah be upon him) commanded us to pay zakaah on everything that was prepared for sale.”



                      But if the land is bought to keep, and not re-sale, whether it is intended for farming, housing, rental or whatever, there is no zakaah due on it because it is not being prepared for sale. And Allaah knows best.



                      Majmoo’ Fataawa wa Maqaalaat Mutanawwi’ah li’l-Shaykh Ibn Baaz, 14/160



                      And Allaah knows best.
                        1449 days ago 

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