Zakat on Purchased Property

17-10-2022 | IslamWeb

Question:

Assalam Alaykum ,If I purchase a property with the intention to rent it to someone but at the same time have the intention to possibly put it for sale in the future depending on if prices go up or my circumstances change and I need money, is zakat due each year on the rent received since that is the main intention or on the value of the whole property ?

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Answer:

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.

In any case, Zakah is due on the rent if it reaches the Nisab (minimum amount liable for Zakah) in and of itself or when added to other items of wealth, gold, silver, or trade goods, and a lunar year has passed on them.

As for Zakah on the value of the real estate, if you had bought the property and resolved to sell it in the future when its price would increase without hesitation, in this case, the property would be considered a trade good liable for Zakah after a lunar year has elapsed and you must pay Zakah on its monetary value with which you bought it. However, if you are hesitant about selling it or not, then it is not liable for Zakah.

Allah knows best.