Fatwa ID: 06559

 

Answered by: Maulana Burhaan Rahman

 

Question:

 

A person purchased land with the intention of developing it and placing the built house on the land for rent. The house will take about 2 years to construct.

 

Is their zakat on this land, when it is still under construction?

 

And what if it was bought with the intention to develop and resell?

 

According to my understanding, in the first scenario, there will be no zakat until the land is not developed and he receives rental income from it. And in the second scenario, because his intention was that of resale, he will pay Zakat on the market value of the land even while it is under construction.

 

Is that correct?

 

 

In the name of Allah, the Most Gracious, the Most Merciful

 

Answer:

 

My dear questioner, you are correct in both scenarios.

 

1) About zakaah on the rent of the land:

 

(فتجب) زَكاتها إذا تم نصابا وحال الحول…(وبدل مال تجارة) فكلما قبَض أرْبعِين درْهما يلْزمه درْهم

(It’s necessary) to give zakah if the money he accumulates throughout the year reaches the minimum threshold…(and exchange of trade for example), whenever he receives forty dirhams he must give one dirham towards zakaah (2.5% essentially) [Rad Al Muhtar Vol 2 Page 305]

 

So as soon as you start earning money from rent, zakaah must be given on the rent money.

 

 

2) And about the zakaah on the intention of reselling:

 

إذا كانت الأرض أردتها للبيع، نيتك البيع؛ تزكيها كل سنة بما تساوي كل سنة بحسب قيمتها عند أهل المعرفة

 

If the land is for sale, your intention is to sell; Zakaah is to be given it every year for the equivalent of its value (market value) according to the people of knowledge. [Al Binaayah Sharh Al-Hidaayah Vol 3 Page 382]

 

If one plans to sell the land that he owns, zakaah must be paid on it every year. He should calculate its worth and give zakaah on it.

 

 

Only Allah knows best.

Written by Maulana Burhaan Rahman

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham