Fatwa ID: 08006

Answered by Alimah Shireen Mangera-Badat

Question:

I am living in Dubai, UAE. I have purchased off -plan properties some for my house purposes that I know are exempted from Zakat but some I have bought for re-sale purposes for business where I must Zakat. But, I have just paid 10-20 % of the installments in these properties. Every month I am paying installments . This is a fair Islamic finance without any interest. Should I pay Zakat on the 10-20% installments  I have already paid or not? Also, I have one big installement next month. Should I deduct it from my cash and also the cash assets? I heared that I can remove the installments of the coming one year ( short term ) not more. I have installments until November 2024.

بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم

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

Answer:

According to Hanafi Fiqh, Zakat is obligatory on financial assets intended for business or investment, not on assets meant for personal use. Therefore, for the portion of off-plan property you own with the intention of resale, you must pay Zakat on the share you currently own. [1]

Specifically, since you have paid 10–20% of the property’s value, Zakat is due on that percentage of the property’s current market value, not on the entire property.

Zakat is calculated at 2.5% of the owned portion. [2]

For example, if the property’s market value is AED 1,000,000 and you’ve paid 20%, your ownership share is AED 200,000, making your Zakat obligation AED 5,000.

Additionally, short-term debts (due within one year)[3] can be deducted from your Zakatable assets. This means that the installment due next month and any payments due up to November 2024 can be subtracted from your cash and liquid assets before calculating Zakat. This ruling is supported by the statement; due to it not being in your possession quite yet. However, long-term debts beyond one year cannot be deducted from Zakat calculations.

I hope that this answers the question.

Only Allah knows best.

Written by

Alimah Shireen Mangera-Badat

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham

[1] ووجوب الزكاة باعتبار المالية……….………

ص- ٢٠/٣-كتاب المسبوط

[2] تتمة : قالوا ثمن المبيع وفاء إن بقي حولاً فزكاته على البائع لأنه ملكه……………

رد المختار، ٣/١٧٧

[3] الدين في خلال الحول لا يقطع حكم الحول وإن كان مستغرقاً………..

رد المختار، ٣/١٨١