Is Zaka'h to be Paid on Land Purchased for Investment?
Question
Title: Is Zaka'h to be Paid on Land Purchased for Investment? Question: I have a land, which I have purchased about four years ago. My intention was to sell the land when the prices go up. It cost me about Rs.270, 000/-. Now the price has reached Rs.450, 000/-. My question is should Zaka'h be paid on the land? If so, how to calculate and what percentage should I give? JazakAllah Khairan Answer: According to the Sunnah of the Prophet (pbuh), Zaka'h is to be paid on: Wealth, except those financial assets which are in the personal use of the owner, if the total value of this wealth (after deduction of assets in personal use) is not below the nisaab ; Production, if the total value of the production is not below the nisaab for production; and Cattle heads, if there numbers is not below the nisaab for cattle heads. Land, whether bought for future personal use or for resale at some future date (except the land which is used for personal or business use), shall be included in the total wealth of a person and Zaka'h shall be calculated on the total wealth thus assessed. The rate of Zaka'h on wealth is two and a half percent of the total wealth (after deduction of assets in personal or business use). In other words, in the particular case that you have mentioned in your question, two and a half percent of the total land (or its actual market value) shall be paid as Zaka'h . In view of the above explanation, it should be quite clear that you are liable to pay Zaka'h on your piece of land for the last three years. This Zaka'h shall be paid at the rate of two and a half percent of the total land (or its actual market value) each year. In case you do not have the amount of cash available to pay Zaka'h , you may keep record of the total Zaka'h that you are liable to pay each year and subsequently, at the time that you sell the land, you may pay the total accumulated amount of Zaka'h that you are liable to pay. In case this method of deferment of the payment of Zaka'h has to be opted, it would only be prudent to bequeath (prepare a will) for the payment of Zaka'h before the distribution of the land among your heirs, in case of your death. 20 th September 1999
Answer
Title: Is Zaka'h to be Paid on Land Purchased for Investment? Question: I have a land, which I have purchased about four years ago. My intention was to sell the land when the prices go up. It cost me about Rs.270, 000/-. Now the price has reached Rs.450, 000/-. My question is should Zaka'h be paid on the land? If so, how to calculate and what percentage should I give? JazakAllah Khairan Answer: According to the Sunnah of the Prophet (pbuh), Zaka'h is to be paid on: Wealth, except those financial assets which are in the personal use of the owner, if the total value of this wealth (after deduction of assets in personal use) is not below the nisaab ; Production, if the total value of the production is not below the nisaab for production; and Cattle heads, if there numbers is not below the nisaab for cattle heads. Land, whether bought for future personal use or for resale at some future date (except the land which is used for personal or business use), shall be included in the total wealth of a person and Zaka'h shall be calculated on the total wealth thus assessed. The rate of Zaka'h on wealth is two and a half percent of the total wealth (after deduction of assets in personal or business use). In other words, in the particular case that you have mentioned in your question, two and a half percent of the total land (or its actual market value) shall be paid as Zaka'h . In view of the above explanation, it should be quite clear that you are liable to pay Zaka'h on your piece of land for the last three years. This Zaka'h shall be paid at the rate of two and a half percent of the total land (or its actual market value) each year. In case you do not have the amount of cash available to pay Zaka'h , you may keep record of the total Zaka'h that you are liable to pay each year and subsequently, at the time that you sell the land, you may pay the total accumulated amount of Zaka'h that you are liable to pay. In case this method of deferment of the payment of Zaka'h has to be opted, it would only be prudent to bequeath (prepare a will) for the payment of Zaka'h before the distribution of the land among your heirs, in case of your death. 20 th September 1999
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