SM Choudhry replied on Wednesday, August 11, 2010 03:05 PM
Question: He bought some land in order to sell it after a while – how should he pay zakaah on it?
How should zakaah be paid on land which was bought with the aim of leaving it for a while then selling it?.
Praise be to Allaah.
If a person has bought land with the intention of selling it after a while, one of the following two scenarios must apply:
1 – He aims to save the money so that he will not spend it on anything else, but he does not intend to trade or make a profit. In this case there is no zakaah on the land.
See question no. 34802
2 – He does intend to trade and make a profit, in which case this land comes under the heading of trade goods, so zakaah must be paid on it.
The value of trade goods should be worked out at the end of one year on the basis of their current value, not the price for which they were bought, and the zakaah must be paid on them. The rate of zakaah that must be paid is one-quarter of one-tenth, i.e., 2.5%.
For example: if you bought land for one hundred thousand riyals, and when zakaah becomes due on it its value is now one hundred and fifty thousand riyals, then when one year had passed you must pay the zakaah of one hundred and fifty thousand riyals. The converse also applies. If you bought it for one hundred thousand riyals and when one year has passed its value is now only fifty thousand riyals, then you only have to pay zakaah on fifty thousand riyals.
See Fataawa al-Lajnah al-Daa’imah, 9/334; Fataawa wa Rasaa’il al-Shaykh Ibn ‘Uthaymeen, 18/205, 236
Note:
It should be noted that the year for reckoning zakaah on trade goods does not begin from the time one bought the land or other product, rather it begins from the time when the wealth with which you bought those goods reached the nisaab (minimum threshold).
Based on this, the year for this land is the year for the money with which you bought it.
See question no. 32715.
Source:Islam Q&A
http://www.islam-qa.com/en/ref/38886
Question: If the land does not sell, is zakaah due on it?
I have bought some land, intending to sell it when its value increases. But its value decreased and it did not sell, it remained in my possession for 10 years and its value did not increase, should I pay Zakah on it?.
Praise be to Allaah.
Land that is bought with the intention of selling it after a while when prices have increased is subject to zakaah, because it comes under the heading of trade goods.
The value of trade goods should be worked out at the end of the year based on the current market price, regardless of the price for which they were bought, and zakaah must be paid. The rate of zakaah is one quarter of one tenth.
See the answer to question no. 38886.
Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was asked: I have a piece of land and I am waiting for the prices of land to go up so that I can sell it, and it has been several years. Should I pay zakaah on it?
He replied: If a person buys land to make a profit then the land does not sell and becomes cheaper, and he keeps it until the price goes up, then he must pay zakaah on it every year, because it comes under the heading of trade goods. If he does not have anything with which to pay the zakaah, and he cannot find a buyer, then he should work out its price at the time when zakaah becomes obligatory and work out its zakaah, and in the following year he should work out the zakaah on its value, then in the third year and so on. Then whenever he sells it he should pay the total amount of zakaah that he had calculated. End quote.
Majmoo’ al-Fataawa (18/225).
He was also asked about a person who bought some land with the aim of trading in it, but it remained in his possession for a number of years. Does he have to pay zakaah on it?
He replied: If a person buys land for trading, then he has to pay zakaah every year, whether the value increases or decreases, and whether it sells quickly or it does not sell. He should work out its value every year at the current market price, then if he has money he should pay its zakaah from the money that he has, and if he does not have any money he should work out the zakaah for each year, and when he sells it he should pay the zakaah for the past years. End quote from Liqa’ al-Baab al-Shahri (15/12).
And Allaah knows best.
Source:Islam Q&A
http://www.islam-qa.com/en/ref/105334/zakah%20Calculator |
