Question: I would like to do the following: Buy two pieces of land at a low price, and wait for 10 or 20 years until it is worth at least fifteen times more. The intention is to sell one piece of land and use that money to build a house on the other piece. My question is, how can i calculate the zakaah on each one; bearing in mind that one is for building a house while the other is like wealth kept for trading.
Answer: Praise be to Allaah. It is not obligatory to pay zakaah on land unless it is for the purpose of trade. Based on this, the land on which you are going to build a house is not subject to zakaah, but the other piece of land is subject to zakaah.The way in which zakaah is worked out is to find out the value of the land at the end of each year, then pay zakaah at a rate of 2.5% of this value. Zakaah must be paid each year; it is not sufficient to pay it one year for all these years. It should be noted that if trade goods are bought with gold or silver, or with money (Naira, riyaals, dollars or other currencies), or with other goods, then the year is reckoned from the time when the wealth with which it was bought was acquired. Based on this, the year does not begin from the time when you took possession of the land; rather it begins from the time when you bought the land.
The Scholars of the Standing Committee were asked: I have some money say, fifty thousand, with which I have bought some land. I think that instead of keeping it in the bank, I should invest it in land so that I will not lose the money. When the right time comes or when I need the money, I will sell the land when its value has increased. Is zakaah due on it? They replied: Whoever buys land or is given it and intends to sell it, must pay zakaah on it when a full year has passed. He must estimate its value every year at the time when zakaah becomes due, and pay zakaah at a rate of one-quarter of one-tenth,i.e., 2.5%. If he buys it with the intention of settling on it and living there, then no zakaah is due on it. But if he then decides to sell it, he must pay zakaah on it after one year has passed since he decided to sell it. If he buys it in order to rent it out, then he must pay zakaah on the rent he receives if it reaches the nisaab (minimum qualifying amount for zakaah), after one year has passed. [Fataawa al-Lajnah al-Daaimah lil-Buhooth al-lImiyyah wal-lfta, 9/339,340]
Shaykh Ibn Baaz (RAH) was asked: How should zakaah be paid on land and the like? Is it sufficient to pay zakaah on it once for a number of years when it is sold? He replied:If the land and similar things such as a house or car etc, is prepared for sale, then you must pay zakaah on it every year, according to its value at the end of the year. It is not permissible to delay that, except in the case of one who is unable to pay the zakaah because he does not have any other wealth. In this case he may wait until he sells it and then pay zakaah for all the years, paying for each year on the basis of its value at the end of the year, whether it was worth more or less than the price for which he bought the land, car or house.
This is the view of the majority of scholars, because it was narrated that the . Prophet (sallaalahu alayhi wa sallam) commanded that zakaah be paid on things that are prepared for sale, and because trade goods are kept for the purpose of making money. So the Muslim has to pay zakaah on these goods every year, just as if he had money in his hand. [Majmoo Fataawa Ibn Baaz, 14/160] And Allaah knows best.
This article was culled from the publications of Deen Communication Limited