Zakat on property used for living in.
The standard rule regarding real estate and zakat is that real estate is not considered as wealth subject to zakat. Therefore, the general guideline is that zakat is not required on it, except in the case of it being used for trade.
According to the consensus of Islamic scholars, no zakat is required on real estate that an individual acquires for their personal use, such as accommodation or storage. This is because, in such cases, real estate is considered personal property, and zakat is not due on personal property. This applies whether the intention of keeping the real estate for personal use was present at the time of purchase or developed later. As long as the owner’s intention remains to keep the real estate for personal use, it is considered wealth that is not subject to zakat, even if it is held for an extended period.
Zakat on property acquired for rental purposes.
In the case of real estate that an individual acquires with the purpose of generating income by renting it out, zakat is not required on its value. Rather, zakat is due on the collected rent after one full year has passed. The majority of Islamic scholars agree that no zakat is required on dwellings, storage places, furnished apartments, hotels, and high-rise buildings that are intended to be rented out. Therefore, the owner is not required to calculate the value of such real estate every year and pay zakat on it.
Zakat on property that is for the purpose of buying and selling.
According to the majority of Islamic scholars, zakat is due on real estate that an individual acquires with the intention of trading or selling it. This means that the individual aims to make a profit on the real estate by taking possession of it. However, simply having the intention to sell the real estate does not automatically make it trade goods, as there may be various reasons for selling it, such as to get rid of it or due to financial difficulty. Trading, on the other hand, refers to selling with the intention of making a profit. Al-Mirdawi explained that “the intention of trading or selling it” means that the individual intends to make money from it by selling it
Seeking guidance from an Islamic finance expert is recommended to ensure compliance with zakat obligations.
For any questions on zakat, please send your questions to support@rehmahglobalrelief.org and one of zakat finance experts can offer you the best advice or use the contact form below.
