Zakah on land prepared for trade
Fatwa No: 103089

Question

al salamu alaikom. My wife has purchased a land and the intention of purchase is to save it for years and then sell it. There was no intention to build any property on the land. The land has now been bought for a year and we are, el-humdellah, about to pay Zakat after verifiying the land's price. The question is: We have some money in the bank that we are using to pay the zakat for the land. The zakat for the land calculated (price of land when the year been completed x 2.5%) is high and the money left in the bank might be enough only to pay for another couple of years, which in reality means that we might end up in debt by contunuing this method. Question, is our zakat calculation for this land correct? Is it logical that by time when we sell the land, the profit might be enough to cover the zakat money that we paid over the years, knowing that we bought the land as an investment and security for the future? Are we better off if we leave the money in a banK? Advise us please, jazakum Allah khair.

Answer

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu 'alyhi wa sallam, is His slave and Messenger.

 

This land is considered as a tradable item since your wife has purchased it with the intention of selling it when the prices go up. Therefore, if the owner of the land has cash then he has to pay its due Zakah [obligatory charity] every year, otherwise he may delay paying Zakah until he sells the land and then pay for all the years he owes. This is the opinion of the majority of the scholars. The amount of Zakah is 2.5%. For details, refer to Fatwas 83761 and 90450.

 

However, your wife might make profit if the price of the land goes up, which is better than investing her money in any other field; she might also incur losses, and this is something which only Allaah could know.

 

Depositing money in a bank to get its profits is allowed if the bank is Islamic, otherwise, it is not allowed.

 

Allaah Knows best.

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