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Fatwa CenterZakah on land, factory and shares
Question
As Salaam Alaikum 1st Question Currently we are leaving in 3 bedroom apartment. 2 years back we have purchased a land to construct our own house. Later we have realized that it is too difficult for us to maintain the house (we live in Qatar), now we have decided to purchase a 4 bed room pent house in the apartment (flat). The land which I have purchased to construct the house having a small house and I gave it for rent which is just Qrs 220.00 The land value is very expensive approx QRS 624,115.00.We have decided to keep this land as asset /property and sell it if we get very good price or any emergency need of money. Also I have started a factory which manufactures optical lenses. Few years back the factory is closed due to labor problem. Now one portion of the factory is given for rent and for the second half I am waiting for the tenant. I have decided to keep the factory and land as asset /property and sell it if I get very good price or any emergency need of money. Now for the above two conditions do I have to pay the Zakath for every year or I have to pay the zakath when I sell the land and 1 lunar year to pass on the money. 2nd Question I have invested some money to buy shares in the construction of apartment (flats). The company constructs and sells the flats. The share value is Qrs 143,000.00. Now the share value is increased. Now do I have to pay the zakath on the current share value for every year or it is sufficient to pay the zaakth at the end of the project when the company distributes the complete share value and 1 lunar year to pass on the money.
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 ‘alayhi wa sallam, is His slave and Messenger.
The land that you had purchased with the intention of building a house on it to live in and then you changed your mind and wanted to sell it if you find a good price, then in this case, the difference of opinion among the scholars applies to it in regard to purchasing a land for personal use and then intending to trade in it: whether or not one is obliged to pay Zakah on it. Some of them said that Zakah is due on it and some said that Zakah is not due, and this latter opinion is the view of the majority of the scholars and it is the view that we adopt here in Islamweb.
Besides, what we understand from the question is that the land does not belong to one person as you said (we live - we purchased - we realized - we decided). So, if the land is possessed by a group of people and not a single person, then Zakah is not obligatory on it even according to the other opinion (of the scholars) just by it reaching the Nisaab (i.e. the money reaching the minimum amount liable for Zakah). Rather, Zakah is due on it on whoever’s share of it reaches the Nisaab, so if the share of each and every one of you from the land reaches the Nisaab, then each one is obliged to pay Zakah separately on it.
However, if one's share in the land does not reach the Nisaab, then he is not obliged to pay Zakah on it unless he has other money or tradable items (that complete the Nisaab) and a whole lunar year elapsed over it.
On the other hand, the factory is not subject to Zakah; rather, Zakah is due on its price after selling it, and after a whole lunar year elapses after possessing its price. Also, Zakah is due on the rent of both the factory and the house if the amount obtained from them reaches the Nisaab by itself or with other money or tradable items added to it, and a whole lunar year elapses over it.
The Nisaab of current banknotes is the equivalent of 85 grams of gold, or 595 grams of silver, so you should pay Zakah at a rate of 2.5% on each money that reaches the Nisaab.
With regard to the shares which you have invested in the construction of apartments and selling them, then they are considered as tradable commodities, so you should evaluate them each year according to the market price and then pay from its value 2.5% as well; this is whether its value increased over the price you purchased it for or decreased. In other words, you must pay Zakah on it each year and not wait until the project is completed and the price of the shares is divided.
Allaah Knows best.
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