I am currently working abroad. Whatever money I save, I purchase property with it. Thus, I have accumulated about 10 residential plots. My intention is that this is an investment for the long term so that when I go back, I can make a home and office for myself and keep the remaining plots for future sales in case the need for money arises anytime in life, like in old age. Please let me know about the ruling on zakah in this scenario as to what I should pay and how. Currently, I am paying zakah on gold that I have. Thank you.
All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad is His slave and Messenger.
Zakaah on land is only obligatory when two conditions are met:
Firstly: it should be purchased with the intention of trading with it.
Secondly: its value should reach the Nisaab (minimum amount liable for zakaah).
So if these plots of land were purchased with the intention of trading with them, then they are tradeable items and they are subject to zakaah – if their value reaches the Nisaab – pursuant to the hadith of Samurah ibn Jundub, may Allah be pleased with him, who said, “The Prophet used to order us to pay zakaah on the items that we prepare for sale.” [Abu Daawood]
Therefore, if you were determined at the time of purchasing those plots of lands to trade with them, then they are considered as tradeable items and zakaah must be paid on them. So the land should be evaluated once a whole lunar year has elapsed since the time that you possessed the money with which you purchased the land, and then you should give out 2.5% of the market price of the land as zakaah.
As regards the land on which you intended to build a house for yourself and which you do not want to trade with, then you do not have to pay zakaah on it because it is not a tradeable item.
Also, if you are not determined to trade with those plots of land in the future but you would only sell them in case you need to do so, and if you are not in need, then you would not sell them, then in such case they are not considered as tradeable items and you do not have to pay zakaah on them.
Shaykh Ibn 'Uthaymeen said, “There is no zakaah on this land, in principle, as long as one does not have a definite intention that it is a commodity for trade; there is no zakaah on it because he is hesitant; even if he hesitates only one per cent, then there is no zakaah on it.”
He also said, “If a person is hesitant and says, 'By Allah, I do not know if I will trade with it or keep it;' for example, he has a piece of land and says, 'I do not know if I trade with it or keep it or build a building on it,' then is there any zakaah on it or not? The answer is: there is no zakaah on it because in principle there is no zakaah unless one has a firm intention to trade with it.”
Allah knows best.
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