Paying zakat on a car that was bought with the intention of selling it

22-1-2014 | IslamWeb

Question:

I am an Algerian residing in Qatar and I purchased a car in installments. My intention was to ship it to Algeria to sell it after fulfilling the installments. However, I had a change of mind a year later and may not ship it after all. Am I obliged to pay zakat on it?

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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.

You are either one of two cases;

The first case: purchasing it with the intention of selling it. Therefore, it is considered a trade good on which zakat is due if it reached the Nisaab and one lunar year passed. Thus, you would estimate it according to the market value and then pay one-fourth of one-tenth of its value (i.e. 2.5%).

The second case: purchasing it with the intention of utilizing it and then selling it after fulfilling the installments so it is not considered a trade good. Thus, there is no due zakat on it, unless you sold it after a full lunar year had passed whereas its price alone, or in addition to other trading goods or money, reached the Nisaab. If so, you have to pay zakat on it, just like with other forms of wealth.

Allaah Knows best.