Do I Pay Zakat on Foreign Property?

Shaykh Abdurrahim Reasat answers a question related to the payment of Zakat on foreign property (according to the Hanafi school of thought).

Question:

Assalamu alaikum wa rahmatullahi wa barakatahuh

Hope you are well. I have a question re. zakat. My family has put a property abroad under my name – presumably to avoid problems of transfer when it comes to future inheritance. It is currently leased to a business who pay rent but in reality, I don’t consider the money as my own as, in effect, it is under the control of my family. Do I need to pay zakat on this? It’s not a matter I feel entirely comfortable with even though I understand why it has been done but I
don’t want to create problems. Concerning my own earned income, I am not eligible for zakat but if I have to incorporate the foreign rent, I may be even though I don’t use it. I would really appreciate an answer, especially as I can imagine other second-generation immigrants may be in similar situations.

Jazakallah khayrun

Answer:

Wa ‘alaykum as-salam wa rahmatullah wa barakatuh

I pray you are well.

Zakat is only due on wealth or property which has the potential for growth. This would include any property purchased with the intention of sale or to acquire rental income. As such, zakat would not be due on the property if it was not purchased with intention of sale. The rental income, however, is zakatable. (Mawsili, Al Ikhtiyar).

Ownership of the Property

Whether you owe zakat on the rental income or not is dependant on who the actual owner is. When the property was transferred to you was it done with the intention of making you the owner of it, such that if you decided to sell it you would be able to do so?

You need to gentle clarify the matter with your family. Make it clear to them that you do not want to cause friction, and then explain that there are religious ramifications to owning the property – if you are indeed the owner. You need to know so you can pay the zakat on the rental income – which is rightfully your if you own it, even if you do not spend it. If they say it is yours then you can deal with the situation in the manner you deem to be the best for all involved.

If the property is only in your name for another purpose then you do not have to pay the zakat on the rental income. The actual owner is responsible for this.

Clarity In Matters of Inheritance 

Inheritance is a serious affair in Islam. When a person dies his property automatically becomes the property of his next of kin – with the exception of funeral costs and the repayment of debts which are both given precedence. It is up to the heirs to see that it is distributed accordingly.

Non-Shari’a compliant distributions before death, and vague allocations can be the cause of a lot of problems، and even fighting، between the next of kin. Therefore, it is best to have all such matters clarified beforehand.

Not following the distribution detailed in the Qur’an has serious consequences in this world and the next. I heard Shaykh Ali Hani, whose family were originally from Palestine, say on a number of occasions that before the country was occupied, it was common for Palestinian families not give anything of the inheritance to the daughters. They thought that the money would end up going to another (her husband’s) family, and they preferred to keep it in their own. This practice was rife. Could it be that what happened to the country was a test from Allah because of this?

Speak to your family and get clarity. It will make things much easier later on.

May Allah grant you the best of both worlds.

Abdul-Rahim

Checked and approved by Shaykh Faraz Rabbani