Zakat on Investment Land

Answered by Ustadh Salman Younas

Question: A friend bought land as an investment to be sold in the future (not for any other reason). Does he have to pay zakat for this and how should he calculate the amount of zakat to be paid?

Answer: wa`alaykum assalam

Zakat is payable on trade commodities. For something to be considered a trade commodity, a clear and firm intention of it being so needs to be present at the time that good is purchased. If one purchased the good without the intention of it being a trade commodity, Zakat would not be due upon it, even if the intention was changed later on. [Sarakhsi, Mabsut; Kasani, Bada`I al-Sana`I; Haskafi, Durr al-Mukhtar]

Thus, land bought with the primary intention of being a trade good at the time of purchase would be considered a zakatable-asset. One would have to include it when calculating the zakatble-minimum (nisab). Here, consideration is given to the current market value of the land.

For further details on how to calculate Zakat, please see:

Zakat on Land and Determining Market Value

Rulings Related to Zakat on Shares

Zakat: How to Calculate and Who to Give to

Salman

Checked & Approved by Faraz Rabbani