What is the Zakat on a land that was purchased initially for savings.
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What is the Zakat on a land that was purchased initially for savings, then the price went up so high ( tripled) , but it is not sold yet, but thinking about selling? Also Jazak Allah khair , what is the Zakat on savings ( last year someone had 2000, and over the past year( 12 months) he saved 3000 more, he is asking about the "Hawwl" - annual anniversary, he did not have the whole 5000 for the whole year? Jazakum ALLAH khair
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Zakah on land
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Your Question:: What is the Zakat on a land that was purchased initially for savings, then the price went up so high ( tripled) , but it is not sold yet, but thinking about selling?
Listed below are the two underlying principles when determining zakah:
1. If the total net worth of any believer (man, woman, or child) is more than the prescribed nisaab of 7.5 tolas of gold (app. 85 grams or app. Value US$2,100.00), then the person is liable to pay the obligatory zakat annually of 2.5% on their excess wealth which has been in their possession for a full calendar year.
2. For the purpose of determining zakah, the Net Excess Assets would be the current market value of all of ones assets (properties, jewelry, cash, etc.) except:
- the value of the house one owns and actually lives in
- the value of the car/vehicle one uses on a regular basis
- the value of the furniture and fixtures one uses on a regular basis.
If one has bought a land for investment, indeed it would be included amongst their net excess assets and one would be liable to pay zakah annually on the current market value of the land at the rate of 2.50%, regardless of whether the value of their asset has multiplied three-fold or dropped to one-half.
Thus, for example if the land was bought for 10,000 and the market value at the property after it has been in their possession for a period of one year is 30,000, then one would be liable to pay 2.50% of 30,000 as their annual zakah; and if the land bought for 10,000 has fallen in value to say 5,000 after one year, then one would be liable to pay 2.50% of only 5,000.
Your Question: .what is the Zakat on savings ( last year someone had 2000, and over the past year( 12 months) he saved 3000 more, he is asking about the "Hawwl" - annual anniversary, he did not have the whole 5000 for the whole year?
Zakah is only liable on the total excess assets only after it has been in ones possession for a period of one full calendar year.
Thus for the initial 2,000.00 savings, one would be liable for the full 2.50% zakah as it has been in their possession for a period of one year. If one wishes to keep the same date or year-end to determine all their zakah dues, then one may pay the zakah on the pro-rata determination of the balance 3,000.00 which was added during the year.or alternatively one may pay the zakah of their 2,000 savings on one date, and the zakah on the other 3,000.00 on the date when its possession with them has completed a full calendar year.
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