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Zakah Calculation.

Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

 

One of our brothers/sisters has asked this question:

السلام عليكم ورحمة الله

Can you please answer my questions as regards to Zakah

I have some assets and I dont have a house for my self.(I am staying in the U A E with my family on company flat and I live at my brother's house when I go to kerala)

 

I have three pices of land.

A) The land I am planning to construct a house for my self.

B) Coconut agricultural land - which I bought in 2003 about 78.5 Cents.  I have no plan to sell it as I think it will be benificial to me or to my children in the future.

C) This land I bought to get it appreciated (thinking if I have no money in the future, I will sell it and construct a house)

 

What Zakah I have to give on these lands? could you please answer?

 

What Zakah I have to give on my salary?

 

I have two other commercial properties.

 

1. A Double B/R Flat under construction which I booked 14 months ago and still under construction only.  I am thinking either to rent out this flat once it is ready or to sell it according to the situation.

 

2. A commercial land (1/2 share with my partner), we are thinking to construct Shops to rent out.  We bought this a year ago and we have not yet started to construct anything 

  

Could you please guide me how I have to give Zakah on all these properties.

 

Jazakallah

 

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Answer:

 

Zakah Calculation

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

 


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 annual zakah of 2.5% on their excess wealth which has been in their possession for a full calendar year.

 

If the total net worth of any believer is less than the prescribed nisaab, he/she is not liable to pay any zakah until their net worth exceeds the prescribed nisaab.

 

For the purpose of determining zakah, the Net Excess Assets would be the current market value of all of ones assets (properties, investments, jewelry, cash, etc.) except:

  1. the value of the house/s one owns and actually lives in (no zakah)
  2. the value of the car/vehicle one uses on a regular basis (no zakah)
  3. the value of the furniture and fixtures one uses on a regular basis (no zakah)

 

Q-1: What Zakah I have to give on my salary?

Ones annual salary or income is absolutely immaterial when determining the annual zakahwhat one is able to save from ones income after ones total expenses, and one possesses those savings for a period of one full calendar year is the amount one would be liable to pay zakah on.

 

For example, lets say your annual income is 100,000.00 and your total annual expenditure is 80,000.00.if the 20,000.00 savings has been in your possession for a period of one full lunar calendar year, you would be liable to pay zakah on your 20,000.00 savings at the rate of 2.50% or 500.00.

 

Q-2: I have three pices of land.

A) The land I am planning to construct a house for my self.

B) Coconut agricultural land - which I bought in 2003 about 78.5 Cents.  I have no plan to sell it as I think it will be benificial to me or to my children in the future.

C) This land I bought to get it appreciated (thinking if I have no money in the future, I will sell it and construct a house)

What Zakah I have to give on these lands? could you please answer?

 

Ref: A) The land I am planning to construct a house for my self.

The house one actually uses or lives in oneself is exempt from zakah in Shariah. If you have merely bought or have a land on which you intend to construct a house for yourself, but you have not yet built the house.that land will be considered your excess asset and you would be liable to pay zakah annually on the fair market value of the land.

 

If and when you do construct the house and live in it yourself, you would be exempt from paying the zakah on that land/house.

 

So assuming that the fair market of the this land is 50,000.00; until you actually build your intended house and live in it yourself, you would be liable to pay 2.50% or 1,250.00 as zakah on the that land for this year.

 

Ref: B) Coconut agricultural land - which I bought in 2003 about 78.5 Cents.  I have no plan to sell it as I think it will be benificial to me or to my children in the future.

If the land is purely agricultural, then there is no zakah on agricultural land in Shariah Law. The zakah on agricultural land is levied not on the value of the land, but rather on what the land actually produces: 10% of the produce of the land if the land is irrigated naturally (by rain, river, etc.) and 5% of the produce of the land if the land is irrigated through artificial means (tube, wells, etc.). It the agricultural land does not produce anything, there is no zakah.

 

Thus lets say that the agricultural land that you own is valued at 1,000,000.00 and produces coconut worth 10,000 every year.

 

If irrigated naturally, the zakah would be 10% of the produce (10,000.00) or 1,000.00; and if the land is irrigated through artificial means, then the zakah would be 5% or 500.00 for the year. The value of the agricultural land itself, even if it is worth millions, is immaterial when determining zakah.

 

Ref: C) This land I bought to get it appreciated (thinking if I have no money in the future, I will sell it and construct a house)

This land would be considered amongst your excess assets and you would be liable to pay 2.50% zakah annually on the market value of the land.

 

Thus lets assume that the fair market value of this land is 20,000.00; you would be liable to pay 2.50% of 20,000.00 or 500.00 as zakah for the year.

 

Q-3: A Double B/R Flat under construction which I booked 14 months ago and still under construction only.  I am thinking either to rent out this flat once it is ready or to sell it according to the situation.

Lets say the purchase cost of this flat under construction is 100,000.00, and you have paid 20,000.00 so far towards the purchase of the flat. Lets also assume that were to sell this flat under construction today, you could sell it for 125,000.00 (ie. the fair market value of the property today).

 

In such a situation you would be liable to pay zakah on this flat as follows:

20,000 (your contribution) + 25,000 profit (market value minus purchase value) = 45,000.00. You would be liable to pay 2.50% of 45,000.00 or 1,125.00 as zakah for the year.

 

Q-4: A commercial land (1/2 share with my partner), we are thinking to construct Shops to rent out.  We bought this a year ago and we have not yet started to construct anything 

Lets say this land was bought for 200,000.00; you paid 50% of the cost and your partner paid the other 50%. Lets assume that were you to sell this land today, you could sell it for 500,000.00.

 

In such a situation, you would be liable to pay zakah on this asset as follows:

100,000 (your 50% share of the purchase) + 150,000 (your 50% share of the profit of the land) = 250,000.00. You would be liable to pay 2.50% of 250,000 or 6,250.00 as zakah for the year.

 

Whatever written of Truth and benefit is only due to Allahs Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

 

Your brother and well wisher in Islam,

 

 

Burhan

 


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