Topics: Islamic Finance

Zakat Guidelines on Property Investment: Selling vs. Renting

When to Pay Zakat on Investment Properties: Understanding Intentions and Ownership

Question: A person received some money as a gift from their father and used it to book a flat with the intention of selling it at a higher price later or renting it out to help with household expenses. Now, there has been a delay of over a year in obtaining ownership of the flat. Should Zakat be paid on the invested amount for the entire period?

Answer: There are two scenarios for the flat:

1. If the flat was purchased with the intention of selling it: Zakat must be paid every year, regardless of whether possession has been taken or not, because in this case, it is considered trade goods, similar to investing money in a business.

2. If the flat was purchased with the intention of renting it out: Zakat is not due on the flat itself. Instead, Zakat is due on the income generated from the flat once it reaches the Nisab (minimum amount for Zakat) and a year has passed. Otherwise, there is no Zakat on a rental property.

If the intention is not determined, whether the flat is for rent or sale, then Zakat is not due. Zakat should be paid only when it is definitively intended for sale.

✍ Sheikh Maqbool Ahmed Salafi (May Allah preserve him)

❪Jeddah Dawah Center – Al-Salama – Kingdom of Saudi Arabia❫

Author: IslamicHelper

IslamicHelper

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