Four of us have got together and bought some land in March 2015 (Equal shares) with a view to obtaining planning permission to build 9 houses to sell once they are built.
We are still in the process of obtaining planning permission. The land still derelict, we will start building when planning has been approved Insha Allah.
This may take one or more years.
Can you please clarify if Zakah is due on the value of the land purchased? And when will Zakah be due on land or houses once built.
Your help is much appreciated.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh
If you purchased the land with the intention of re-selling immediately and making a profit, it would be considered as stock in trade; hence you are obligated to pay Zakaat on the current market value of the land if it reaches the amount of Nisaab.
If you purchased the land with the intention of keeping the land and then re-selling after some time and making a profit, then you are not obligated to pay Zakaat on the land in reference since it is not considered as being stock in trade.
You state that you purchased the land with the intention of building and selling plots in the future, since you do not have an immediate intention to re-sell and profit from the land, you will not be obligated to pay Zakaat on the land. However, you will be obligated to pay Zakaat once you sell the land and receive the profits accrued from such a sale.
And Allah Ta’āla Knows Best
Checked and Approved,
Mufti Ebrahim Desai.