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Is it Permissible to Invest in a Property Fund and What is the Zakat Liability on Such a Fund?

Answered as per Hanafi Fiqh by Darulfiqh.com


I have invested in a property fund which invests in commercial real estate and rents out these real estate on the high street. The portfolio consists of 96% property and 4% cash. Is this investment permissible? Is there Zakat on this fund?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.


The asset class of property is a lawful asset class for investment. A fund consisting of rental physical properties (brick and mortar) in its portfolio is a permissible investment as long as there are no other non-compliant factors. In terms of Zakat, you will only need to pay Zakat on the cash element in this fund. Therefore, if 4% of the fund composes of cash, you will pay Zakat at 2.5% of 4% of the value of your investment. 

And Allah Ta’ālā Alone Knows Best

Mufti Faraz Adam,

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This answer was collected from DarulFiqh.com, which is operated under the supervision of Mufti Faraz ibn Adam al-Mahmudi, the student of world renowned Mufti Ebrahim Desai (Hafizahullah).

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