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Zakat on Investment property

Answered as per Hanafi Fiqh by DarulIftaBirmingham

If someone has a property which was bought with the intention of Long term investment and the value of the property kept bouncing from low to high all these years then does zakat apply and how should one calculate zakat on such property. The property is not in ones possession but the papers are in ones possession.

In the name of Allah, Most Compassionate, Most Merciful.

Zakat is compulsory upon a person who possesses the quantum of nisab (i.e. 612.35 grams of silver or 87.47 grams of gold or currency, wealth equivalent to that amount) for a complete lunar year; which is over and above his basic needs and also free from debts. (Raddul Muhtar Vol 2, P5)

In the above situation the property which was bought with the intention of long term investment will be liable for zakat. Once you have signed the contract (papers) you are considered the legal owner and it is for that reason you either enjoy the profits or suffer the loss. Therefore in the above situation zakat should be calculated annually on the value of the property at the time of paying zakat and thereafter, after deduction of liabilities zakat paid accordingly.

Only Allah Knows Best

Sayeedur Rahman

Darul Ifta Birmingham

This answer was collected from DarulIftaBirmingham.co.uk, which is run under the supervision of Mufti Mohammed Tosir Miah from the United Kingdom.

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