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Do I have to pay Zakat on land purchased for future construction and renting?

Answered as per Hanafi Fiqh by Jamia Binoria
I pay my Zakat (obligatory charity) on the first of August every year. Last year I had 41 lakh saved up from which I paid my Zakat. This year, in the beginning of March, I used my entire savings of 54 lakh to purchase a plot of land. This land is not ready for construction. It is possible that I get permission to do construction on the land next year. I plan to build a house on this plot of land after some years then rent out the house. Do I have to give Zakat on this plot this year on the first of August? It is as though I am planning to build a house and rent it out in future. Please guide me whether about playing or not paying Zakat in this mentioned situation through references of authentic Hadiths.

الجواب حامدا و مصلیا

Firstly, the lunar calendar is used for checking the day in which Zakat is due, not the solar calendar. For this reason, the questioner should specify a date to pay his Zakat in accordance with the lunar calendar. Moreover, since the questioner didn’t purchase the plot of land for trade (i.e. to resell it), but rather to build a house on it and then rent out the house, then in that case Zakat is not due on the value of the plot of land. Rather, it is incumbent to pay Zakat of 2.5% of the rent money achieved (from the house after it is built and rented out) on the day that Zakat is due.
And Allah knows best.

This Q&A was indexed from the official english fatwa portal of Jamia Binoria. It is an Islamic educational institute in Karachi, Pakistan.

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