The Effect of Intention on the Zakah of Land
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Q101: The questioner says: We bought three plots of land. One of them was bought with the intention of building on it immediately, and the other two were bought with the intention of benefiting from them in the future by selling them or developing them. Six years have passed, and we have not paid the zakah on any of them. Do we owe anything for this, and how much must we pay?
A101: The land that a person buys falls into three categories: The first category: is when his intention is for residence, to develop it and live in it, or for agriculture, meaning he plants and cultivates it. There is no zakah on this, because it has become part of his necessities that he needs. However, if he utilizes it through agriculture and planting palm trees, he pays zakah on its produce of grains and fruits in the prescribed manner. The second category: is when he buys land with the intention of trade and seeking profit from its price. This is merchandise for trade, like other goods. If a lunar year passes while it is held for trade and he is waiting for profit, he must appraise it when the year is complete, look at what it is worth at the end of the year, and pay one-fifth of one-tenth (2.5%) of its current value. He adds it to his other wealth and pays the zakah on the total. The third category: is when he wants the land he bought for investment by developing it into shops or buildings for rent. There is no zakah on the principal value of this, but the zakah is on its income. If he receives from it an amount that reaches the nisab (minimum threshold) and a lunar year passes over it, he must pay zakah on it. If it is less than the nisab, he adds it to his other wealth and pays zakah on the whole. You mentioned that you bought three plots of land, one of them for residence,
and we have established that there is no zakah on it. As for the second, you are hesitating whether to make it for residence or for sale. As long as you are hesitating and not certain that it is for trade, there is no zakah on it, and zakah is not obligatory on it unless you resolve to make it for trade.
A101: The land that a person buys falls into three categories: The first category: is when his intention is for residence, to develop it and live in it, or for agriculture, meaning he plants and cultivates it. There is no zakah on this, because it has become part of his necessities that he needs. However, if he utilizes it through agriculture and planting palm trees, he pays zakah on its produce of grains and fruits in the prescribed manner. The second category: is when he buys land with the intention of trade and seeking profit from its price. This is merchandise for trade, like other goods. If a lunar year passes while it is held for trade and he is waiting for profit, he must appraise it when the year is complete, look at what it is worth at the end of the year, and pay one-fifth of one-tenth (2.5%) of its current value. He adds it to his other wealth and pays the zakah on the total. The third category: is when he wants the land he bought for investment by developing it into shops or buildings for rent. There is no zakah on the principal value of this, but the zakah is on its income. If he receives from it an amount that reaches the nisab (minimum threshold) and a lunar year passes over it, he must pay zakah on it. If it is less than the nisab, he adds it to his other wealth and pays zakah on the whole. You mentioned that you bought three plots of land, one of them for residence,
and we have established that there is no zakah on it. As for the second, you are hesitating whether to make it for residence or for sale. As long as you are hesitating and not certain that it is for trade, there is no zakah on it, and zakah is not obligatory on it unless you resolve to make it for trade.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.