Land Offered for Sale: If the Market Slumps, Is Zakat Due on It?
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Fatwa No. ( 19260 )
Q: About six years ago, there was a movement of buying, selling, and investing in large land plots in the city of Riyadh . Some people bought land for themselves only, while others bought it and offered it for investment, taking a commission from their partners. The prices kept rising continuously, but then this movement soon died down.
And those lands became frozen in the hands of their owners because there were no buyers except at very low prices, which might not even equal half the price they had reached before the slump. So those lands remained in the hands of their owners for years, and it rarely happened that a large plot was sold, and then only at a low price. The landowners are waiting for the market to revive, and those who want to buy are afraid of the future of large lands, especially those that have not received services. It is known that most of these lands are large in area, and the majority are outside the urban boundary and have not received services. People used to trade them among themselves for the purpose of commerce only, as they exceed the need for housing for many years to come. If each of them wanted to sell their land at the present time, the supply would increase while demand would decrease, due to the lack of a buyer with a need. The buyer for the purpose of commerce is afraid of the future of the lands, and will not take the risk and proceed to buy during the slump except at attractive low prices. Therefore, given this situation, is the annual zakat obligatory on such lands, and at what price are they assessed? It is known that this situation is common to all people who engaged in land in the city of Riyadh.
A: Zakat is obligatory on land offered for sale whenever the lunar year is completed, because it is from the goods of trade. Its value is assessed at what it is worth at the end of the year, and a quarter of a tenth is paid from it, whether it is in high demand or in a slump;
due to the generality of the evidence regarding the obligation of zakat on what is prepared for sale and trade. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: About six years ago, there was a movement of buying, selling, and investing in large land plots in the city of Riyadh . Some people bought land for themselves only, while others bought it and offered it for investment, taking a commission from their partners. The prices kept rising continuously, but then this movement soon died down.
And those lands became frozen in the hands of their owners because there were no buyers except at very low prices, which might not even equal half the price they had reached before the slump. So those lands remained in the hands of their owners for years, and it rarely happened that a large plot was sold, and then only at a low price. The landowners are waiting for the market to revive, and those who want to buy are afraid of the future of large lands, especially those that have not received services. It is known that most of these lands are large in area, and the majority are outside the urban boundary and have not received services. People used to trade them among themselves for the purpose of commerce only, as they exceed the need for housing for many years to come. If each of them wanted to sell their land at the present time, the supply would increase while demand would decrease, due to the lack of a buyer with a need. The buyer for the purpose of commerce is afraid of the future of the lands, and will not take the risk and proceed to buy during the slump except at attractive low prices. Therefore, given this situation, is the annual zakat obligatory on such lands, and at what price are they assessed? It is known that this situation is common to all people who engaged in land in the city of Riyadh.
A: Zakat is obligatory on land offered for sale whenever the lunar year is completed, because it is from the goods of trade. Its value is assessed at what it is worth at the end of the year, and a quarter of a tenth is paid from it, whether it is in high demand or in a slump;
due to the generality of the evidence regarding the obligation of zakat on what is prepared for sale and trade. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.