What is the amount of zakah on the rental income of real estate?

Another questioner: Peace be upon you.

The Shaykh: And upon you peace.

The questioner : In the name of Allah, and praise is to Allah, and blessings and peace be upon the Messenger of Allah. Shaykh, regarding some questions about zakah.

The Shaykh: Yes.

The questioner : What is the amount of zakah on the rental income of real estate? I mean apartments or villas or the like. What is the amount of the rental income...?

The Shaykh : When we are asked this question, we say that it is not applicable to us, because we say that real estate prepared for renting and for buying and selling has no zakah due on it. Generally speaking, all trade goods have no zakah due on them. And when I say there is no zakah, I mean the known zakah with the conditions mentioned in the books of jurisprudence. For example, there is no zakah until a lunar year has passed over it, and no zakah until it reaches the nisab. Your question is based on this well-known position held by most scholars. But we say that this zakah, which has a nisab and the condition of the passing of a lunar year, does not apply, or was not legislated, for real estate, nor for all trade goods. This zakah, which has a nisab and the condition of the passing of a lunar year, has not come in the Book, nor in the Sunnah, as indicating the obligation to pay the annual zakah on any trade goods, including the sale and rental of real estate. Therefore, this question is not applicable to us. And it is perhaps important that we elaborate a little on explaining our view regarding the non-obligation of zakah on trade goods.
We say that it is agreed upon among the scholars of the Muslims that the original ruling regarding private parts is prohibition, except for what is permitted by an explicit text. The original ruling regarding blood is prohibition, except for what is permitted by an explicit text. Likewise, the original ruling regarding wealth is prohibition, except for what is permitted by a binding explicit text. This is derived from texts, the strongest and most famous of which is the sermon delivered by the Prophet (peace and blessings be upon him) on the Day of the Farewell Pilgrimage, when he said: . The original ruling regarding wealth is like that regarding blood and private parts: prohibition except by a text that permits it. For example, it is very clear that it is not permissible for a Muslim to enjoy a woman by any means other than the way of marriage or the way of concubinage, even if she consents to it and permits her person to any man, because the original ruling regarding private parts is prohibition except by an explicit text.
And so, say the same regarding blood, which is even clearer. Then, lastly, comes wealth. It is not permissible to take anything from the wealth of people that Allah (Blessed and Exalted is He) has not made obligatory upon them. As for voluntary charity, that is an ocean with no shore. The issue is regarding the obligatory and the mandatory; the original ruling regarding wealth is prohibition.
And there has come what confirms the non-obligation of zakah on things not specified in the texts. For example, regarding livestock, he (peace and blessings be upon him) said: . Based on this authentic hadith, it is reported in "Musnad al-Imam Ahmad" that a group of merchants came in the time of 'Umar with horses for trade. They came to 'Umar and said, "O Commander of the Faithful, take its zakah." He said (may Allah be pleased with him), "My two predecessors before me did not do that," meaning the Messenger (peace be upon him) and Abu Bakr. "My two predecessors before me did not do that." Ali ibn Abi Talib (may Allah be pleased with them all) was present in the assembly. When he saw that the merchants were pressing 'Umar to take the zakah from them, Ali said, "Take it, O Commander of the Faithful, as voluntary charity." He took it from them, and their hearts were pleased with that. This does not happen today; rather, the opposite happens. Many people have zakah due on them, but they resort to various kinds of tricks to get rid of it. But these people, with the goodness of their hearts, saw that Allah had blessed them with this wealth. When 'Umar refused to take the zakah from them, and Ali ibn Abi Talib provided a solution for them to take it as voluntary charity, he took it from them and their hearts were pleased.
The point is that this indicates that trade goods do not have a specific obligatory zakah. Also, what indicates what we mentioned regarding the non-obligation of zakah on trade goods are some reports from some scholars, which summarize that there is no zakah on fruits except dates or grapes, and no zakah on grains except wheat or barley. They argued for this by saying that when the Prophet (peace and blessings be upon him) sent Mu'adh to Yemen, he said: . This indicates that the original ruling is prohibition, because he (peace and blessings be upon him) forbade him from taking charity from anything other than these four categories of fruits and grains. I say that the original ruling regarding wealth is prohibition, and zakah is not given or obligatory to give. I explained that zakah is this regulated zakah with a nisab and a known rate of two and a half percent. But there is absolute zakah in matters where the wise Lawgiver has not prescribed obligatory zakah. There is absolute zakah, in the context of His saying (the Exalted): . So, if we assume a man, as is the case with many merchants today,
whenever he has dirhams and dinars, what is called today liquidity, he converts them into trade goods. He is undoubtedly rich, and may even be one of the richest of the rich. But he may not have wealth over which a lunar year has passed and it is obligatory to pay two and a half percent. Nevertheless, he knows for certain that he is a rich man, and that there is a right in his wealth, as He (the Exalted) said: . So, the result of this ruling regarding these real estate properties and these trade goods is that there is no annual regulated zakah of two and a half percent on them, but rather what the rich man's soul is generous with. What the rich man's soul is generous with. This is what can be said regarding the legal evidence. In brief, there is no authentic evidence that obligates zakah on these types of trade goods, or on fruits or grains other than the four categories we mentioned.
And here an objection arises. They say: If it is said that there is no zakah on trade goods, the poor will suffer great harm from that; because in that case, the rich will not come to them with anything from the zakah of their wealth. Our answer to that is from two aspects:
The first aspect: We said that the regulated, prescribed, and defined obligatory zakah is not required on wealth. But absolute zakah, in the context of purifying wealth, and indeed purifying the soul from what it is inclined to, as He (the Exalted) said: ; this is necessary. But it is not said, "Wait until the lunar year has passed," or "Hurry before the year ends." It is not said, "It will come to you at two and a half percent, so make an inventory every year from the first item to the last item, calculate their value at that hour, and give two and a half percent." This is not said. But give what your soul is pleased with, of any type you have, whether it is dirhams or dinars or merchandise like raisins or sugar or anything that benefits the poor. This is the first answer.
The second answer is that many people fall into a strange negligence. This negligence becomes clear when we raise the following question: There is no doubt that it is permissible for a rich man to keep or hoard his wealth of gold and silver in an iron box and not put it in the market for trade, on the condition that he pays the zakah on this wealth every year. I think this is known to everyone. In that case, we ask: If a person does this, is he to be held accountable? If he pays the zakah on his wealth every year? The answer is no.
Another merchant has not a single dirham or dinar in his box; it is all put into trade. And let us assume that the wealth of each of the two merchants is equal to the other's in terms of quantity. For example, his capital is one million, and this one's capital is one million. The first one's million is hoarded in the box, and every year it comes to two and a half percent. The second one's million is with him, put in the market, in any of the trade goods. Now the question arises: Which of these two rich men is more beneficial to the poor? The first or the second?
Now, state what you know, for many of you are merchants, whereas I am not a merchant. Which man is more beneficial? Do you have any doubt about this statement? There is no doubt. So, when someone assumes that when we say that the one whose wealth has been converted into trade goods has harmed the poor, he is mistaken. If it is true that he has harmed the poor, it is the first man who has done so, because he held back his wealth and his treasure. But the Lawgiver said to him: As long as you pay the zakah, you are not sinful. So how can it be said that this one has harmed the poor? If one of the two types is more harmful, it is the first man.
We say, finally, that the second man is the one who benefits the poor; because when he employs his capital, there is movement in the town, and there is work for the poor. If we suppose that all the rich people are of the first type, unemployment would strike the workers, the poor, and the needy. And the opposite is exactly the opposite. So, we must now observe something very important: that Allah (Mighty and Majestic), when He did not impose zakah on trade goods, and on the contrary imposed zakah on hoarded wealth, is as if our Lord (Mighty and Majestic) is saying to the rich: Put your wealth into people's hands and employ it in trade goods, for that is better for people than hoarding it in your boxes or your treasures.
So, here is a profound wisdom in that Allah (Mighty and Majestic), when we do not find in the Book of Allah or in the Hadith of the Messenger of Allah (peace and blessings be upon him) a text that obliges this rich man who has put his capital in the market to conduct an inventory and appraise these vast amounts of wealth every year, has been lenient with him in this leniency; because he deserves it, because his work is more beneficial to the poor than that of the rich man who hoarded his wealth. And yet, Allah was lenient with him, as long as he pays out two and a half percent from these accumulated, hoarded funds.
In summary, what we understand about this topic is that revelation and reason agree at one time that there is no zakah on trade goods, and that the wise Lawgiver’s lifting of the zakah from them is for the benefit of the poor; because it helps the rich man not to hoard wealth. If he hoards it, the poor’s benefit from it decreases. On the other hand, it helps the rich man to put his wealth in the market, so the poor benefit from it more than they benefit from the funds. And this is what I have on this issue.