A man bought a piece of land with the intention of submitting it to the Real Estate Development Fund and then selling it again, but a long time passed and he did nothing, so when...
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The questioner : A man bought a piece of land with the intention of submitting it to the Real Estate Development Fund and then selling it again, but a long time passed and he did nothing. When does he start paying zakah? From the time he first bought it, or when he started offering it for sale in the market?
The Shaykh : If he bought it for trade, its zakah begins with his wealth, because trade goods are assessed by their value. For example, if a person has one hundred thousand in cash and buys land for trade during the year for fifty thousand, then when the year is completed, he must pay zakah on the one hundred thousand, even if he did not own this land except during the lunar year of possession, because trade goods are based on their original value. So we tell this brother:The questioner : If you intended it as trade goods from the time you bought it, pay zakah on it along with your wealth, whether you built on it or not. But if you did not intend to trade it, and instead intended to invest in it by building on it through the Real Estate Development Fund, then there is no zakah on it, because for real estate intended for investment, zakah is only due on its rental income.
The questioner : May Allah reward you and bless you.
The Shaykh : If he bought it for trade, its zakah begins with his wealth, because trade goods are assessed by their value. For example, if a person has one hundred thousand in cash and buys land for trade during the year for fifty thousand, then when the year is completed, he must pay zakah on the one hundred thousand, even if he did not own this land except during the lunar year of possession, because trade goods are based on their original value. So we tell this brother:The questioner : If you intended it as trade goods from the time you bought it, pay zakah on it along with your wealth, whether you built on it or not. But if you did not intend to trade it, and instead intended to invest in it by building on it through the Real Estate Development Fund, then there is no zakah on it, because for real estate intended for investment, zakah is only due on its rental income.
The questioner : May Allah reward you and bless you.