Are trade goods valued at the time of purchase or at the time zakah becomes due?
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The questioner : He says: I ask about the zakah of trade goods. Are the goods valued at the purchase price or at the prevailing price when the term arrives?
The Shaykh : Yes, trade goods are valued at the time zakah becomes due, and there is no consideration for what they were bought for. Suppose a person trades in land and buys a piece of land for ten thousand, and when zakah becomes due, it is worth one hundred thousand. Does he pay zakah on the ten thousand or the one hundred thousand? Answer. One hundred thousand. The consideration is the value at the time zakah becomes due. Now, conversely, if he buys land for one hundred thousand and the price drops so that when zakah becomes due it is worth only ten thousand, what does he pay zakah on? Ten thousand. Now, if it is unclear to him whether he is making a profit or a loss, or if it is sold at cost, meaning the value is not stable when zakah becomes due, to what does he refer? He refers to the original, which is what it was bought for. For example, if he buys land for one hundred thousand and when zakah becomes due it is unclear to him whether it is worth eighty thousand, or one hundred and twenty thousand, or one hundred thousand, what do we say?
We say eighty, or one hundred and twenty, or one hundred? One hundred, because the original is that what was is as it was; what was remains as it was.
In another question, which may be more important than this: if a person trades, buying and selling, and he buys a commodity one month before zakah becomes due, do we say there is no zakah on you until a lunar year has passed since its purchase, or is it based on what came before?
The answer: It is based on what came before, because trade goods are exchanged. If we said that every time a person buys something, a new lunar year begins for it, he might never have to pay zakah. So the consideration is the first lunar year. Suppose this man’s zakah year is Ramadan, and he is buying and selling land. He buys land in Sha'ban, and then Ramadan comes. How long has he had it? How long has he had it? One month. Does he pay zakah on it or not? He does not pay zakah on it, because he bought it with what he was already obligated to pay zakah on. So what he newly acquired is based on what came before. Now. Another example: a man’s father dies, and he is the only heir. The father died in Sha'ban and left behind much land for trade. The son owns it. Does he pay zakah on it in the Ramadan in which his father used to pay zakah, or in Sha'ban of the second year? We say in Sha'ban of the second year. In Sha'ban of the second year. Why? Because his ownership of it is new. The son was not the owner initially. He did not own it except when? Except in Sha'ban. So zakah is not due on him until a lunar year has passed. And on this basis, what people inherit from their deceased is based on... Yes, the heirs begin a new lunar year with it. A new lunar year.
Now, the difference is clear, because in the first issue, the issue of trade goods, this person was the owner of the thing, and the renewal was only for the specific item of wealth. But in the issue of inheritance, the renewal is for the ownership of the wealth, not for the specific item of wealth. Yes.
The questioner : May Allah reward you with good. A person owns a building, part of which is residential and part of which he rents out.
The Shaykh : The method.
The Shaykh : Yes, trade goods are valued at the time zakah becomes due, and there is no consideration for what they were bought for. Suppose a person trades in land and buys a piece of land for ten thousand, and when zakah becomes due, it is worth one hundred thousand. Does he pay zakah on the ten thousand or the one hundred thousand? Answer. One hundred thousand. The consideration is the value at the time zakah becomes due. Now, conversely, if he buys land for one hundred thousand and the price drops so that when zakah becomes due it is worth only ten thousand, what does he pay zakah on? Ten thousand. Now, if it is unclear to him whether he is making a profit or a loss, or if it is sold at cost, meaning the value is not stable when zakah becomes due, to what does he refer? He refers to the original, which is what it was bought for. For example, if he buys land for one hundred thousand and when zakah becomes due it is unclear to him whether it is worth eighty thousand, or one hundred and twenty thousand, or one hundred thousand, what do we say?
We say eighty, or one hundred and twenty, or one hundred? One hundred, because the original is that what was is as it was; what was remains as it was.
In another question, which may be more important than this: if a person trades, buying and selling, and he buys a commodity one month before zakah becomes due, do we say there is no zakah on you until a lunar year has passed since its purchase, or is it based on what came before?
The answer: It is based on what came before, because trade goods are exchanged. If we said that every time a person buys something, a new lunar year begins for it, he might never have to pay zakah. So the consideration is the first lunar year. Suppose this man’s zakah year is Ramadan, and he is buying and selling land. He buys land in Sha'ban, and then Ramadan comes. How long has he had it? How long has he had it? One month. Does he pay zakah on it or not? He does not pay zakah on it, because he bought it with what he was already obligated to pay zakah on. So what he newly acquired is based on what came before. Now. Another example: a man’s father dies, and he is the only heir. The father died in Sha'ban and left behind much land for trade. The son owns it. Does he pay zakah on it in the Ramadan in which his father used to pay zakah, or in Sha'ban of the second year? We say in Sha'ban of the second year. In Sha'ban of the second year. Why? Because his ownership of it is new. The son was not the owner initially. He did not own it except when? Except in Sha'ban. So zakah is not due on him until a lunar year has passed. And on this basis, what people inherit from their deceased is based on... Yes, the heirs begin a new lunar year with it. A new lunar year.
Now, the difference is clear, because in the first issue, the issue of trade goods, this person was the owner of the thing, and the renewal was only for the specific item of wealth. But in the issue of inheritance, the renewal is for the ownership of the wealth, not for the specific item of wealth. Yes.
The questioner : May Allah reward you with good. A person owns a building, part of which is residential and part of which he rents out.
The Shaykh : The method.