How to Calculate Zakah on Rented Real Estate
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Question:
In his letter, he asks about the obligatory zakah on real estate, saying: Is the zakah due on the full value of the rented property, or only on its annual income? To be more specific: Suppose I have a building worth five hundred thousand riyals, rented out for fifty thousand riyals. Is the zakah due on the five hundred thousand, or only on the fifty thousand?
Please inform us. May Allah reward you with good.
Answer:
If real estate is for rental, there is no zakah on the property itself; rather, the zakah is due on its rent. So, this property worth five hundred thousand has no zakah on it if it is for rental and not for sale. However, its rent, which is fifty thousand for example, has zakah due on it if a lunar year has passed over it. But if its owner takes it and spends it on his needs, or pays off a debt he owes with it before a lunar year has passed over it, then there is no zakah on it, not even on the rent itself. Zakah becomes obligatory on it only if a lunar year has passed over it after the contract.
Likewise, all real estate for residence or for rental has no zakah on it. The zakah is only on real estate intended for sale; for example, if one buys a building for five hundred thousand intending to sell it for profit, he pays zakah on it when a lunar year has passed over it. He pays zakah on its value that it equals at the time the year completes, meaning at the end of the year. This applies to lands, shops, and stores if they are for sale. When the year is completed, you determine their value according to the current price, and you pay zakah on them like cars and the like. Yes.
The presenter: May Allah reward you with good.
In his letter, he asks about the obligatory zakah on real estate, saying: Is the zakah due on the full value of the rented property, or only on its annual income? To be more specific: Suppose I have a building worth five hundred thousand riyals, rented out for fifty thousand riyals. Is the zakah due on the five hundred thousand, or only on the fifty thousand?
Please inform us. May Allah reward you with good.
Answer:
If real estate is for rental, there is no zakah on the property itself; rather, the zakah is due on its rent. So, this property worth five hundred thousand has no zakah on it if it is for rental and not for sale. However, its rent, which is fifty thousand for example, has zakah due on it if a lunar year has passed over it. But if its owner takes it and spends it on his needs, or pays off a debt he owes with it before a lunar year has passed over it, then there is no zakah on it, not even on the rent itself. Zakah becomes obligatory on it only if a lunar year has passed over it after the contract.
Likewise, all real estate for residence or for rental has no zakah on it. The zakah is only on real estate intended for sale; for example, if one buys a building for five hundred thousand intending to sell it for profit, he pays zakah on it when a lunar year has passed over it. He pays zakah on its value that it equals at the time the year completes, meaning at the end of the year. This applies to lands, shops, and stores if they are for sale. When the year is completed, you determine their value according to the current price, and you pay zakah on them like cars and the like. Yes.
The presenter: May Allah reward you with good.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.