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Zakat on property

Paying Zakat on Property and Unused Land | Best Practices (2021)

Zakat, an obligatory charity imposed on Muslims, is one of the 5 pillars of Islam. The main goal of this charity is to ease the suffering of numerous underprivileged people while also purifying your wealth. It’s widely believed that donating a portion of your wealth increases and blesses the remainder of Muslim’s wealth.

Calculating and paying Zakat on property, i.e., land assets can be a little tricky. Since we, at Makeen Marketing, deal with property management, our real estate agents are in a good position to direct you on what properties are exempt from Zakat, the steps for calculating Zakat on property, and what the stance is for Zakat for unused land.

When is Zakat on Property Exempt?

When is Zakat on Property Exempt?
Paying Zakat on Property and Unused Land | Best Practices (2021)

Not all property qualified for zakat. An easy way to remember which properties you, as a Muslim, don’t have to pay Zakat on is this: Zakat is not applicable on a property for personal use.

These include:

  • Residential properties,
  • Agricultural properties,
  • Commercial/ business properties.

Residential Properties

Residential Properties
Paying Zakat on Property and Unused Land | Best Practices (2021)

Simply put, residential properties are those purchased for the purpose of residing in. For example, the house you purchased to live in with your family is exempt from Zakat.

The reason why Zakat on property that is used for residential purposes is because this is a real estate necessity— you need a roof over your head. You aren’t earning any money on this property. Moreover, if you are constructing a home for the purpose of residence then there is no Zakat on property under construction.

 If you’re looking for residential plots in Islamabad get in touch with our seasoned agents. We deal in a wide range of real estate investments ranging from luxury properties to low- and middle-income investments. Some of the housing societies in Islamabad that we are partnered with right now include Blue World City, Islamabad Model Town, and Capital Smart City. These projects are one of the most coveted real estate societies in the Islamabad real estate market.

Read: Low-cost housing to be financed by PMRC: RS 15 bn set aside.

Agricultural Properties

Agricultural Properties
Paying Zakat on Property and Unused Land | Best Practices (2021)

Agricultural land itself is exempt from zakat. However, according to Islam, a small amount of Zakat is levied on the agricultural produce that is produced by the land.

You are only eligible to pay if you have savings generated through the possession of this farming land. Even then, the amount of savings must exceed the nisaab criteria.

Commercial and Business Properties

Commercial and Business Properties
Paying Zakat on Property and Unused Land | Best Practices (2021)

Muslims are exempt from paying Zakat on property that is being used to execute a business idea. These business and commercial properties include land for shops, showrooms as well as factories and offices. If you’re wondering about whether or not you’ll have to pay Zakat on earnings from these business properties, that depends entirely on whether your earnings exceed the nisaab criteria.

If you’re looking to buy commercial land in Islamabad real estate, we highly recommend housing societies such as Blue World City and Islamabad Model Town. The main reason why we think these housing societies in Islamabad are a great commercial investment is that they are still offering pre-launch prices.

Pre-launch prices are significantly easier to afford. Plus, they offer high ROIs— you can buy these properties cheaply and resell them at a fruitful profit.

Calculating Zakat on Property

Calculating Zakat on Property
Paying Zakat on Property and Unused Land | Best Practices (2021)

Calculating zakat on real estate is fairly straightforward. All you need is a working knowledge of the real value of your land and how nisaab works and you’re good to go.

We’ve mentioned nisaab a few times before— so, what really is it? Nisaab refers to the minimum amount of wealth you must possess in order to give zakat. Because nisaab is tied to the ever-fluctuating value of gold and silver, Muslims must research the current market price before calculating their Zakat on property.

The steps for calculating zakat are listed as such:

  • Work out the value of your land (and/or other assets) to determine a baseline for your nisaab.
  • After calculating the sum total of your assets, multiple it by 2.5%. This is known as the Zakat percentage. This is all the math there is to calculate the amount of Zakat you are liable to pay.
  • Now it’s time to distribute your zakat to the less fortunate— recent converts to Islam, slaves, people in debt, and zakat collectors.

Zakat for Unused Land

Zakat for Unused Land
Paying Zakat on Property and Unused Land | Best Practices (2021)

Suppose you’ve purchased a property and never constructed anything on it. Its been left vacant or unused for some quite time an you intend on keeping it as an investment. Is there any Zakat on that property?

According to Muslim scholars, you are not obliged to pay Zakat on property that has been left untouched. There is no Zakat for land that is bought for the purpose of an investment.

About Makeen Marketing:

We are a real estate marketing company operating in Islamabad. Our goal is to provide our clients with the best commercial and residential plots in Islamabad. We are a diamond sales partner of Islamabad Model Town, a highly anticipated housing project in the heart of the capital. Our agents are dedicated to providing you with the best of the best real estate solutions. Our services include real estate consultancy, investment management, transaction management well as property development plans, and real estate portfolio management.

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