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Does Zakat need to be paid every year on files and plots?,

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   Saqib®
Thursday, June 9, 2016 12:42 AM 
Reply: >
I live abroad so can't get in touch with a good Muslim scholar or imam here. Hoping the fellow property investors on this forum can throw some light on whether Zakat needs to be paid every year on files and plots that an investor holds, with intentions of selling it on a profit in future?

Would really appreciate your responses with references from the Holy Quran or any ruling given by an aalim.
KK® replied on Thursday, June 9, 2016 04:49 AM 

There should be some more clarification, if some one hold plot for one year, zakat is applicable on gross current market price or difference of purchase and current price,,,,,,, , thx
Arif M® replied on Thursday, June 9, 2016 05:09 AM 

Yes Zakat is applicable every year on all plots/files etc which are purchased/kept with intention of investment and resale (for profit).

You can easily google it. There are many online fatwa websites from india, pakistan and US where you can find details about it.
Khurram11® replied on Thursday, June 9, 2016 06:29 AM 

It's simple. Zakat is payable on all wealth you have (which may be in the form of bank accounts, gold, plots, files, shares, other investments etc). However Zakat is not payable on the value of house you own and live in. Also, subtract any loans you have obtained for the calculation of your wealth on which Zakat @ 2.5% is payable.
Ahmed Paki replied on Thursday, June 9, 2016 07:38 AM 

yes ArifM is very correct. But i found also if your intention is not clear , if you will sell it for profit or use it for rent.

My other question is, if after 4 years of holding plot to build home on it, later after 4 years we decide to sale it, at that time upon saleing the plot what is the zakat on it.also the amount paid to the developler for that plot is same unpon saleing the plot after 4 or 6 years.
NT replied on Thursday, June 9, 2016 10:04 AM 

Zakat is payable on house/ plot/file if you hold that investment for resale & get profit for example a builder's investment on house(s) is zakatable. However if some invest his saving in these assets for his children or without intention of resale than asset is not considered Zakatable.

It is the intention which is important, once you change intention about house/plot/file & start considering them as resaleable property zakat should be calculate on them even if you didn't sold it yet.
Arif M® replied on Thursday, June 9, 2016 10:05 AM 

Ahmad Paki, According to my limited knowledge which i obtained from reading online fatwas.. Zakat will due for all the period in which ur intention was to keep it as investment.

For example, you had a plot for 4 years.. in fist year your intention was to keep it for personal, in next 2 years your intention was to keep it for resale and in last year your intention again changed to keep it as a home. so first 1 year pa zakat nahi hogi q k tb niyat ghar ki thi. next 2 years pa hogi q k tb niyat business ki thi aur last 1 year pa nahi hogi k tb niyat again ghar ki thi. So in short it is bound to your niyat. BUT, all said it is better that you get fatwa from some proper qualified Mufti.
Jameel Mughal® replied on Thursday, June 9, 2016 10:48 AM 

Files and Stock business is new, But Land and Gardens possession is known for long time. In prophet time Zakat was not applicable on Land, Agri Land or Garden's Land value etc, However it was applicable on wealth, Live Stock and produce of gardens even Usher.
Ulma differ in new products, However i think as precaution we should pay as it will give us even more Ajar, even if it was not due.
Arif M® replied on Thursday, June 9, 2016 11:02 AM 

In my humble opinion Files, stocks, plots, plazas etc are just names which we use for our assets. As per my knowledge all ulema are agreed that if land or any asset is kept with business/investment intent then zakat is due on it.

Only houses - plots kept with intent of personal accommodation are exempt from zakat. Similarly agricultural land is also exempt. But land of plaza, office or any plot/files purchased with intent of resale (for profit taking) is not exempt from zakat. This is very common topic and information can be easily found on this topic. So it ll be best if information is taken from some credible online or offline source. Preferably a qualified scholar - institute.
S.Hameed® replied on Thursday, June 9, 2016 03:02 PM 

JameelMughal Sahib,

Can you please provide some reference of what you have said about Land?

Thanks,
Shah replied on Thursday, June 9, 2016 05:08 PM 

Dear Jameel Bhai
In Prophet's (PBUH) time land was not considered as a tradeable commodity in the sense we trade plots and files these days. Land was considered as a means of earning by virtue of its produce and hence the zakat was declared on produce which we call as Ushr.

Plots and files have become the most prized tradeable commodities of our times. And the spirit of Zakat is that it is levied on tradeable commodities or "saman ay tajarat". If a plot or file is held with the intention of resale (for profit gains) it falls under the catagory of "saman ay tajarat" or tradeable goods. And hence Zakat is fully applicable.

If the plot or file is held with the sole intention of making a house (either fir own reaidence or for putting on rent) it is not a tradeable good by virtue of your such intention and hence zakat is not applicable.

WaAllah il Ilm
Samurai® replied on Thursday, June 9, 2016 09:19 PM 

@ Jameel Mugahl Sahib,
During Prophet (Peace be upon him) Era, no one was holding land for bussines purpose so it is not good to compare it with these plots. Even if you keep plot not for bussines but as saving, one has to pay Zakat as it is applicable to savings. For bussiness no need to mentions that all scholars agree that Zakat should be paid.
Saqib® replied on Friday, June 10, 2016 05:55 AM 

So its clear that Zakat is due on Files and Plots that are held with the intention for selling on profit.

Thanks for all your comments guys.
NT replied on Friday, June 10, 2016 07:09 AM 

IMHO land was always a tradeable and valueable assets in history. An asset's "tradeable" characteristic does not make it zakatable.

Zakat is paid on goods likely to growth/increase, goods unlikely to growth/increase are not zakatable. Further an assets held with the intention of resale & making profit is zakatable, an assets held without intention of resale is not zakatable.

Example: even one house held by builder for resale is subject to zakat where as 3 houses held by a person without intention of resale are not subject to zakat.
Salman Abid replied on Thursday, September 30, 2021 04:28 PM 

I have a question in same regard. In Islam Virtual business is NOT allowed. I Want to know that the same goes for a file as well. As most of the time the file is in a society but the buyer is not aware of where will be the piece of land and he only buys the file. HE is also selling the file as virtual entity. There is no physical exsistance of the plot.
My question here, the file cannot be sold till the possession? and how to calculate Zakat on such cases.
Habib Ahmed replied on Monday, April 10, 2023 04:31 AM 

What If someone has multiple houses but live in only one house and the rest are just standing there, purpose is not for sale but might rent in future. So is zakat applicable on those multiple houses, are those counted as assets ?
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