No Zakah on plots for self-use
Fatwa No: 86227

Question

I have purchased two plots. What is rule for paying Zakah on these plots? Should I pay Zakah on these plots or not? Initially I was paying Zakah on these plots but now I have discontinued it as I read that there is no Zakah on plots if plots purchased for self-use and not with the intention of selling? What happened if I change my mind and sell these plots if I got better offer in future? At present I have no intention for selling these plots. What happened if one person purchased plots for investment of his cash etc. and set his mind for not selling but actually he made investment of his money which ultimately transforms into to selling of plots?

Answer

Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions. As long as the nature of the plots is as you mentioned, Zakah is not due on them. Instead, you have to pay Zakah on their price after selling them if that price reaches the Nisaab and a lunar year passes after owning it. Know that the amount of Zakah that should be paid is 2.5% of the total amount. Allah will reward you for what you had paid as Zakah. Know that every plot or piece of the land that are initially possessed with the intention of acquisition are not subjected to Zakah even if the owner changes his mind later on and sells or trades with them, since merely the intention does not change their state, i.e. they are not considered as trade goods. On the other hand, the land that is purchased with the intention of selling after its price becomes higher, is subject to Zakah since the intention of trade that is getting better price exists in this case. Allah knows best.

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