Zakat on real estate: its conditions and rulings

Zakat in Islam has various avenues that allow Muslims to help the needy and the poor not only through money or gold, but also through real estate zakat. This type of zakat strengthens social solidarity and spreads mercy and compassion in hearts, as it instills a sense of responsibility toward those in need. However, this zakat requires fulfilling specific conditions set by Islam in order to be valid and to bring reward and blessings to its giver.

Therefore, in this article we will learn together about the conditions for the obligation of zakat on real estate, the types of properties subject to zakat, and how to donate to help the poor through Al-Wafaa Humanitarian Association, which is considered your ideal and most trustworthy choice.

Conditions for the Obligation of Zakat on Real Estate

Below are the conditions for zakat to be due on real estate:

• The property must be fully owned by the owner, with complete control and no shared rights preventing disposal.
• The owner must have a clear intention of trade or investment, meaning it is intended for sale for profit and not for personal residence.
• The value of the property must reach the nisab equivalent to 85 grams of gold or its value in silver.
• One full lunar year must pass from the date of ownership or from the intention to trade in it.

Types of Real Estate Subject to Zakat

The following are the types of properties on which zakat is due:

• Commercial properties intended for sale: These are considered trade goods, meaning properties prepared for profit and business purposes, such as houses, shops, or land. Zakat is due if the nisab and one lunar year are completed, at a rate of 2.5% of the full market value.
• Rental properties: These include residential or commercial properties rented out. Zakat is due on the rental income if it reaches the nisab and a lunar year has passed. Zakat is calculated at 2.5% of the total rental income after deducting maintenance costs and taxes.
• Investment properties: These are properties intended for leasing or investment, including developed and subdivided properties that generate financial returns. Zakat is due on the net rental profit.
• Agricultural lands: These are lands cultivated for crops or fruits such as barley, wheat, grapes, dates, and vegetables for sale. Zakat is due on the produce once it reaches the nisab of 653 kilograms. The rate is 5% if irrigation involves cost, and 10% if irrigated naturally without expense.

How to Calculate Zakat on Real Estate

Calculating zakat on real estate depends on the owner’s intention. If the property is intended for trade, zakat is 2.5% of its market value after completing one lunar year. For example, if a property was purchased for 20000 and after one year its value became 250000, zakat is calculated based on 250000.

If the property is for investment or rental purposes, zakat is due on the net profit and income, not on the property itself, at a rate of 2.5% after reaching the nisab and completing one lunar year.

Personal properties used for residence are not subject to zakat, as there is no intention of trade or profit.

Other Rulings Related to Zakat on Real Estate

There are additional rulings related to real estate zakat that must be known to ensure it is performed correctly and to attain the expected reward:

• If the owner’s intention changes from selling for trade to personal use, zakat is no longer due due to the change in intention.
• Mortgaged or seized properties are generally not subject to zakat. However, if the mortgaged property is intended for sale and its value exceeds the debt while still reaching the nisab, zakat is due.
• If the property is jointly owned, each partner must pay zakat on their share if it reaches the nisab.
• If a property is sold in installments, zakat is due on the installments received after one lunar year has passed, while deferred installments are not subject to zakat until received.
• Unproductive agricultural land is not subject to zakat unless it produces crops later.
• Commercial property that does not generate profit, such as a factory or office that is inactive, is not subject to zakat. If it generates profit, zakat is due on the net profit provided it reaches the nisab.

Donate Your Zakat to Help Those in Need

You can donate your zakat to help those in need through Al-Wafaa Humanitarian Charity, which is your best path to supporting the poor and needy who are in urgent need of this zakat to improve their living conditions.

You can donate online or directly by visiting the headquarters of Al-Wafaa Association, which will ensure that zakat reaches its rightful beneficiaries through its experienced and dedicated team that has assisted millions over the years.

Frequently Asked Questions

When Is Zakat Due on Real Estate?

Zakat is due on property prepared for sale once a full lunar year has passed and its value has reached the nisab.

Is Zakat Paid on Real Estate?

Yes, zakat is paid on real estate if it is intended for sale, at 2.5% of its market value. If it is for rental, zakat is paid on the net income at 2.5%, provided it reaches the nisab and a lunar year has passed.

Is There Zakat on Owned Apartments?

Zakat on owned apartments depends on the owner’s intention. If they are for residence, no zakat is due. If intended for sale, zakat is obligatory.

Is Zakat Due on Personal Property?

Zakat is not due on personal belongings. It is only due on assets intended for sale, such as cars, goods, and real estate, for profit, provided they reach the nisab and a lunar year has passed.