Are you inquisitive in knowing about the zakat applicable to your wealth as per shariah? Zakat is an essential responsibility for every Muslim. The payable amount depends on your wealth and is calculated based on your money, land, gold, property, and other valuables that you haven’t used for a period of 12 months. Undoubtedly, zakat, one of the five pillars of Islam is a religious obligation for every Muslim, intending to purify your money. But how to know about the right quantity of zakat you have to pay? This is the main question that arises in the mind of every Muslim and answering it appropriately is always the responsibility of Transparent Hands. In this post, we have presented valuable information about how to calculate zakat on property, so let us get into the details. We suggest you read the article until the end.
Importance of Zakat
Before we get into the main debate, it is important to realize the importance of Zakat in Islam. Zakat is one of the fundamental pillars of Islam. There is no better way of purification of soul and wealth than Zakat. Zakat gives the underprivileged section of society their right, which they have on our wealth. In the holy Quran, Allah (SWT) says:
“Those in whose wealth there is a recognized right for the needy and the poor”
Zakat on Property
Nisab is the financial criteria set for every Muslim based on which the amount of zakat can be calculated. Like other financial assets, your property is also a financial asset that comes in the list of Nisab and the zakat rules apply on it as well. So, we’ll guide you on how to calculate zakat, and how this amount varies from one asset to another. We will also be discussing the eligibility for the zakat, the right distribution, and the collection method.
When is your Property Eligible for Zakat?
Zakat cannot be applied to all types of properties you own. You can buy and own a property for rental and reselling purposes and will still have to pay Zakat. That means if these assets are used to make income and profits, they could be eligible for Zakat.
Land for Reselling
If you are purchasing any land for reselling purposes, that means it is a commercial property. And such assets are always a part of the Nisab. The amount of Zakat payable for this land will be calculated according to the value of the property when your Zakat payment date arrives.
Land to Build a House
If you are planning to purchase land for the sake of building a house on it and rent it out, keep in mind that this property is not eligible for Zakat. However, in case you start saving this rental income, you will have to pay its Zakat because this is the money you own now. But the amount of these savings should be equal to or greater than what you have to pay. So we suggest that you calculate Zakat properly every time you have to pay it according to the measure of property and money you own.
Built for Reselling
If you construct any residential building meant for reselling purposes, you’ll have to pay zakat on the money you earn from it. The amount you’re liable to pay will be 2.5% of the money you make by selling any part of the building. You’ll have to pay Zakat on the day you receive the money. This money will add up to the sum you will own in the future and will have to pay its Zakat.
What is the Nisab to Pay Zakat on Property?
The main thing to understand when paying Zakat is the Nisab that applies to your wealth. Nisab is the minimum amount required for a person to pay Zakat. According to Islamic and Sharia laws, the Nisab is applicable on a minimum of 3 ounces of gold or money equal to its price. For silver, there should be 21 or more ounces or money equal to its price.
We all understand the fluctuation in the price of gold and silver with time, which also affects the total amount payable. This is why it is crucial to check the contemporary market prices of gold or silver and calculate Zakat according to the current prices.
Steps to Calculate Zakat on Property
Calculating zakat on property is very simple if you follow the steps mentioned below.
- The very first thing is to calculate the Nisab you own. For this, you have to take into account all your money and assets eligible for Zakat.
- Now check the land, rental properties, or buildings you own for more than a year. Calculate their worth and add them into the Nisab you own.
- Once you are done calculating the total worth of your assets, multiply the sum with 2.5% to get the total amount of Zakat you have to pay.
You can use our Zakat calculator to get the exact amount you are liable to pay against all the money, property, and other assets you own.
Who Is Eligible to Receive Zakat Money?
As mentioned above, the purpose of Zakat is the exchange of money between the needy and affordable people and that it keeps on circulating in the society. Zakat is only for people who are in need and can’t afford a balanced lifestyle. Here is a list of people who can take it:
- People in debt
- Unemployed person
- Disabled people
- Needy people
Hopefully, this piece of writing proves to be beneficial for you in understanding how to calculate zakat on property. Zakat is a religious task obligatory for every Muslim. It is not just essential in purifying your money, but it also plays a big role in the provision of wealth to the needy by those who have an excess amount of it. Zakat is crucial for every Muslim and is determined based on the Nisab you own. May Allah Almighty bless every Muslim to pay Zakat and indulge in other Islamic obligatory activities and walk on the path of Sunnah.