Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

AOA Burhan Bhai!
i wanted to know if Zakat is applicable in my case. I Have the following property
1-Agricultural land . what % and on annual income or each harvest like wheat cotton etc. my land is under irrigation from canal as well as Tube well both. on non perennial canal(six monthly)
2- Rental property but rent is recieved by Old Father.
3- recently sold a rental property too. if yes then What %.
4- income from investment in education business.
thanks 

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Answer:

Zakah on land produce agriculture

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Q-1: Agricultural land . what % and on annual income or each harvest like wheat cotton etc. my land is under irrigation from canal as well as Tube well both. on non perennial canal(six monthly)
There is absolutely no ‘zakah’ on the value of the agricultural land in Shariah; even if the land itself is worth millions of dollars, one is not liable to pay any ‘zakah’ on the value of the agricultural land….the ‘zakah’ is only due from the actual produce of these lands.

If the land is irrigated by natural water (rain, adjacent stream, or spring, etc.), then the ‘zakah’ is determined at 10% of the produce of the land; and if the land is irrigated by water from artificial means (wells, purchased water, tubes, canals, etc.), the ‘zakah’ dues are 5% of the produce.

Hadrat Mu'adh (r.a.) reports that the Prophet (saws) said: "On that which is watered by the heavens, or by an adjacent water channel, a tithe (10%) is due. As for what is irrigated through a well or an (artificial) stream, its ‘zakah’ is half a tithe (5%)."

Related by alBaihaqi and al-Hakim.

Q-2: Rental property but rent is recieved by Old Father.

There is no ‘zakah’ liable in Shariah on the house one actually lives in or resides; but if one has bought some property for investment purposes, or with the intention to earn rental income from the property, etc…..the income from such property is absolutely immaterial when determining ‘zakah’ dues. One would be liable to pay 2.5% of the market value of the property, absolutely regardless of the income it generates or does not generate.

Whoever own the rental property will be liable to pay its ‘zakah’, regardless of who receives its rental income. Thus if the property which derives rental income is owned by your father, it is he who is liable to honor its annual ‘zakah’ dues; and if that property is owned by you, regardless of who consumes its rental income, you are liable to pay its annual ‘zakah’ dues at the rate of 2.5% of its market value.

Q-3: recently sold a rental property too. if yes then What %.

Lets assume at the beginning of the year you owned a property worth $10,000.00 with the intention of investment, and in the middle of the year you sold that property for cash. The ‘zakah’ is calculated on one’s excess wealth, regardless of whether it is in property or in cash….thus at the end of the year, you would be liable to pay the annual ‘zakah’ for your excess wealth at 2.5%.

Q-4: income from investment in education business.

Absolutely regardless of the amount of profit or loss the investment in the business makes, you would be liable to pay 2.5% annually on the value of the said business at the end of the calendar year.

Lets say you invested $10,000.00 in an education business and (Allah forbid) the business made a loss and its worth was only $5,000.00 at the end of the calendar year; in such a situation you will be liable to pay 2.5% on $5,000.00 as ‘zakah’.

Alternatively say you invested $10,000.00 in the education business and Allah blessed it to be successful and the business was worth $15,000.00 at the end of the calendar year….in such a situation you would be liable to pay 2.5% ‘zakah’ on the market value of the business, ie. $15,000.00.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan