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Zakah on property off plan

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:

SALAMS DEAR BROTHERS

RAMADAN KAREEM.


PLS SHED MORE LIGHT ON ZAKAT. LIKE WE HAVE PROPERTY INVESTMENTS IN DUBAI IN OFF PLAN PROPERTIES AND NOW WE DONT KNOW WHETHER WE WILL GET THE MONEY BACK OR MONEYS WORTH AS WE HAVE PAID ONLY BOOKING DEPOSITS AND VALUES HAVE COME DOWN MORE THAN 50-80% 

 

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Answer:

 

Zakah of property off plan

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.

 

If one has invested in an off-plan property and fears that the market value of their investment might have to be completely written off, or that the values might have substantially decreased, one would still be liable to pay their annual ‘zakah’ as follows:

 

Example 1:

If one has invested (fully paid up) in an off-plan property say of value 100,000.00, and the current market value of that same property has dropped to 25,000.00; then one is liable to pay their annual zakah for this at 2.50% of 25,000.00.

 

Example 2:

If one has invested (fully paid up) in an off-plan property of say value 100,000.00, and one is not sure when and if their property will ever be made or handed over to them, one has the option to defer the payment of zakah on the market value of the property when one actually gets it in their hands.

Thus, as long as the property is not handed over to them, they are not liable to pay zakah on their investment.

But lets say the property is finally handed to them after 5 years, and the current market value of the said property is only 20,000.00. Then one would be liable to pay annual zakah for 5 deferred years on the current market value of that property.

 

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

 


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