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:

i want to know how we have to take out the zakat on cash, land, gold and fixed Assets.

please explain me detailly so that i can understand clearly.

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Answer:

Zakah determination

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.

Every believer, regardless of whether man, woman, or child, who has excess wealth (over the ‘nisaab which is appx US$1,000.00) of their own, is liable to pay a 2.5% annual zakat of their nett excess wealth in Shariah.

Zakat is not determined from one’s earnings, but rather on one’s net excess wealth which is left over after paying all their expenses, and it has been in their possession for a period of one calendar year. There is no zakah liable on the house one lives in, or the furniture and fixture one uses in their house, or the car one drives, etc. But if one has property which one has bought as an investment, or spare vehicles other the one one drives, or jewelry, or any other excess asset…then zakah would be liable on these excess wealth and property.

Any asset, or wealth, or cash, or savings, which are left over after all of one’s expenses are paid, and that excess savings and wealth has been in their possession for one full calendar year is liable for payment of annual ‘zakat’ at 2.5% of its value.

Your Question: i want to know how we have to take out the zakat on cash, land, gold and fixed Assets.

For example: a person has the following assets:

1. The house one lives in himself, the market value of which is $1,000,000.00;
2. The car one drives himself, valued at $50,000.00
3. Cash savings or holdings in the bank worth $10,000.00
4. Various properties other than the house one lives in worth $15,000.00
5. Gold and jewelry worth $5,000.00
6. Fixed assets (other than the house one lives in) worth $20,000.00
7. Loans, debts, and liabilities which one has to pay others: $10,000.00

Assuming that all the above listed assets of the person have been in his possession for a period of one full calendar year, the zakah would be calculated as follows:

1. No zakah on the house one lives in (regardless of its value!), or the car one drives (regardless of its value!), etc.
2. Total Assets = Cash $10,000.00 + Other properties $15,000.00 + Gold and jewelry $5,000.00 + Other fixed assets $20,000.00. Thus total Assets of the person would be $50,000.00
3. The liabilities of the person are $10,000.00

Thus total nett excess assets of the person upon which annual zakah would be liable is (total assets) $50,000.00 (- minus) (total liabilities) $10,000.00 = $40,000.00 at the rate of 2.5%. Thus total zakat amount payable is the 1000.

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