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:

As Salaam Aleikum Wa Rahmatullahi Wa Barakatuh!

I am getting your e-mails of replies to various questions raised by brothers and sisters. Mashallah! you are doing a great favour by replying the issues in the light of Quran and Sunnah.My Allah (swt) reward you abundantly from his bounty.

I live in Gulf and I like other foreigners, I have rented house here. I have a house in my village and an apartment in Mumbai. Whenever, me and my family go to India, we live in these residences and all round the year these are closed. My questions are the following : 

Am I liable to pay Zakah on these residences as they are more than one.

I may decide to sell my apartment in Mumbai for the purpose of going for a better location as there are very few Muslims around and no Masjid in close vicinity. I may have some capital gains but from the amount I get from the sale, I will buy an apartment in a better location. Perhaps, I will have to put some additional amount as well. Do I have to pay Zakah on the capital gains?

If I sell the apartment, as mentioned above, and invest in other apartment and give it on rent (not using for my personal use), how and on what amount I will be liable for Zakah?

I will appreciate if you kindly send me your reply.

Wassalam...

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Answer:

Zakah calculation

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 the total net worth of any believer (man, woman, or child) is more than the prescribed ‘nisaab’ of 7.5 ‘tolas’ of gold (app. 85 grams or app. Value US$2,100.00), then the person is liable to pay the obligatory annual ‘zakah’ of 2.5% on their excess wealth which has been in their possession for a full calendar year.

If the total net worth of any believer is less than the prescribed ‘nisaab’, he/she is not liable to pay any ‘zakah’ until their net worth exceeds the prescribed ‘nisaab’.

For the purpose of determining ‘zakah’, the ‘Net Excess Assets’ would be the current market value of all of one’s assets (properties, investments, jewelry, cash, etc.) except:

1. the value of the house/s one owns and actually lives in
2. the value of the car/vehicle one uses on a regular basis
3. the value of the furniture and fixtures one uses on a regular basis.

Your Question: I live in Gulf and I like other foreigners, I have rented house here. I have a house in my village and an apartment in Mumbai. Whenever, me and my family go to India, we live in these residences and all round the year these are closed. My questions are the following : 

Am I liable to pay Zakah on these residences as they are more than one.

Respected brother, if the houses are bought with the intention for your own personal use, then you are not liable to pay ‘zakah’ on the value of those houses, even if you happen to own more than one house.

But if you bought the houses with the intention to trade, or rent the premises, or derive any commercial benefit from them…..then indeed you would be liable to pay the annual ‘zakah’ of 2.50% on the market value of the properties.

Your Question: I may decide to sell my apartment in Mumbai for the purpose of going for a better location as there are very few Muslims around and no Masjid in close vicinity. I may have some capital gains but from the amount I get from the sale, I will buy an apartment in a better location. Perhaps, I will have to put some additional amount as well. Do I have to pay Zakah on the capital gains?

If you sell one of the apartments and buy another apartment, provided you buy the other apartment for your own personal usage, you would not be liable to pay ‘zakah’ on that property, regardless of how much capital gains you made by selling the first property.

Your Question: ……If I sell the apartment, as mentioned above, and invest in other apartment and give it on rent (not using for my personal use), how and on what amount I will be liable for Zakah?

Lets assign some values to the properties so that a clearer picture emerges….suppose you bought the first apartment for your own personal use 10 years ago for 100,000.00, and the market value of the same property today is 500,000.00. Also lets suppose the new apartment you wish to purchase as an investment or give it on rent (not for your personal use) is bought today for 700,000.00.

As long as the property was for your personal use, regardless if it worth millions, there is no ‘zakah’ on that property. But if you have a the property with the intention of investment, or trade, or rent, or any commercial benefit……then you would be liable to pay ‘zakah’ annually on the fair market value of the property.

If the new apartment which you bought today for 700,000.00 has a market value of 800,000.00 at the end of the next calendar year, you would be liable to pay 2.50% of 800,000.00 or 20,000.00 ‘zakah’ on that property for the corresponding year.

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