Zakat on Property [Detailed]

This post has 23 views.

Question:

If a person owns 2 homes, does he have to pay Zakat for the second house? Is Zakat on the total value of the house or rent of the house?

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-Salāmu ‘Alaykum Wa-Rahmatullāhi Wa-Barakātuh.

There are multiple scenarios in the enquired question:

  1. Clear intention for personal use

If a house(s) is purchased for personal use, then there is no Zakat on the house(s) regardless of how many houses one owns.[1]

  1. Clear intention to re-sell

If the house was purchased with the intention to re-sell; Zakat has to be paid on the market value (not the cost price) of the house each Zakat date.[2]

  1. Clear intention to lease/rent out

If the house was purchased with the intention of earning rental income; Zakat will only be on the rental income. The rental income will be added with the other Zakatable wealth and if the Zakatable wealth reaches Nisaab, Zakat will be Fard.[3]

4. Conditional intention

If the house is purchased with the intention of personal use and only to re-sell if there is capital appreciation. There will be no Zakat on the house.[4]

And Allah Ta’ala Knows Best.

Owais Siddiqui

Student Darul Iftaa
Vancouver, Canada

Checked and Approved by,
Mufti Muhammad Zakariyya Desai.

Zakat on Property [Detailed]