How Do We Pay Zakat on a Real Estate Investment Business?

Answered by Shaykh Faraz A. Khan

Question: We have a share holded community-run organization that does many business mainly with real estate. We collect money on a monthly basis. Every month, the amount increases. It has been like this for the past 4 years. After we reach a substantial amount, we utilize this full amount to invest in real estate or any other business opportunity. We have already bought some land at this point of time.

So, my question is whether zakat is applicable on the real estate(land) or is it on the invested money? Or is it on the profit’s basis(money received after selling of land)?

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and states.

Zakat is not due on the invested money, but rather on the market value of the real estate (land) itself. It is also due on the income generated from selling the land.

And Allah knows best.

Checked & Approved by Faraz Rabbani

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