Zakat on property is payable because it is an essential pillar of Islam. Zakat is a charity paid to the poor people in society by eligible Muslims following the teachings of Islam. Zakat must be paid annually in accordance with the lunar calendar.
You can pay zakat anytime during the year, but most people prefer Ramadan for paying zakat. Several people know zakat as gold or money. However, many of us need to learn zakat on real estate property.
Difference Between Zakat and Tax
Zakat is payable only to Muslims, whereas a tax is payable to every citizen of the country, regardless of their religion. Therefore, tax is remittable by the country’s government, but zakat is not.
Zakat is only 2.5 that is fixed by the Holy Quran and can not be changed by anyone worldwide. However, the tax can vary from country to country and can be increased or decreased by the relevant authorities of governments.
Is Zakat Payable on Property?
Zakat is payable on every immovable property, including land, investment properties, houses, rental properties, and commercial properties. The zakat is appreciable to properties if the values of 87.88 grams of gold or equivalent cash are standard Nisab.
Is Zakat Due on the House You Live in?
Zakat does not apply to personal assets like the house you live in or your in-use car. However, it applies to every house bought with the purpose of investment. Therefore, zakat applies to investment properties.
What is the Percentage of Zakat on Property?
Zakat’s percentage on property is only 2.5. Therefore, you have to pay 2.5% by considering the total value of your property. It is important to note that zakat applies to all kinds of investment properties except your house.
How to Calculate Zakat on Property?
The calculation of zakat is really simple and is given below:
2.5% * property value=zakat amount
2.5% * net rental value=zakat amount
When you have a rental property with a mortgage, you can calculate the zakat amount through this formula.
2.5% of the net rental income – mortgage payment = zakat amount
On Which Assets Zakat is Applicable?
The Zakat on the property is applicable to the following assets:
- Rental Properties
- Investemtn properties
Types of Zakat on Property
Zakat on property on rent and zakat on investment property are two different types of zakat on real estate property.
Zakat on Rental Property
Zakat is applicable to the rental income of properties. Moreover, zakat on rental property Hanafi is 2.5% of total rental income. The zakat is applied to the net income of 7,000 if your rental earning is 10,000 and expenses are 3,000.
It is crucial to remember that zakat is only payable if the net rental income is more than the Nisab.
Zakat on Investment Property
Zakat on investment properties like commercial, residential, and land is calculated at 2.5% of the market value. The zakat will be 12,500 if your property has a value of 500,000. You must pay zakat only if your property value exceeds Nisab.
Zakat on Land Property
2.5% zakat is also applicable to undeveloped land with a purpose of investment with more value than Nisab. Two thousand five hundred are payable if you own a property valued at 100,000.
Zakat on Commercial Property
You must pay 2.5% zakat if you own commercial properties with investment purposes, such as warehouses, shopping centers, and office buildings. Moreover, zakat on installment property will be calculated on already paid installments.
How to Pay Zakat on Property?
You can pay zakat to the zakat collectors, people working for religion, people with debt, enslaved people, and stranded travelers. You can also distribute the amount of zakat to the poor and needy persons with no income source for their basic needs. Moreover, zakat can be paid to newly converted Muslims.
Can I Give Zakat to Someone Who Owns a House?
You can not pay zakat to someone who owns a house and has a means of income. However, you can give zakat to a person who owns a house, but his wealth is less than the Nisab. Therefore, you need to be very careful in paying your zakat.
Final Words
Zakat on property is a crucial obligation in Islam, valid for immovable commercial or investment properties. You can also consult a financial advisor or qualified Islamic scholar for a brief knowledge of zakat.
Zakat on Property: Applicable to Properties and Calculation
If you want to know about Zakat on Property: Applicable to Properties and Calculation, contact Makaan Solutions. Our Sales Executive Officer will provide you with all the latest information. Starting from consultation to choosing the property, and from booking to owning your dream property. For further details, please do not hesitate to contact on the below-given information:
