Zakah on Residential Plots

Zakah is as obligatory as Prayer. There are some Muslims who do not pay Zakah, and there are some who give whatever they like to give without observing the rules of Zakah. Muslims must learn the rules of Zakah just as they learn the rules of Prayer, so as to avoid committing the enormity of neglecting Zakah when it is due.

Responding to this issue, Dr. Monzer Kahf, an expert in Islamic economics and finance, said,

This is a new kind of investment that was not in practice when the Hanafi school came about some more than 1,200 years ago.

Investment properties are subject to Zakah because they fall under the general definition of the amwal (wealth) that are not assigned for personal or family use.

Zakah is due on investment properties at the market value on the day of Zakah. The day of Zakah comes at the completion of a hawl (354 days) after the acquisition of nisab for the first time (the nisab is the minimum amount of savings, capital, or product on which Zakah should be paid). Zakah is then paid every year at the rate of 2.5 percent on the same day from that year on. This rate has nothing to do with the ups and downs of the market price, because this price determines how rich you are