Zakah: On unproductive land

Q725 :I have invested my savings in buying some plots of land which are now lying vacant and unproductive. I have a mind to dispose of them and to invest otherwise. I want to build a house of my own and start a business when I go back home. May I ask how should I pay zakah on these unproductive lands?

A725 : The difficulty which your questions presents is that you do not seem to have a very clear idea of how you look at these plots of land you have bought. It is clear, however, that it is a purchase made for investment. Therefore, the first thing that springs to mind is that they should be treated as ordinary merchandise which one buys in order to sell later, hoping to make a profit. There is, however, the additional point of wanting to build a house. My advise to you is to identify first of all the land on which you intend to build house. No zakah is payable on that land or on the house you build on it, even if you build it now and leave it vacant until you have gone back home. However, should you rent out the house, then zakah is payable on the rent after the deduction of any expenses you may incur in maintaining the house and any fees of the estate agent who rents it out for you. The other plot should be treated as a commercial commodity. Every year, on the day when your zakah falls due, you should estimate the value of the land and pay zakah on it at the rate of 2.5 percent, in the same way as a businessman calculates the value of his stock in order to pay zakah. This is absolutely fair, because if you had the money in the bank or in a safe, you still have to pay zakah. If the land appreciates in value, your payment increases, simply because any Muslim in a comparable position who invests his money and makes a profit should pay zakah on the capital and profit.

Our Dialogue ( Source : Arab News - Jeddah )