Zakatable wealth

Zakat on property, rent and land

The answer depends entirely on why you hold the property, not on what it is worth.

In short

There is no zakat on the home you live in. Property bought to resell is zakatable at its full market value. Buy to let property is not zakatable itself, but the rental income you still hold on your zakat date is, at 2.5 per cent.

Family home: no zakat
Property held to resell: zakat on market value
Buy to let: zakat on retained rent, not the building
Land bought as an investment: zakat on market value

The home you live in

Your residence is a personal need, not trading wealth. No zakat is due on it, however much it is worth, and the same applies to furniture, your car and personal belongings.

Property bought to sell

If you bought with the intention of reselling at a profit, the property is trading stock. Zakat is due on the full market value on your zakat date, at 2.5 per cent. If your intention changes to long term rental, most scholars stop treating it as stock from that point.

Buy to let and rental income

The building itself is a productive asset, not stock, so it is not zakatable. What is zakatable is the rent you have collected and still hold on your zakat date, after maintenance costs, mortgage payments due and agent fees.

Land and plots

Land bought purely as an investment is treated like stock and is zakatable at market value. Land bought to build a family home on is not.

Frequently asked questions

Do I deduct my mortgage from my zakat?

Only the instalments currently due, not the whole outstanding balance. Deducting a full mortgage would wipe out zakat for most homeowners, which is not the intent of the ruling.

I inherited a property I plan to sell. Is zakat due?

Once you form a settled intention to sell it as an investment, it becomes zakatable at market value from that point.

Is a holiday home zakatable?

Not if it is for personal use. If it is rented commercially, treat the retained income as zakatable.