Question # 552: I’m constructing a G+4 building that will be assigned for rent once completed. The construction is undergoing now, Prior to the construction, I allocated 80% of the construction cost aside to be used solely to pay the contractor based on performance milestone, I have paid two payments to the contractor so far and work is being under going , I paid 36% of the amount I assigned aside, I still have 64% of that amount to be used based on invoice submission by the contractor. Do I pay Zakat on the remaining 64% I still possess as of today?
bismi-llahi r-raḥmani r-raḥīm,
Assalamu ‘laikum warahmatullahi wabarakatuh,
All praise and thanks are due to Allah (سبحانه و تعالى), and peace and blessings be upon His Messenger (صلى الله عليه و سلم).
Dear questioner,
First of all, we implore Allah (سبحانه و تعالى) to help us serve His cause and render our work for His sake.
Answer: Zakat is payable on the 64% amount which will be due for payment to the contractor on completion of construction work. This is based on the assumption that work is not yet completed and the funds are in your possession. As for the actual project, nothing is Zakatable for now till the building is fully constructed and the property is ready for use. Even when the construction is completed, no Zakah is due on the market value of the building because it is a rental property, and Zakah has to be paid only on the lease revenue.
(The above answer has been verified by Dr. Main Khalid Al-Qudah, Member of the Fatwa Committee of the Assembly of Muslim Jurists in America)
Allahu A’lam (Allah (سبحانه و تعالى) knows best) and all Perfections belong to Allah, and all mistakes belong to me alone. May Allah (سبحانه و تعالى) forgive me, Ameen.
Wassalaam
