Question # 69: Is Zakah payable on house/ multiple houses and mode of transportation like cars, bikes etc.?
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).
First of all, we implore Allah (سبحانه و تعالى) to help us serve His cause and render our work for His sake.
Shorter Answer: A Muslim does not have to pay Zakah on the house in which he lives – even if he owns more than one house – or on the car/s which he owns for personal use. However, on houses or cars prepared for sale, Zakah is due on these, according to their market value, each year, when a full year has passed. As for the property/car that is rented out, Zakah must be paid on the rent if it reaches the nisab (minimum threshold) by itself or when other money is added to it, and one full hijri year has passed. The year for the rent starts from when the rental contract begins.
Long Answer: A Muslim does not have to pay Zakah on the house in which he lives – even if there is more than one house… Shaykh Ibn Baaz (may Allah have mercy on him) said: There is no Zakah on houses if they are for living in… but with regard to land, houses, stores and the like that are prepared for sale, Zakah is due on these according to their value each year when a full year has passed, regardless of whether their value has risen or fallen, if the owner has firmly resolved to sell them. (Majmoo’ Fataawa al-Shaykh Ibn Baaz)
[As for the value of the property (prepared for sale) to be used for calculating Zakah], the Standing Committee stated that “Land which has been bought to sell comes under the heading of trade goods, and the general principle in Islamic shari’ah is that the value of trade goods should be worked out after one year has passed, according to their market value, regardless of the purchase price, and regardless of whether the market price at the time when Zakah becomes due is more or less…” (Fataawa al-Lajnah al-Daa’imah)
As for the property that is rented out, Zakah must be paid on the rent if it reaches the nisab (minimum threshold) by itself or when other money is added to it, and one full hijri year has passed. The year for the rent starts from when the rental contract begins.
Cars that people own are of [three] types:
- Cars that are prepared to be bought and sold. Zakah is due on them because they come under the heading of trade goods;
- Cars those are prepared for… personal use. No Zakah is due on them, because of the hadith narrated by al-Bukhari and Muslim from Abu Hurayrah (رضي الله عنه) that the Messenger of Allah (صلى الله عليه و سلم) said: “The Muslim is not obliged to give Zakah on his slave and his horse”. Al-Nawawi (may Allah have mercy on him) said: This hadith establishes the principle that that no Zakah is due on property that one keeps; there is no Zakah on horses or slaves if they are not intended for trade. (Sharh Muslim by al-Nawawi). “Property that one keeps” is that which a person keeps to use and benefit from, not to sell it and trade in it.
- Cars that are hired out for transportation or private cars – Shaykh Muhammad ibn ‘Uthaymeen (may Allah have mercy on him) was said “…Cars that are hired out for transportation or private cars that a person uses for his own purposes are not subject to Zakah. Zakah is only due on the fees earned if they reach the minimum threshold by themselves or when added to other money that he has, and one year has passed since acquiring it. The same applies to property that is prepared for renting out. There is no Zakah on it; rather Zakah is due on the rent paid. (Majmoo‘ Fataawa Ibn ‘Uthaymeen)
(The above reply is based on various answers by Shaykh Muhammad Saalih al-Munajjid on the topic)
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.