Is Zakat Due on Property Bought for Resale but Leased?

Zakat is not due on real estate acquired to generate rental income, even if the property is currently leased out. 

The key points to consider are:

• Intention Matters:

If the property is bought to resell for profit, Zakat is due on the capital gain once it is sold. While the property is leased out, Zakat is not required on its market value.

• Zakat on Rental Income:

For properties used to generate income through renting, Zakat is due only on the rental income received during the year. This applies once a full lunar year has passed, and the rental income meets or exceeds the nisab of Zakat.

• No Zakat on Property Value:

Zakat is not calculated on the market value of the property itself, whether it’s a dwelling, storage unit, hotel, or high-rise building being rented out. There is no need to assess the value of the property for Zakat purposes each year.

• Zakat on Income:

Zakat is calculated based on the net rental income after one full lunar year, provided it reaches the Nisab. If the rental income does not reach the Nisab, no Zakat is due.

Thus, if the property is bought with the purpose of resale, Zakat is only due to the profit made from the sale. For properties used to generate rental income, Zakat applies only to the rental income received, not the property’s value, once it reaches the Nisab threshold.

And Allah knows best!

Other Zakat Questions You May Have

• Is Zakat Obligatory on Gifted Land?
• Is Zakat Required on an Undivided Estate?
• Is Zakat Required on Rental Income from My Property?
• Is Zakat Required on Land Bought for Resale in 3-5 Years?
• Do I Have to Pay Zakat on My Home?
• Is Zakat Due on Money I Intend to Gift in the Future?