Is Zakat Due on Personal Assets Later Sold?

Answered by Mawlana Ilyas Patel

Question

Is Zakat due on a car purchased for personal use but later sold to loan money to my father? Also, is zakat required on land gifted to me if I may sell it in the future for educational or investment purposes? What if the land is intended for me but not in my name?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

I pray you are in good faith and health. Thank you for your question.

Zakat is only due on items and goods actively acquired for trade, not on personal assets and used items. However, once sold, if the money remains with you at your zakat due date, it is subject to zakat.

Zakat on Land for Investment

Once you are gifted the land, and from the beginning, if you intend to sell the land as a business asset, it is treated as a zakatable trade asset. If you hold it for resale, you must pay 2.5% of its market value annually. However, if you received the land as a gift and did not intend to sell it for business purposes immediately, it is considered a personal asset. It is not subject to zakat, even if you later decide to sell it.

Zakat on Money Spent on Education

No, Zakat is not due on money that has already been spent, including money spent on education. Here’s how it works: Zakat is only due on wealth that remains in your possession at your zakat due date after deducting necessary expenses and debts.

If you had the money but spent it on education before your zakat date, then no zakat is required on that amount. However, if you still have the money set aside for education at your zakat date, it is zakatable if it meets or exceeds the nisab.

Zakat On Gift Intended Land

Zakat is not due on gift-intentioned land until it is gifted to you in your name and possession.

Zakat on Sale Proceeds

Once sold, if the money remains with you at your zakat due date, it is subject to zakat. [Ibn ‘Abidin, Radd al-Muhtar]

Please go through the valuable answers and links below. Insha’Allah, they will provide you with guidance and direction.

Related

• Zakat: How to Calculate & Whom to Give …
• Zakat: A Comprehensive SeekersGuidance Reader 
• Zakat Calculator

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I pray this helps with your question.
Wassalam,
[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Faraz Rabbani

Mawlana Ilyas Patel has received a traditional education in various countries. He started his schooling in the UK and completed his hifz of the Quran in India. After that, he joined an Islamic seminary in the UK, where he studied secular and Aalimiyya sciences. Later, he traveled to Karachi, Pakistan, and other Middle Eastern countries to further his education. Mawlana has served as an Imam in the Republic of Ireland for several years and taught the Quran and other Islamic sciences to both children and adults. He also worked as a teacher and librarian at a local Islamic seminary in the UK for 12 years. Presently, he lives in the UK with his wife and is interested in books and gardening.