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Selling Investment Propeties

Ustadh Salman Younas is asked if it is permissible to sell investment properties for a living.

I wanted to know if it is permissible to work in a business that sells properties to property investors? My job is to persuade them to take up the opportunity in investing in a property, and gain earning from commission from that sale.

The permissibility of any job depends on:

  1. The specific work is in itself permitted.
  2. The primarily line of activity of the company is permitted.
  3. The majority (51 percent) of the income/profit of the company is earned/generated through licit means.

The business that you describe would in all likelihood fulfill (b) and (c). You will have to look at the nature of the work you do specifically to see if it is also permitted. Again, on the surface, the work of persuading others to invest in a property is not problematic in itself.

However, if it involves directly assisting them in formulating and finalizing interest-based loans and agreements, the work would be highly problematic. But if this is done by someone else, while you only bring them to the table and convince them to invest, your work is permitted.

Salman

Checked and approved by Shaykh Faraz Rabbani

Selling Investment Properties

Ustadh Salman Younas is asked if it is permissible to sell investment properties for a living.

I wanted to know if it is permissible to work in a business that sells properties to property investors? My job is to persuade them to take up the opportunity in investing in a property, and gain earning from commission from that sale.

The permissibility of any job depends on:

  1. The specific work is in itself permitted.
  2. The primarily line of activity of the company is permitted.
  3. The majority (51 percent) of the income/profit of the company is earned/generated through licit means.

The business that you describe would in all likelihood fulfill (b) and (c). You will have to look at the nature of the work you do specifically to see if it is also permitted. Again, on the surface, the work of persuading others to invest in a property is not problematic in itself.

However, if it involves directly assisting them in formulating and finalizing interest-based loans and agreements, the work would be highly problematic. But if this is done by someone else, while you only bring them to the table and convince them to invest, your work is permitted.

Salman

Checked and approved by Shaykh Faraz Rabbani


Should I Pay Zakat on Investments I Have Made?

Answered by Shaykh Umer Mian

Question: Assalamu alaykum

I have a certain amount of cash that I have given to my friend to invest in his business, I had that amount for a year with me and then transferred it to him to invest. Does this wealth require zakat to be paid? And currently, I am unemployed and don’t have any other source of income.

Answer: Wa alaikum as-salam wa rahmatullahi wa barakatuhu

Short answer:

If you intended to transfer ownership of those funds to your friend, your friend pays the zakat. If you intended your friend to merely act as an agent (wakeel) to invest the funds on your behalf, then you pay zakat on those funds. Whoever has to pay the zakat should calculate it according to the method detailed below.

Detailed Answer:

First of all, the principle underlying the obligation of zakat has been summarized as follows:

“Zakat is only due if one possesses a net zakatable amount above and beyond one’s debts and immediate (one-month) expenses after a zakat-year has passed since first possessing such an amount.” (Shaykh Faraz Rabbani, may Allah preserve him, in one of his past answers).

Secondly, there are two parts to your question. The first pertains to the year you were in possession of the cash, prior to giving it over to your friend. During that year, the cash you had must certainly be counted from your assets. You should do the calculations described below to determine whether you owe zakat for this year.

The second part of your question pertains to what happens after transfering the cash to a friend to invest. Based on your intention at the time of transferring the funds, the following is possible: A) you intended to make your friend your agent (wakeel) to invest the funds on your behalf, or B) you intended to transfer ownership of the funds to your friend. In latter scenario, the funds would be considered a gift (hibah) and your friend would become the owner of the funds from the time of transfer. Hence, after the transfer, no zakat would be due on you in relation to those funds. Rather, your friend would have to calculate and pay zakat on those funds from that point on.

Since you have asked regarding your own zakat obligation, it seems more likely that you intended scenario A. That is, the friend is merely acting as an agent (wakeel) on your behalf, while the funds remain yours. In this case, you must calculate and pay zakat on those funds, in the same way as described above. One must always remember that paying zakat from any given wealth is the responsibility of the owner of that wealth (malik), and not the responsibility of the one to whom it is given for a specific duration. Phyiscal possession is not necessary for the obligation of zakat. Rather, if one has full control over the funds and they are redeemable whenever one desires, the funds are considered to be in one’s possession and zakat will due on them.

Lastly, you have indicated that you are unemployed without any other source of income. Even in that situation, zakat may still be due. In order to determine zakat due, you must add up your zakatable assets for a given year. Zakatable assets include cash, bank balances, investment and retirement accounts, gold, silver, and trade goods (i.e. goods purchased for resale, not for personal use). Any property acquired for personal use (including homes, cars, furnishings, personal effects, etc.) is not from one’s zakatable assets. From the total zakatable assets, subtract your debts, including immediate (one-month) expenses for yourself and your dependents. If the resulting amount is more than the nisaab, then you must pay 2.5% of that amount as zakat for that year. Note that the nisaab is the minimum amount of wealth upon which zakat is due, and it equals 612.32 grams of silver or about $302 (according to the current market price for silver).

Wassalam,
[Shaykh] Umer Mian

Can I Invest in a Fund That Accumulates Interest? [Video]

Answered by Shaykh Faraz Rabbani

Question: Assalamu alaykum

Can I invest in a fund that accumulates interest?

Answer:  Wa’leykum Salam,

Here is a video answer by Shaykh Faraz Rabbani to this question:

Shaykh Faraz Rabbani is a scholar and researcher of Islamic law and Executive Director of SeekersHub Global After ten years overseas, Shaykh Faraz returned to Canada in the Summer of 2007. In May 2008 he founded SeekersHub Global to deal with the urgent need to spread Islamic knowledge—both online and on the ground—in a reliable, relevant, inspiring, and accessible manner. He has been repeatedly listed as one of the world’s 500 most influential Muslims (The Muslim500).

Investing in Money Market Funds

Answered by Shaykh Faraz A. Khan

Question: I have a quick question regarding an investment that I was holding. It was an executive wealth builder fund which I closed as I started to understand more about halal investments. There was profit/interest made on my investment which I wanted to question. I found out the activities of the fund and came to know that my investment was distributed about:

 

> 50%(money market account/fund)- this i suspect is haram
> 30% (govt bonds) – I also suspect the returns will be haram
> and 20% in gold – which I am unsure about.

 

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and states. Please pardon me for the undue delay in response.

Investment in money market funds (debt securities or derivatives like futures, options, swaps, etc) or government bonds are unlawful, while investment in gold is generally lawful. As such, you should get rid of the profit made off the unlawful, by giving it away without intending charity but rather intending getting rid of the unlawful.

And Allah knows best.
wassalam
Faraz

Checked & Approved by Faraz Rabbani

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