Zakat on money earmarked for house purchase
A person is in the process of purchasing a house but the contracts have not been exchanged and his date of Zakah has arrived. Will he need to give Zakah on the money he has earmarked for the house?
بسم الله الرحمن الرحیم
Zakah is necessary on all the assets of a person on the date Zakah is due on them. If the contracts have been exchanged before this date, then Zakah is not necessary on the purchaser even if the actual money has not been transferred. Similarly, if the buyer and seller have verbally conducted the transaction in accordance to Islamic teachings, Zakah is not necessary on the purchaser even if the contracts have not been exchanged.
However, if no such verbal transaction has taken place and the contracts have also not been exchanged, then Zakah is necessary as the money still belongs to him and he is under no legal or Islamic obligation to purchase the house. Similarly, if the transaction is cancelled, then Zakah is necessary.
قال الحداد في الجوهرۃ النیرۃ (۱: ۱۱٤) وحکاہ ابن عابدین (۲: ۲٦۰): وهذا كله إذا كان الدين في ذمته قبل وجوب الزكاة، أما إذا لحقه الدين بعد وجوب الزكاة لم تسقط الزكاة لأنها قد ثبتت في ذمته واستقرت، فلا يسقطها ما لحقه من الدين بعد ثبوتها۔
Allah knows best
9 Dhū al-Qaʿdah 1438 / 2 August 2017
Approved by: Mufti Shabbir Ahmad and Mufti Muhammad Tahir