How to Calculate Zakat on Gold and Property in 2022

Zakat is one of the five pillars of Islam and Muslims are obligated to pay it every year. If you are a Muslim and possess a certain amount of wealth, it is essential for you to know how important paying Zakat is. The amount that you have to pay depends on your property, assets, wealth, and jewelry. If the fixed financial criteria or ‘nisab’ is fulfilled, a specific sum of money is to be given to the less fortunate. The criterion is detailed in Islam and every Muslim is required to follow its rules. This article will elaborate on how to calculate Zakat on gold and property.

Objective

Zakat is a way of dividing wealth in society and is a means for Muslims to cleanse and purify their wealth in a manner devised by Allah. By paying Zakat, a Muslim gains Allah’s favor and helps the needy. This decreases the value of money and assets in the eyes of Muslims and gaining Allah’s reward becomes their first priority.

In addition to providing personal benefits in the hereafter, Zakat ensures the societal well-being and prosperity of the needy. You also have to pay Fitrana ahead of Eid-ul-Fitr to the needy.

How to Calculate Zakat on Gold and Property

The jewelry and property of a Muslim are among their tangible assets that are included in the financial criteria (nisab) for which Zakat is obligatory. The nisab is the minimum amount of wealth that is held by the owner, and it can be held for at least a year. The nisab for 2022 has been set at Rs. 88,927, which means if you own this sum of money, you are required to pay Zakat this year.

By the gold standard, the nisab is 3 oz. of gold (87.48 g) or its equivalent in cash. In the case of silver, it is 21 oz. of silver (612.36 grams) or its cash equivalent. The prices of gold and silver keep fluctuating, and it is advisable to check the latest rates before calculating Zakat.

Applicability of Zakat on Property

The Zakat that is to be paid on the property depends only on the nisab. However, the method and criteria for property tax are completely different than that of Zakat. Zakat is not applicable on all types of property, and it is necessary to understand the kinds of property on which Zakat is to be paid. Zakat usually applies to the properties that are to be used for reselling and rentals in the future. These are simply all the capital assets that generate profit and income subject to Zakat.

Land That is to be Sold

When a certain area of land is bought to be resold, it is considered to be a commercial asset. The liability of the property for Zakat depends on the current value of the property and the owner’s Zakat date.

Building for Sale

If a residential building is being constructed to be sold, Zakat will be applicable to it as well. The money you receive for the portions you sell is liable to Zakat at the rate of 2.5 percent on the day you receive the money. This money will now become a part of your wealth and will later be subject to Zakat in the normal way.

Plots

Plots that are purchased to build rental houses are not subject to Zakat but it is to be paid from the rental income like the other income if it exceeds the nisab criteria. Moreover, if you own agricultural land, it is not subject to Zakat, and the savings generated from the land will be subjected to Zakat like regular income.

Zakat Calculation on Property

To determine the amount of Zakat that you have to pay, you have to understand the value of your assets and the nisab requirement. Here are the steps you can follow to calculate the Zakat on your property.

• Start by reviewing and calculating all the assets and money that you own. List all the property and cash that you have had for one year or more to get a clear understanding of your nisab.
• Next thing, calculate the sum of your assets and multiply it by 2.5 percent. The resultant value will be the Zakat.

Zakat on Gold

Calculating Zakat on gold or any other kind of jewelry is often considered to be complex and people are confused about how much is to be paid for their gold or silver. To pay it (in cash), you can give the market value of 2.5 percent of the weight of the jewelry.

If the jewelry that you own is made up of a mixture of metals, you are only required to pay Zakat on the gold and silver.

You can also give actual gold or silver in Zakat. If you own 100 g of gold jewelry, you can give 2.5 g of it in Zakat. However, gold and silver must be weighed separately before giving them as Zakat.

To Whom Should Zakat be Given?

The Quran gives clear directions about the distribution of Zakat as follows:

1. Poor people: those who have no means to earn a livelihood.
2. Needy people: those who are unable to fulfill their basic needs.
3. Zakat collectors.
4. Recent converts to Islam.
5. Stranded travelers.
6. People working for a religious cause.
7. Slaves.
8. People who are in debt.

This article was an attempt to explain Zakat’s calculation and requirements in detail. If you have any questions, mention them below and we will try our best to address them.