How zakat applies to savings, business assets, receivables, shares, rental property and pensions, with the main scholarly differences.
The Qur’an tells believers to spend from the good things they have earned (2:267), and scholars have applied the rules of zakat to the forms of wealth people hold today. The rate is 2.5% on qualifying wealth above the nisab after a lunar year.
Cash and savings
Bank balances, cash at home and money you are owed that you expect to receive are zakatable. Add them together on your zakat date.
Business
For trade goods, use their current market (selling) value on your zakat date. Add cash and receivables, then subtract short-term debts due. Buildings, equipment and machinery used to run the business are not zakatable in themselves.
Property
The home you live in is not zakatable. Property bought to sell is treated as trade goods. For a rental property, the property itself is not zakatable, but savings from the rent are, like other cash.
Shares, funds and pensions
These are newer questions, and scholars use different methods. Ask your local scholar or use the guidance of a recognised zakat body.
Key points
- Cash and bank savings are zakatable at 2.5% once they reach the nisab and a year passes.
- For a business, zakat is calculated on trade goods at their market value, plus cash and receivables you expect to receive, minus short-term liabilities.
- Personal homes, cars and tools are not zakatable; property held for sale is.
- Shares, funds, pensions and other modern products are discussed differently by contemporary scholars.
Qur’an
“O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth. And do not aim toward the defective therefrom, spending [from that] while you would not take it [yourself] except with closed eyes. And know that Allah is Free of need and Praiseworthy.”
Surah Al-Baqarah (2) — 2:267
Scholarly notes
Debts: the schools differ on whether and how personal debts are deducted; many contemporary scholars deduct short-term debts that are due now. Shares: for shares bought to trade, many scholars apply 2.5% to the market value; for shares held long term, some scholars apply it to the market value, while others calculate on the zakatable part of the company’s assets. Pensions and retirement funds: some scholars require zakat only on funds you can access, while others require it annually on the balance. These are contemporary questions with no single agreed answer. Follow the guidance of a qualified scholar or recognised zakat body.
FAQ
Do I pay zakat on my mortgage-financed house?
Your own home is not zakatable. For debts that you owe, scholars differ on how they affect the calculation. Ask a qualified scholar.
How do I handle a pension I cannot withdraw?
Scholars differ. Ask a knowledgeable teacher, and give what your teacher advises.
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