—namely, the value at which you appraised it, based on what it was worth on that very day and at that time.

You must therefore pay zakat for every year the land remained in your possession while you were waiting to make a profit. In addition, you have to pay zakat on the price for which you sold it. Whatever portion of that price you have already received is liable for zakat once a complete lunar year (ḥawl) has elapsed over it. As for the remainder that is still owed by the purchaser, you must also pay zakat on it each year provided the buyer is solvent and able to pay. If, however, the buyer is bankrupt or insolvent and you are unsure whether he will be able to settle the debt, then you pay zakat on the amount owed only after you actually receive it; once a full lunar year has passed over it, you pay zakat for a single year, and that suffices, God willing.

Question: Likewise, if someone owns a piece of land from which he seeks profit, must he pay zakat on it every year, or does he pay only after he has collected the sale price?

Answer: He must pay zakat every year. Each year that passes while the land is on the market, he must estimate its value at the completion of the lunar year and then pay zakat on it just like the other trade goods in his shop. It is simply one commodity among others: it is valued at what it is worth when the year becomes due and zakat is paid on that valuation, whether that amount equals the purchase price, or is higher, or lower.

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Zakat on real estate

Question: We bought three parcels of land—one with the immediate intention of building on it, and the other two with the intention of benefiting from them in the future, either by selling them or by developing them. Six years have now passed and we have not paid zakat on any of them. Are we liable for anything, and how much should we pay?