Answer: Land that a person purchases falls into one of three categories:

1. He buys it with the intention of living on it—either to build a home for his residence, or to farm it by sowing crops or planting trees. This land is not subject to zakat, because it has become part of his personal needs. However, if he actually cultivates it or plants date-palms, he must pay zakat on its yield of grain and fruit in the prescribed manner.

2. He purchases the land for the purpose of trade and to earn profit from its sale. In this case the land is considered trade goods like any other merchandise. When a full lunar year (ḥawl) has passed while the land is set aside for trade and he is waiting for profit, he must appraise it at the completion of the year, determine its value at that time, and pay one quarter of one tenth (2.5 percent) of that current value, or add that value to his other assets and pay zakat on the total.

3. He buys the land for investment, intending to develop it by building shops or residential units to rent out. Here, no zakat is due on the land itself; zakat is owed only on its rental income. When the rent he collects reaches the niṣāb and a full lunar year has passed over it, he pays zakat on it. If the amount is below the niṣāb, he combines it with the rest of his money and pays zakat on the aggregate.

These are the types of land a person may hold. Regarding your own situation: you mentioned that you bought two plots—one for housing, and we have established that no zakat is due on it. As for the second plot, about which you remain undecided whether to keep it for housing or sell it, so long as you have not firmly resolved to treat it as a commercial asset, no zakat is due on it, because zakat is only obligatory once you make a definite intention to place it in trade.