Zakaat on Property Trusts

Q. A group of family members own properties in a Trust from which rentals are received monthly and distributed amongst them. The properties are an investment for the family to receive rentals only and the properties are not for resale. How does Zakaat work?

A. In terms of properties or a Trust which has a property portfolio that is solely for rental purposes, Zakaat must be paid on the rentals received from the properties.

If there are several shareholders or owners of the properties, the respective shareholders or owners must discharge the Zakaat of 2.5% on the rentals received from the properties due on their respective Zakat dates. Alternatively, the person managing the properties may be authorized to discharge the Zakaat due on behalf of the shareholders or owners before the rentals are distributed amongst them.

N.B. The 2.5% of Zakaat due on the rentals received from properties refer to the rental amounts held in the ownership/account of the shareholders or owners on their respective Zakaat due dates. Zakaat is not due on any rentals not held in one’s ownership/account on one’s Zakaat due date.

Allah Ta’ala Knows Best

Mufti Ismaeel Bassa