[xiaoselangone]

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Assalamu Alaikum Wa Rahmatullah,

Hope all of you are well inshaAllah. I do intend to ask the following questions to my Ustadh in a few weeks. But for the moment, as I need to make a decision, I was wondering if any knowledgeable 'Ulama on this forum can help me inshaAllah. For your ease, I have broken it down into sections. The queries are quite specific and detailed so there’s no pressure at all!

Introduction:
My dad managed to convince me to utilise my UK savings by buying some land in Bangladesh. As you may know, Bangladesh is one of the most densely populated countries in the world and the economy is growing really fast (GDP Growth +6% p.a.). Naturally, land is one of the most precious of resources. The expected appreciation is, by conservative estimates, 600% by 2020. In reality, this may reach 1000% (inshaAllah). This is better than anything available in the UK (where most stuff is interest based anyway). In addition, since the Bangladeshi economy is improving and the local stock exchange is attracting foreign investors, the currency (Taka) is expected to appreciate against GBP. This will work in my favour if I decide to repatriate the money back into the UK to buy a house for example.

However, such a decision raises loads of questions about zakat.

Section 1: Is the Land zakatable to begin with?
Background: According to what I have read, if you buy a piece of land with the specific intention of selling it in the future, it takes the same ruling as trade stock/merchandise i.e. every year, you have to calculate the profit (aka capital appreciation) with regards to the current market value at the time of payment of zakah. Zakat on the profit is payable in that year @ 2.5%.

References:
http://abdurrahman.org/zakat/fatwa/f...atwaIslam.html [About 40% of the way down, there is a related fatwa by Shaykh Ibn Baaz)
http://qa.sunnipath.com/issue_view.a...=4211&CATE=179
http://spa.qibla.com/issue_view.asp?...14403&CATE=239
http://qa.sunnipath.com/issue_view.a...=2426&CATE=179
http://qa.sunnipath.com/issue_view.a...ID=1514&CATE=5

Q1: In Bangladesh, what most land owners do is hand the land over to a “Builder” (A Real Estate Construction/Development company). No money is exchanged at this stage. Once the builders finish building the full set of apartments, the owners of the land will get 50% of the apartments and the Builders will get the other 50%. The land owner and the builders are then free to do what they will (e.g. sell the apartments individually, rent/lease individually etc.). So literally, no money has exchanged hands during the entire process. In this case, would such a land fall under the definition of stock/merchandise good?

NB: It’s the same as saying I have a piece of land and I invited a carpenter to build a house on it. In return, I am retaining 50% of the house and giving the rest to him. So the land itself is being built on and not being sold.

Q2: Also, often, potential buyers of the land will not buy the land outright as they may not have the financial capacity. So they will opt to pay in instalments. In such an event, the ownership is only transferred once the last instalment is paid (which may be several years after the first). In such a case, would any zakat need to be paid at all on the year-to-year profit/appreciation since one doesn’t technically own the land?

Section 2: Timing of payments
Background: From what I have read, the 2.5% of the profit aspect is payable every year. The ultimate proceeds upon selling the land will of course attract zakat, provided it remains “idle” for a lunar year (assuming we are not following Shaykh Qaradawi’s “Income Statement approach” opinion)

Q3: What if the buyer of the land does not have sufficient cash to pay the zakah every year? Can he delay paying the zakat on the profit aspect until the ultimate sale of the land?

Q4: Also, even if the buyer has sufficient cash to pay the zakah every year, is there still an option to delay paying this until the ultimate sale?

Section 3: Market Value
Background: In section 1, it was mentioned that the profit is calculated with respect to market value.

Q5: Is there anything in the Shari’ah to indicate how the market value is arrived at? E.g.
Option 1: What you as the buyer can sell it at (Accounting Term: Net Realisable Value)
Option 2: What the current brochure price is for similar locations (Accounting Term: Replacement Cost) (NB. The land is originally bought from Real Estate companies)

The price under Option 2 is usually 3 times the price under Option 1 (for the obvious reasons i.e. the Real Estate companies have a much greater bargaining power plus have much higher targeted margins than individual sellers).

Your patience and help is much appreciated! Jazakumullah Khair.