Zakat due on money after buying property through verbal agreement

ASAK. I have a question on Zakat money which I hope you can answer as a matter of urgency, as I may be overdue on making zakat payment. Last year I paid the Zakat in the month it was due (which happened to be during Ramadan) for year ending year 2011. The amount paid there is all fine with me. Then during the next year, ie for this year up to August 2012 (so for year September 2011 to August 2012) I was building up further savings. During this year I agreed, verbally, to purchase a property with a third party. This verbal agreement took place during the month of June, so the full year had not yet taken place, with the expectation transaction / property completion would take place prior to the next zakat due date (August 2012). At this time, the agreement was only verbal and awaiting exchange of contracts, thus making it fully legal to proceed, as my solicitor was carrying out the usual checks / preparing the usual contracts. This however only completed a week after the next Zakat due date for the year just ended, ie after Ramadan 2012. My question is, do I include the savings I had reserved for the purchase of the property in my zakat calculations, or can I exclude the savings for calculating the zakat due. At the moment I have excluded it but I am not sure if I have made the right decision on the basis that it is a debt I have agreed to pay assuming all the checks are agreeable. JazakAllah Khair

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad ,  is His slave and Messenger.

First of all, you should know, dear brother, that a sale is concluded and becomes binding on both parties by offer and acceptance (‘Eejaab and Qabool); for example, if the seller says ‘I have sold you this for such and such’ and the buyer says ‘I have accepted’ or ‘I have bought’ or with any other term that means offer and acceptance. However, it is not a condition to authenticate the contract by official authorities so that it can be concluded.

Therefore, if the sale contract was concluded between both of you through (the principles of) offer and acceptance, and it was not suspended until looking into the safety and good condition of the estate, then you should deduct the price of the estate from the Nisaab (the money reaching the minimum amount liable for Zakat) as this is a debt in your liability for the buyer; this is according to the view of the majority of the scholars who hold the opinion that the debt should be deducted from the money of Zakat and then one should pay Zakat on the remaining money (if it reached Nisaab), as it is confirmed that ‘Uthmaan said in the presence of some Companions: “This is the month of your Zakat, so whoever has a debt, he should pay it and then you should pay the Zakat on the remaining money that you possess.” [Al-Albaani graded this narration as Saheeh (sound) in his book entitled Al-Irwaa’]

However, Ash-Shaafi’i in his new (latest) opinion, is of the view that the debt should not be deducted from Zakatable money; this is the view chosen by Shaykh Ibn Baaz and Shaykh Ibn ‘Uthaymeen and this opinion is more appropriate in order to be on the safe side.

On the other hand, if the sale between you and the seller has not been concluded, because there was no offer and acceptance, or that it was suspended until looking into the safety and good condition of the estate, or until registering it, then you should pay Zakat on the amount that you intend to pay for this estate because it is still in your possession.

Finally, it should be noted that the calculation of the date of Zakat should be according to the lunar months and not the months of the Gregorian calendar. It should also be noted that what we have mentioned concerning deducting the amount (the price of the estate from the Zakatable money which you have) is on the assumption that you did not buy the estate with the intention of selling it, otherwise you should pay Zakat on all the Zakatable money that you possess including the estate itself, as in such a case it is considered as money that is liable for Zakat and its lunar year is the same as the lunar year of the money by which it was bought.

Allaah Knows best.