Zakaat on EasyProperties Investment?
Question:
Assalamualaykum, I'd like to find out more about property investing via Easy Properties https://properties.easyequities.co.za/ Their model is - you buy into a group of properties, and are paid a dividend (rental income) every 3 months. The payment is in proportion to the amount you have invested in. My questions are 1) is such a transaction acceptable? 2) Would you pay zakaat on your core investment? From my understanding, your funds are locked and you cannot withdraw at any time. Only 2 options for withdrawal a) they have a quarterly 'auction' where you can sell your shares and hopefully someone buys it b) they sell the entire set of properties and pay you back you investment + profit (or less if its sold at a loss) Looking forward to your answer
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
We hope you are well and in good health.
We sincerely apologize for our belated response.
Your question refers.
We have not reviewed the actual terms and condition of the EasyProperties investment for shariah compliance. Kindly send us the actual terms and conditions for our shariah review.
In principle, there are several factors to consider when considering an investment for shariah compliance especially fractional ownership of property investments:
1. Haqq al-Shuf’ah – The shareholders of the specific properties will have the right of Shuf’ah/ Pre-emption Rights. In essence, since the joint shareholders jointly own the underlying property, they equally have the joint pre-emptive rights to be offered the shares of any exiting partner before such shares or units are offered to the public on auction.
2. Impermissible Income – The income from the properties should be of a shariah compliant nature. Impermissible food, beverage and entertainment are impermissible.
3. Financial Model and Structure – The underlying financial structure and model should represent a pure equity instrument with a projected profit or a zero coupon debt instrument. Therefore typical structures representing debentures and guaranteed return fixed income structures are impermissible.
4. Asset Backed – An IPO should be backed by physical assets and not merely represent the cession of an income stream or collateralized security structure with no physical assets backing the investment.
5. Terms and Conditions – The underlying terms and conditions should also be 100% Shariah compliant with no reference to fixed returns, guarantee on capital and undue complexity (Jahalah Fahisha).
With regards to your question on paying Zakat on such an investment, you will only pay Zakat on such an investment if you purchased such shares with the intention of immediate resale/trading and you have complete and unobstructed access to the funds (Qabdh taam and Milk Taam). Since it appears that you do not have direct and immediate access to your investment, then Zakat will not be Wajib on such an investment in general. Moreover the primary objective of such an investment is for rental income and not capital investment for immediate resale/trading.
Kindly forward us the specific terms and conditions in order for us to issue a definitive verdict (Fatwa).
And Allah Ta’āla Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee,
Darul Iftaa, Durban, South Africa
DISCLAIMER: The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
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and Allah Ta'ala Knows Best
Mufti Ismail Desai
Darul Iftaa
Durban, South Africa
Disclaimer The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
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