The Zakat of Property ~ Property and Zakat

The Zakat of Property
This letter describes when to pay and how to calculate the amount of the Zakat of money.

Zakat is a certain amount of money that every adult, free, mentally stable, and financially able Muslim, male and female, has to pay to support the specific categories mentioned in the surah (verse) of At-Tawbah. Allah azza wa jall says: "Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the Cause of Allah; and for the wayfarer: (thus is it) ordained by Allah, and Allah is full of knowledge and wisdom." (The Holy Qur'an 9:60).
The obligatory nature of Zakat is firmly established in the Qur'an, the Sunnah (or hadith), and the ejmaa' (the agreement of the companions). In the Qur'an, Allah azza wa jall says : "... And there are those who hoard gold and silver and spend it not in the Way of Allah: announce unto them a most grievous chastisement. On the Day when it will be heated in the fire of Hell, and with it will be branded their foreheads, their flanks, and their backs.- 'This is the (treasure) which ye hoarded for yourselves: taste ye, then, the (treasures) ye buried!'" (The Holy Qur'an 9:34-35).
The prophet salla Allah u alihi wa sallam said: "Any owner of gold and silver who does not deliver from them their right, on the Day of Quiyamah (Day of Judgment), (the gold and silver) will be shaped as foils of fire. Then it will be heated in the fire of Hell; (and) then with it he will be ironed on his side, his forehead, and his back" (narrated by Muslim).
It is agreed between Muslims in all the centuries the obligatory nature of paying Zakat for gold and silver, and from those the other kinds of currency.
The Zakat of Property: Gold, Silver, and Currency
Zakat is obligatory when a certain amount of money, called the nisab is reached or exceeded. Zakat is not obligatory if the amount owned is less than this nisab. The nisab (or minimum amount) of gold and golden currency is 20 mithqal, this is approximately 85 grams of pure gold. One mithqal is approximately 4.25 grams. The nisab of silver and silver currency is 200 dirhams, which is approximately 595 grams of pure silver. The nisab of other kinds of money and currency is to be scaled to that of gold, 85 grams of pure gold. This means that the nisab of money is the price of 85 grams of 999-type (pure) gold, on the day in which Zakat is paid.
When is Zakat Due ?

1. Passage of One Lunar Year:: Zakat is obligatory after a time span of one lunar year passes with the money in the control of it's owner. Then the owner needs to pay %2.5 (or 1/40) of the money as Zakat. (A lunar year is approximately 354 days).
2. Deduction of Debts:: The owner should deduct any amount of money he or she borrowed from others; then check if the rest reaches the necessary nisab, then pays Zakat for it.

If the owner had enough money to satisfy the nisab at the beginning of the year, then the money increased (in profits, salaries, inheritance, grants...etc.), the owner needs to add the increase to the nisab amount owned at the beginning of the year; then pay Zakat, %2.5, of the total at the end of the lunar year.(there are small differences in the fiqh schools here) How to Calculate the Zakat of Money :

Example :

A person inherited $3000 at the beginning of the year. The amount increased during the year, to reach $5000 at the end of the lunar year. What is the nisab and how much is the Zakat, if applicable ?

Calculation :

The minimum amount that Zakat is paid for is :
nisab = 85(grams)*383($/oz)*(1/29)(oz/gram) 
      = approximately $1150

($383 is the price of one ounce of gold in the U.S.A. on August 1st, 1995) This owner has $5000, which is more than the minimum nisab. Hence the owner needs to pay the Zakat :