Q: I have savings to pay a deposit to buy a house, do I need to pay Zakat on this?
A: Previously our ruling was that if a contract has not been signed by the time the Zakat anniversary comes, then the deposit set aside for the house purchase will also be Zakatable. However, based on our new research, we have now come to a new ruling:
If a verbal agreement has been made between the buyer and seller, then the savings for the house purchase will not be subjected to Zakat. From a Sharia perspective, once the offer is accepted and a price agreed on, then this will be enough to indicate that the contract has already started. If the transaction falls through, and nothing is signed in the end, and neither the deposit is paid, then you would still not need to make up for any unpaid Zakat.
And Allah knows best!
Mufti Billal Omarjee