In Islamic tradition, the act of creating waqfs to benefit the needy is one of the purest forms of thinking of your akhirah (hereafter). Historically, before the advent of managed funds, donors would donate property instead of cash. This practice continues today with many donors choosing to bequeath or donate real estate to organisations like Awqaf Australia.

The model is relatively new in the Land Down Under but has existed for relative eons overseas. In India, the Waqf Boards manage vast tracts of land used for hospitals and orphanages. In Pakistan, the Data Darbar is a government managed waqf that feeds and houses thousands a day. Closer to home, Singapore has further corporatised the system. The investment arm of the Islamic Religious Council of Singapore manages commercial waqf properties in the heart of the city. These properties generate millions in rental income, which is then funneled into mosque maintenance and Islamic education, ensuring the community remains self-sustaining without relying solely on constant new donations.

When you create a property waqf by donating a building or piece of land the property is ‘locked’. It remains a permanent community asset with its rental income or use by charities legally protected by the waqf deed. 

Additionally, donating property while still alive may have the added benefit of a tax deduction. For properties held for more than 12 months, you can generally claim a tax deduction for the full market value at the time of donation, provided you obtain a formal valuation from an independent valuer. For those that are not earning millions of dollars to offset the donation in a single year, if the property’s value exceeds your annual income, you can elect to spread the deduction over five years, lowering your tax bracket for half a decade.

Gifting a property to an organisation endorsed as a Deductible Gift Recipient (DGR) is also generally exempt from Capital Gains Tax. You bypass a major tax bill while creating a large deduction. Most Australian states also offer stamp duty exemptions for transfers to registered charities, ensuring that the full value of your donation goes to the endowment and isn’t eaten by statutory fees and charges.

The information contained in this article is general in nature and may not be applicable to your individual financial situation. Please consult a qualified professional advisor before making any decisions.