(1) Zakat is due for land only if at the time of purchase, the buyer has a clear and firm intention of reselling the land itself.
Zakat is not due if the land were purchased for any other purpose, nor if the intention of resale at the time of purchase was not definite but rather a possible option. This holds even if the intention at the time of purchase is for commercial purposes such as leasing, and even if after purchase one firmly decides to resell the land.
Therefore in the scenario you describe, zakat would not be owed.
Also if one does purchase land with the explicit intention of reselling the land, then one simply pays 2.5% of the ‘current market value’ of the land at the time of his or her zakat due date, not on the profit/appreciation alone.
(2) If in this scenario the land were purchased with the explicit intention of reselling the land, then zakat would be due every year upon whatever it is that the buyer owns at the time of his zakat due date, depending on the nature of the contract.
So if at the time of the contract complete ownership of the land is transferred to the buyer, who then pays its price over time in installments, then zakat is due every year on the ‘current market value’ of the land itself. Again, this is assuming the land were purchased with the firm intention of resale alone.
If however the ownership of the land remains with the seller until the full amount is paid, then zakat would be owed every year on the installment money itself given to the seller.
In such a situation though, it might be advisable for the buyer to not make an explicit intention of resale but rather have an intention of ‘keeping his options open’ — even if resale is one of those options — as that makes the situation a bit easier.
(3) In such a situation, one may delay payment of zakat. Again however, zakat is due on the ‘current market value’ of the land at the time of one’s zakat due date, not on the profit/appreciation alone.
(4) Undue delay without a good reason is disliked, so this should not be done.
(5) Neither of these is the basis of determining ‘current market value.’ Rather, this is done by consulting experts in the market who are capable of appreciating the value of land at that time.
[Ibn Abidin, Radd al-Muhtar; Kasani, Bada’i Sana’i; Zayla`i, Tabyin al-Haqa’iq]
And Allah knows best.
Answered By: Shaykh Faraz Rabbani