Capital gains from redeveloped inherited residential property
Respected Madams/Sirs,
My query is whether long term or short term capital gain will be applicable in our case.
Facts:
1) This is a residential property in Mumbai owned by my grandfather before 1981.
2) My grandfather willed this property to a) all 5 children in case of a sale and b) to only two sons if not sold and kept for residence
3) Both sons passed away without a will before redevelopment process started
4) Property was transferred to Widows of both sons in the share certificate of the CHS
5) Old Property was physically handed over to builder in 2010 and possession of new property was received in 2015
6) Redeveloped agreement was done by society in 2011-2012
7) New property sold n 2016
I understand that long term capital gain will be applied on sale of redeveloped property to builder but capital gains can be saved since new property is also given by the same builder. Now, we have sold the new property in 2016. So, should we now calculate long term capital gains since redeveloped agreement by the society was done sometime in 2011-2012. Or will short term capital gain be applicable since physical possession was done in 2015 only.
Kindly note that only two children of the five children in the will were alive at the time of handover of physical possession of new property. Rest are all legal heirs of other three children. It was not possible nor practical to just retain the new property without occupation for three years after physical possession as now there are multiple beneficiaries of this inherited property.
Please advise.
Also, the two widows would gift their respective shares to their respective children. So, should there be a registered gift deed to this effect?
Also, who should pay capital gains and file returns in this case - widows or their children who have their share as well as their mothers.
Regards
DR