That would include mortgage debt which is forgiven as a result of foreclosure, as well as debt restructuring, short sale or deed in lieu of foreclosure, so long as the debt is associated with the purchase, building or improvement of your main home and even if that debt is considered recourse debt.

FORBES: You Are Not Alone: R. Kelly Joins Taxpayers Who Have Lost Homes Due To Foreclosure

One example: Congress passed a law allowing beleaguered homeowners to exclude from taxable income home-mortgage debt that is forgiven by lenders.

FORBES: Fact and Comment

Established in 2007 with the onslaught of the foreclosure crisis, the Mortgage Forgiveness Debt Relief Act grants distressed homeowners an exemption from paying federal taxes on forgiven mortgage principals.

FORBES: As Fiscal Cliff Looms, Here's The Expiring Tax Break That Will Hurt Housing Most