1. There is accrued interest on the loan, especially on a home equity loan, that was not used to improve the residence (a cash-out).
2. There is a foreclosure sale of short sale with expenses incurred in connection with the transaction that may or may not be added to the loan balance or sales proceeds allocated to late fees or interest.
3. The home has been both a principal residence and vacation home.
4. One spouse has left the home.
5. A spouse is insolvent immediately after the forgiveness of non-qualifying debt.
6. There is home equity debt and total debt exceeds the fair market value of the home.
7. The home is sold at a gain following debt forgiveness.
8. The home is sold at a loss following debt forgiveness in the same year.
9. The lender participates in the sale of a home at a gain.
10. A single umbrella debt encumbers two residences in which the spouses reside separately.
11. The spouses are to file MFS returns following a forgiveness or foreclosure sale.
Each of these situations presents complications best handled by a tax lawyer.