Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Cancellation of Debt (COD)

Cancellation of Debt—Principal Residence

What is qualified principal residence indebtedness?

Qualified principal residence indebtedness includes:

  • Any debt incurred in acquiring, constructing, or substantially improving a principal residence that is secured by the principal residence
  • Any debt secured by the principal residence resulting from the refinancing of debt incurred to acquire, construct, or substantially improve a principal residence, but only to the extent that the amount does not exceed the amount of the refinanced indebtedness

A principal residence is generally the home where the taxpayer lives most of the time. A taxpayer can have only one principal residence at a time.

A home.