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Forgiveness Debt Relief Act survived the fiscal cliff when it was given a one year extension through 2013. Homeowners who sell their primary residence in a short sale or lose their home to foreclosure will not have the added insult to injury of losing their home and then having to pay taxes on the loss up to $2 million ($1 million if married filing separately). Granted, neither of these options is ideal—no one wants to voluntarily take a loss and harm their credit score for years—but there are circumstances when a short sale or foreclosure is the right strategic financial move, even for high income earners. At least it is still an option to explore.

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