How to determine “Principal Residence”?

Purchased house 9/’05, renovations were needed and began 9/’05 and continued into ’06 which means I wasn’t living there during this time, I was renting an apartment. I refinanced 5/’06 based on advice from person in charge of renovations. He ran out of money. Negative things happened (too much to list) and house was never finished. Mortgage payments were in arrears so I was advised by my lawyer at the time to sign over deed to house to someone she knew who was interested in making a deal with the bank for the house. I was told this was the only way I’d be saved. Deed was transferred 10/’06. Lawyer lied. New owner did nothing with the bank because house foreclosed 7/’07. Since I never physically lived in house and since I did a deed transfer in 10/’06, would it still be considered my “Principal Residence”? If yes, why? If no, why? CPA says even if I didn’t physically live in house, it’s still my “Principal Residence” since it was my first home. He says it’ll be fine. Please clarify.
So based on the info I provided, it’s unclear whether or not I can say it was my principal residence? I have to file my taxes and need real answers. The utility bills for house were paid in my name.
CPA said in order for the Mortgage Debt Relief Act of 2007 to help me with huge amounts of cancellation of debt, the house would have had to be my principal residence or else I’ll have to pay tax on the large amount of cancellation of debt. I’m just confused since I never lived in the house and because the deed was transferred out of my name on 10/2006. Thanks.

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