1099-C on residence - rental property

I sense from your post that we have a building that contains rental units or shared quarters that are providing rental income. I say that because of your last comment about considering "this" the residential portion and why would you ask the question otherwise.

If you want to exclude from income (Form 982) cancelled qualified principal residence debt, then the amount cancelled must represent debt that was obtained to buy, build or substantially improve a principal residence and be secured by that residence.

If the loan is secured by the building, then the loan covers property that is your principal residence and property that is not your principal residence. You have to allocate that debt to the rental portion of the property. Then you determine what part of the debt allocated to your home meets the definition of qualified principal residence debt and what part of the debt allocated to the rentals meets the definition of qualified real property business debt. The law allows exclusion from income for both types. See Form 982 instructions for lines 1d and 1e and also the section on Reduction of Tax Attributes because you still own the property and have to reduce its cost basis.