LO.3, 4, 8 Matt, who is single, has always elected to itemize deductions rather than take the standard deduction. In prior years, his itemized deductions always exceeded the standard deduction by a substantial amount. As a result of paying off the mortgage on his residence, he projects that his itemized deductions for 2012 will exceed the standard deduction by only $500. Matt anticipates that the amount of his itemized deductions will remain about the same in the foreseeable future. Matt’s AGI is $150,000. He is investing the amount of his former mortgage payment each month in tax-exempt bonds that were issued five years ago. A friend recommends that Matt buy a beach house to increase his itemized deductions with the mortgage interest deduction. What are the relevant tax issues for Matt?