Matt, who is single, always has 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. Based on recent tax law changes and the fact that he has recently paid off his home mortgage, he projects that his itemized deductions for 2018 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 $350,000. He is investing the amount of his former mortgage payment each month in tax-exempt bonds that were issued in 2014. 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?