What you can deduct
- Home mortgage interest
- All real estate taxes on any property you own
- Your state income taxes
- Charitable contributions
- Medical and dental expenses that exceed 7.5% of your income
- Personal property taxes if your state has them
- Certain moving expenses.
At the start of a mortgage repayment schedule, when the debt hasn't been reduced yet, almost all of your monthly payment goes toward interest. A bit goes toward reducing principal (the amount borrowed), so that the next month you're borrowing a bit less, and owe a little less interest. That allows more of your next payment to go toward reducing principal. However, this process is very slow in the beginning and the interest portion remains high for many years.

Between the mortgage interest and the property tax deductions, you can figure that the government is shouldering part of your monthly mortgage payment - 28% of it, in fact, if that's your tax bracket. Your state income tax bracket can also be added to that, before you calculate how much you save on income tax as a homeowner.