Mortgage interest rate / tax deductible ? (Definition)

[Edison Reis]

Greetings fellow investors,

I am close to get into my first property and I am wondering about the following.

We are all aware that the interest paid on the mortgage is tax deductible but ......

A) Does the deduction relates to the contractual bank annual rate ? (I.e: 3% of the total mortgage)? 

Or ...... 

B) Does that mean you write off the annual  amount that the bank applied to pay the interest ? (Not the principal) 

Usually when you start a new mortgage 90% (or more) goes to pay the interest and a small fraction goes to pay the principal. 

Meaning ..... I am wondering what's  the interpretation of " interest tax deductible"?

I live in Canada but would appreciate feedback from our USA friends too.

Happy investing

Cheers 

Edison