How do you calculate depreciation on a rental property. Does it depreciate every year?

Yes, rental property depreciates yearly while in use. Land is not depreciable. Generally, rental real estate depreciates using the straight-line method over 27.5 years. You can also depreciate improvements, and the recovery period for improvements depend on what was placed in service. You can look up depreciable periods for improvements in IRS Publication 946.

Here is an article with some more information you may find helpful: Tax Deductions for Rental Property Depreciation