Deprecation recapture should only happen (in general) when you sell. 

Flip 2, didn’t sell and our JV investor ended up taking it on as a multi-family so that we wouldn’t sell at a loss.

I am not planning to sell in the near future but I am planning to refinance next year, so this is very important!

@Matt Morgan  I'm pretty sure they can't sell it to you for less than is owed as you are related to them. 

But, if he has equity in the property , I would sell and get the $250k tax free gain.

One owner is ready to sell.

Doing a refi now would move me from a 4.5% interest rate to somewhere in the high 7% to 8% range, so I am thinking of potentially selling.

This is a seller whose asking price is based on something other than market value – such as I want to sell and retire with a million (now 5 million) dollars.

If they sell as themselves and buy as two disregarded LLCs (one for each of them).   

These are generally 12-24 month interest only loans that borrowers will generally pay back by selling or flipping to long term financing like DSCR loans.More on DSCR loans:DSCR loans won't use your income to underwrite the loan.DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.Here's a bit more in detail about how rates are calculated for DSCR loans:1.