deleted

Yes, you can use your passive losses from the property converted to personal use when there is income from property B, see below. Confirm this loss is carried forward each year until it is used up or the property is sold,

For your first question, 'how carryover losses can be used to offset income from the sale of a second property - property B' -

• You can only deduct suspended passive-activity losses in two situations:  
  • Against passive-activity income (your other rental activity when there is a positive income)
  • When you dispose of the passive activity in a fully taxable transaction to an unrelated party (a future sale of property A)

When you converted rental property into a personal home.

The rental home had suspended passive-activity losses. You can continue to deduct the suspended passive activity losses from other passive income. If you have no other passive income, the suspended losses remain suspended. Carry them forward until you sell the home in a fully taxable transaction (noted above).

For your second question, 'is it possible to offset depreciation recapture and how to deal with that'. 

• It depends, this will only occur on the sale of either property.  At the point of sale your cost basis will be reduced by accumulated depreciation.  At that time you would recover any passive activity losses that had not previously been used up, which will reduce taxable gain.