UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB
(Mark One)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                                   For the quarterly period ended June 30, 2007

                                       OR

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                                               Commission File Number: 333-11625

       CAPITAL ALLIANCE INCOME TRUST LTD., A REAL ESTATE INVESTMENT TRUST
       ------------------------------------------------------------------
              (Exact name of small business issuer in its charter)

            Delaware                                  94-3240473
-------------------------------          --------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

 100 Pine Street
 Suite 2450
 San Francisco, California                                        94111
----------------------------------------                  --------------------
 (Address of principal executive office)                       (zip code)

                                 (415) 288-9595
                                 --------------
                           (Issuer's telephone number)

     Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
Common Stock $0.01 par value                    American Stock Exchange

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

                                                        Yes [X] No [_]

As of July 20, 2007, the issuer's common shares closed at $7.92 and the
aggregate market value of the issuer's shares of Common Stock, $.01 par value,
held by non-affiliates of the issuer was approximately $2,217,600. At that date
approximately 381,000 common shares were outstanding of which 280,000 common
shares were held by non-affiliates.

Transitional Small Business Disclosure Format.          Yes [_] No [X]

<PAGE>

                                TABLE OF CONTENTS



PART I

     ITEM 1   CONSOLIDATED FINANCIAL STATEMENTS                        3-5

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              6-10

     ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS                   11-15

     ITEM 3   CONTROLS AND PROCEDURES                                   16


PART II

     OTHER INFORMATION                                               16-17
     SIGNATURES                                                         18

     CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT                   19

     CERTIFICATION OF FORM 10-QSB                                    20-21







                                       2

<PAGE>
PART I
ITEM 1.
<TABLE>
<CAPTION>
                      CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST
                          Consolidated Balance Sheets

                                                                    June 30,      December 31,
                                                                      2007            2006
                                                                 -------------    ------------
                                                                  (Unaudited)
                                                                  ------------
<S>                                                               <C>             <C>
ASSETS

Cash and cash equivalents                                         $    559,584    $    599,943
Restricted cash                                                         13,214         123,037
Marketable securities                                                   89,718             899
Accounts receivable                                                    880,969       1,000,937
Allowance for doubtful accounts                                       (230,000)       (230,000)
Notes receivable:
   Mortgage notes receivable                                        12,381,922      17,121,939
   Allowance for loan losses                                          (672,309)       (782,309)
                                                                  ------------    ------------
      Net notes receivable                                          11,709,613      16,339,630
Real estate owned                                                    1,849,221         245,000
Origination costs, net                                                  62,190         124,654
                                                                  ------------    ------------

Total assets                                                      $ 14,934,509    $ 18,204,100
                                                                  ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
     Mortgage note holdbacks                                      $     13,214    $    123,037
     Bank loans payable                                              3,930,068       6,767,821
     Other liabilities                                                 110,142         159,016
                                                                  ------------    ------------
Total liabilities                                                    4,053,424       7,049,874

Stockholders' equity
   Preferred stock, $.01 par value;1,600,000 shares authorized;          2,138           2,138
       213,820 shares issued and outstanding at June 30, 2007
       and December 31, 2006
   Additional paid in capital - preferred stock                      5,509,728       5,509,728
Less treasury stock: 16,919 and 16,919 preferred shares at
       June 30, 2007 and December 31, 2006 at cost                    (229,179)       (229,179)

   Common stock, $.01 par value; 2,000,000 shares authorized;            5,001           5,001
       500,032 shares issued and outstanding at June 30, 2007
       and December 31, 2006
   Additional paid in capital - common stock                         9,394,576       9,394,576
Less treasury stock: 119,500 and 119,500 common shares at
       June 30, 2007 and December 31, 2006 at cost                  (1,699,771)     (1,699,771)
   Accumulated other comprehensive income                                  (44)            137
Accumulated deficit                                                 (2,101,364)     (1,828,404)
                                                                  ------------    ------------

Total stockholders' equity                                          10,881,085      11,154,226
                                                                  ------------    ------------

Total liabilities and stockholders' equity                        $ 14,934,509    $ 18,204,100
                                                                  ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                      CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST
                     Consolidated Statements of Operations


                                                        Three Months Ended            Six Months Ended
                                                             June 30                       June 30
                                                       2007           2006           2007           2006
                                                       -----          -----          -----          ----
REVENUES                                            (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)
                                                    -----------    -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>            <C>
   Interest income                                  $   304,901    $   596,403    $   643,683    $ 1,232,677
   Loan origination income                                   --         58,796             --        190,474
   Service release premium                                   --            653             --         85,797
   Other income                                           4,344            702          6,598          8,013
                                                    -----------    -----------    -----------    -----------
       Total revenues                                   309,245        656,554        650,281      1,516,961

EXPENSES
   Loan servicing fees to related parties                 8,350        101,288         15,500        240,790
   Management fees to related parties                        --         51,114             --        132,470
   Interest expense on loans                             73,286        267,655        184,968        567,038
   Interest expense on loans from related parties            --          8,001             --         38,403
   Commission expense                                     1,011             --          1,011             --
   Loan origination costs                                36,962          2,273         62,465         70,754
   Provision for loan losses                            118,000         12,373        221,649         32,373
   Wages and salaries                                   105,113             --        204,759        152,643
   Taxes                                                  9,978          5,427         19,153         10,402
   Amortization                                              --          5,550             --          5,550
   General and administrative                            82,853        171,667        200,898        328,360
                                                    -----------    -----------    -----------    -----------
         Total expenses                                 435,553        625,348        910,403      1,578,783
                                                    -----------    -----------    -----------    -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS               (126,308)        31,206       (260,122)       (61,822)
   Operating expenses of real estate owned                   --        (27,746)            --        (72,360)
   Gain (loss) on real estate owned                          --             --         (3,182)      (239,850)
   Gain (loss) on securities transactions                (9,656)            --         (9,656)            --
                                                    -----------    -----------    -----------    -----------
         Total gain (loss) from other items              (9,656)       (27,746)       (12,838)      (312,210)
                                                    -----------    -----------    -----------    -----------

NET INCOME (LOSS)                                   $  (135,964)   $     3,460    $  (272,960)   $  (374,032)
                                                    ===========    ===========    ===========    ===========

PREFERRED DIVIDENDS                                          --             --             --             --
                                                    -----------    -----------    -----------    -----------

NET INCOME (LOSS) AVAILABLE TO COMMON               $  (135,964)   $     3,460    $  (272,960)   $  (374,032)
                                                    ===========    ===========    ===========    ===========

BASIC EARNINGS PER COMMON SHARE                     $     (0.36)   $      0.01    $     (0.72)   $     (0.98)
                                                    ===========    ===========    ===========    ===========

DILUTED EARNINGS PER COMMON SHARE                   $     (0.36)   $      0.01    $     (0.72)   $     (0.98)
                                                    ===========    ===========    ===========    ===========

DIVIDENDS PAID PER PREFERRED SHARE                  $        --    $        --    $        --    $        --
                                                    ===========    ===========    ===========    ===========

DIVIDENDS PAID PER COMMON SHARE                     $        --    $        --    $        --    $        --
                                                    ===========    ===========    ===========    ===========

BASIC COMMON SHARES                                     380,532        380,532        380,532        382,374
                                                    ===========    ===========    ===========    ===========

DILUTED COMMON SHARES                                   380,532        380,532        380,532        382,374
                                                    ===========    ===========    ===========    ===========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>

                      CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST
                     Consolidated Statements of Cash Flows


                                                                            Six Months Ended
                                                                                June 30
                                                                         2007            2006
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                                            $  (272,960)   $  (374,032)
  Adjustments to reconcile net income (loss) to net cash (used in)
    provided by operating activities:
    Provision for loan losses                                             121,649        (85,000)
    Loss on real estate owned                                                  --        239,850
    Sale of (investment in) marketable securities, trading                (89,000)
    (Increase) decrease in accounts receivable                           (211,681)      (104,763)
    (Increase) in other assets                                                 --         81,467
    Change in due to / due from related party                                  --       (324,616)
    Increase (decrease) in other liabilities                              (48,874)        63,403
                                                                      -----------    -----------
      Net cash (used in) operating activities                            (400,866)      (503,691)

CASH FLOWS FROM INVESTING ACTIVITIES
  Sale of (investment in) marketable securities, available for sale            --         (3,574)
  (Increase) decrease in origination costs                                 62,464         40,473
  (Increase) decrease in warehousing facilities                                --     (1,858,900)
  (Increase) decrease in net real estate owned                            234,868             --
  (Increase) decrease in net mortgage notes receivable                  2,900,928      4,938,356
                                                                      -----------    -----------
    Net cash provided by investing activities                           3,198,260      3,116,355

CASH FLOWS FROM FINANCING ACTIVITIES
  Payments of bank loans                                               (2,837,753)    (3,008,667)
  Purchase of treasury stock                                                   --       (154,227)
  Preferred dividends paid                                                     --             --
  Common dividends paid                                                        --             --
                                                                      -----------    -----------
    Net cash (used in) financing activities                            (2,837,753)    (3,162,894)
                                                                      -----------    -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                 (40,359)      (550,230)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                          599,943      1,626,247
                                                                      -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $   559,584    $ 1,076,017
                                                                      ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid for interest                                             $   200,721    $   278,623
                                                                      ===========    ===========
   Cash paid for taxes                                                $       159    $    78,125
                                                                      ===========    ===========

NON-CASH INVESTING ACTIVITIES
   Foreclosure                                                        $ 1,839,089    $        --
                                                                      ===========    ===========
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       5

<PAGE>
                          CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.   Organization

     References to the "Company" refer to Capital Alliance Income Trust Ltd., A
     Real Estate Investment Trust (the "Trust"), a Delaware corporation, and
     Capital Alliance Funding Corporation ("CAFC"), collectively. The Trust was
     formed December 12, 1995 as a mortgage investment trust, which invests
     primarily in loans secured by deeds of trust on one-to-four unit
     residential properties as the loan's primary collateral. On April 11, 1997,
     the Trust formed a non-qualified REIT subsidiary, CAFC, to conduct a
     mortgage banking business. The Trust owns all of CAFC's common and
     preferred shares. As of June 30, 2007 and December 31, 2006, the Trust and
     CAFC are consolidated in the Company's financial statements.

     Prior to December 29, 2006, the Company was externally advised by Capital
     Alliance Advisors, Inc. (the "Former Manager", "CAAI"). On December 29,
     2006, the Former Manager was terminated and the Company became self
     advised.

2.   Summary of significant accounting policies and nature of operations

     These financial statements should be read in conjunction with the financial
     statements and notes thereto for the year ended December 31, 2006 filed
     pursuant to 15d-2 on Form 10-KSB with the Securities and Exchange
     Commission.

     Basis of presentation.   The financial information herein is unaudited;
     however, such information reflects all adjustments (consisting of normal,
     recurring adjustments) which are, in the opinion of management, necessary
     for a fair statement of results for the interim period. The results of
     operations for the three and six months ended June 30, 2007, are not
     necessarily indicative of the results to be expected for the full year.
     These financial statements should be read in conjunction with the Company's
     audited financial statements and the notes thereto included in the
     Company's Form 10-KSB filed for the year ending December 31, 2006.

     Income taxes.   The Trust intends at all times to qualify as a real estate
     investment trust ("REIT") for federal income tax purposes, under Sections
     856 through 860 of the Internal Revenue Code of 1986, as amended and
     applicable Treasury Regulations. Therefore, the Trust generally will not be
     subject to federal corporate income taxes if the Trust distributes at least
     90% of its taxable income to its stockholders. To qualify as a REIT, the
     Trust must elect to be so treated and must meet on a continuing basis
     certain requirements relating to the Trust's organization, sources of
     income, nature of assets, and distribution of income to stockholders. The
     Trust must maintain certain records and request certain information from
     its stockholders designed to disclose actual ownership of its stock.

     In addition the Trust must satisfy certain gross income requirements
     annually and certain asset tests at the close of each quarter of its
     taxable year. If the Trust fails to qualify for taxation as a REIT in any
     taxable year, and the relief provisions do not apply, the Trust will be
     subject to tax on its taxable income at regular corporate rates.
     Distributions to stockholders in any year in which the Trust fails to
     qualify will not be deductible by the Trust nor will they be required to be
     made. Unless entitled to relief under specific statutory provisions, the
     Trust will also be disqualified from taxation as a REIT for the four
     taxable years following the year during which qualification was lost. Based
     on the Trust's belief that it has operated in a manner so as to allow it to
     be taxed as a REIT since inception, no provision for federal income taxes
     has been made in the consolidated financial statements.

     Revenue recognition.   Interest income is recorded on the accrual basis of
     accounting in accordance with the terms of the loans. When the payment of
     principal or interest is 90 or more days past due, management reviews the
     likelihood that the loan will be repaid. For these delinquent loans,
     management continues to record interest income and establishes a loan loss
     reserve as necessary to protect against losses in the loan portfolio
     including accrued interest. However, if the mortgage's collateral is
     considered insufficient to satisfy the outstanding balance, after estimated
     foreclosure and selling costs, interest is not accrued. The Trust's loan
     origination income is deferred and recognized over the life of the loan. A
     portion of the Company's loan origination is recognized at origination and
     a portion of the Company's service release premium is recognized at the
     time of the mortgage's sale into the secondary market.


                                       6
<PAGE>
                          CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


2.   Summary of significant accounting policies and nature of operations
     (continued)

     Stock options.   During the six months ended June 30, 2006 and 2007 no
     option awards were issued. Therefore, there was no disclosure necessary
     pursuant to FASB Statement No. 123 (revised 2004) ("FAS 123(R)"),
     "Share-Based Payment," which is a revision of FASB Statement No. 123 ("FAS
     123"), "Accounting for Stock-Based Compensation."

     Reclassifications. Certain 2006 amounts may have been reclassified to
     conform to the 2007 presentation. Such reclassifications had no effect on
     previously reported net income or earnings per share.

     Recent accounting pronouncements. Management does not believe that any
     recently issued, but not yet effective, accounting standards if currently
     adopted would have a material effect on the accompanying financial
     statements.

3.   Mortgage notes receivable

     Reconciliation of the mortgage notes receivable balances follows:

                                        Six months ended  Twelve months ended
                                           June 30, 2007    December 31, 2006
                                            ------------    -----------------
     Balance, beginning of period           $ 17,121,939    $      26,443,616
     Additions during period:
         Originations                                 --           21,542,427
     Deductions during period:
         Collections of principal                (25,923)            (120,010)
         Repayments                           (2,875,005)         (11,223,490)
         Sales                                        --          (19,220,604)
         Foreclosures, net of reserve         (1,839,089)            (300,000)
         Write off of uncollectible loans             --                   --
                                            ------------    -----------------
     Balance, end of period                 $ 12,381,922    $      17,121,939
                                            ============    =================

     Mortgage notes receivable are stated at the principal outstanding. Interest
     on the mortgages is due monthly and principal is usually due as a balloon
     payment at loan maturity. As of June 30, 2007, the Trust has REO for sale
     of approximately $1,849,221 and approximately 30% of the mortgage loan
     portfolio is non-performing assets. REO and non-performing mortgage loans
     declined to approximately 51% of total shareholder equity and approximately
     99% of common shareholder equity.

4.   Allowance for loan losses

     The allowance for loan losses is based on the fair value of the related
     collateral, since all loans subject to this measurement are collateral
     dependent. Management believes a $672,309 and $782,309 allowance for loan
     losses are adequate to protect against potential losses inherent in all
     receivables as of June 30, 2007 and December 31, 2006, respectively. Actual
     losses may differ from the estimate.

     A reconciliation of the allowance for loan losses follows:
<TABLE>
<CAPTION>
                                                             Six months ended   Twelve months ended
                                                               June 30, 2007     December 31, 2006
                                                                ---------         ----------------
<S>                                                             <C>                   <C>
     Provision for loan losses
         as reported on consolidated statements of operations   $ 221,649             $ 522,840
     CAFC consolidation adjustments                                    --              (102,398)
     Write-off of uncollectible loans (net)                      (331,649)              (28,133)
                                                                ---------             ---------
     Total adjustments to allowance                              (110,000)              392,309
     Balance, beginning of year                                 $ 782,309             $ 390,000
                                                                ---------             ---------
     Balance, end of year                                       $ 672,309             $ 782,309
                                                                =========             =========
</TABLE>

                                       7
<PAGE>

                          CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


5.   Real estate owned

     As of December 31, 2006, the Company owned one property. During the six
     months ended June 30, 2006, the Company foreclosed on two properties and
     sold one. As of June 30, 2007, the Trust owned two properties.

     A reconciliation of the real estate owned account shows its cash and
     non-cash activities follows:
<TABLE>
<CAPTION>
                                                          Six months ended   Twelve months ended
                                                           June 30, 2007      December 31, 2006
                                                            -----------          -----------
<S>                                                         <C>                  <C>
     Balance, beginning of period                           $   245,000          $ 1,978,350
     Additions
     Foreclosed mortgage notes, net of reserve (non-cash)     1,858,593              300,000
     Assumption of senior debt                                       --                   --
     Repayment of senior debt                                        --             (962,127)
     Writedown on REO                                           (12,554)
     Gain (loss) on sale (non-cash)                                  --             (165,031)
                                                            -----------          -----------
                                                              2,091,039            1,151,192
     Less: Proceeds from sale of real estate owned
     (net of closing costs )                                   (241,818)            (906,192)
                                                            -----------          -----------
     Balance, end of period                                 $ 1,849,221          $   245,000
                                                            ===========          ===========
</TABLE>

6.   Related party transactions

     The Former Manager, which is owned by two directors - Messrs. Swartz and
     Konczal - provided management and advisory services and received fees for
     these services from the Company. The Former Manager also received
     reimbursement from the Company for clerical, direct expenses and
     administrative services at cost based on relative utilization of facilities
     and personnel. On December 29, 2006, the Former Manager's management and
     advisory service contracts were terminated and the Company paid the Former
     Manager a one time termination fee of $500,000.

     During 2006, the Former Manager received a loan origination and servicing
     fee equal to one-twelfth (1/12) of 2% annually of the Gross Mortgage Assets
     of the Trust computed at the end of each month. As of June 30, 2006, the
     Trust capitalized 32.5% of this fee as origination costs and amortized them
     over the average life of the portfolio.
      The remaining 67.5% of the fee was expensed as the portion attributed for
     servicing. For the three and six month period ended June 30, 2006, the
     Trust expensed loan origination and servicing fees of $101,288 and
     $240,790, respectively.

     During 2006, the Former Manager received a management fee equal to
     one-twelfth (1/12) of 1% annually of the book value of mortgages,
     mortgage-related investments and real property ("Gross Mortgage Assets") of
     the Trust plus one-twelfth (1/12) of one-half percent (1/2%) of the book
     value of the non-mortgage assets of the Trust computed at the end of each
     month. The management fee also includes reimbursement for the direct costs
     of overseeing the administration and disposition of real estate owned by
     the Company. The Trust paid the Former Manager $51,114 and $132,470 in
     management fees for the three and six month period ended June 30, 2006,
     respectively. Within the financial statements, the management fees are
     included in the Management fees to related parties.

     During 2006, the Former Manager received a REO management fee for managing
     and servicing the properties that the Company has obtained through
     foreclosure of mortgage notes held. The fee for these services is $500 per
     month for each property. The Trust paid the Former Manager $1,500 and
     $2,500 in REO management fees for the three and six month period ended June
     30, 2006, respectively. Within the financial statements, 2006's REO
     management fees are included in the Management fees to related parties.

     Effective January 1, 2007, the Trust engaged the Former Manager to continue
     to servicing its mortgage loans and REO. CAAI is paid $50 per month per
     loan file for loan servicing and $500 per month per REO. The Trust paid
     $5,100 and $10,750 in loan servicing fees and $3,250 and $4,750 in REO
     coordination fees for the three and six months ended June 30, 2007,
     respectively. Within the 2007 financial statements loan servicing and REO
     coordination fees are included in loan servicing fees to related parties.

                                       8
<PAGE>

                          CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)



6.   Related party transactions (continued)

     During 2006, the Former Manager received an administrative fee up to 25
     basis points on mortgages funded for the benefit of the Trust. The Trust
     expensed $28,220 for this cost as of June 30, 2006. These fees are reported
     as part of the management fees.

     On occasion, the Company and its former affiliates had related receivables
     and payables arising from ordinary business transactions. As of June 30,
     2007 and December 31, 2006, the Company had a net payable of $0 and $0 from
     the Former Manager and a net payable of $0 and $0 from Calliance Realty
     Fund, LLC, respectively.

7.   Preferred, common and treasury stock

     The Preferred Shareholders are entitled to a dividend preference in an
     amount equal to an annualized return on the adjusted net capital
     contribution of Preferred Shares at each dividend record date during such
     year (or, if the Directors do not set a record date, as of the first day of
     the month). The annualized return is the lesser of: (a) 10.25%, (b) 1.50 %
     over the Prime Rate (determined on a not less than quarterly basis) or (c)
     the rate set by the Board of Directors. The preferred dividend preference
     is non-cumulative. After declaring dividends for a given year to the
     Preferred Shareholders in the amount of the dividend preference, no further
     dividends may be declared on the Preferred Shares for the subject year,
     until the dividends declared on each Common Share for that year equals the
     dividend preference for each Preferred Share for such year. Any additional
     dividends generally will be allocated such that the amounts of dividends
     per share to the Preferred Shareholders and Common Shareholders for the
     subject year are equal. The Preferred Shareholder's additional dividends,
     if any, are non-cumulative.

     Preferred Shareholders are entitled to receive all liquidating
     distributions until they have received an amount equal to their aggregate
     adjusted net capital contribution. Thereafter, Common Shareholders are
     entitled to all liquidation distributions until the aggregate adjusted net
     capital contributions of all Common Shares has been reduced to zero. Any
     subsequent liquidating distributions will be allocated among Common
     Shareholders and Preferred Shareholders pro rata.

     The Preferred Shares are redeemable by a shareholder, subject to the
     consent of the Board of Directors, annually on June 30 ("Redemption Date")
     for written redemption requests received by May 15 of such year. Preferred
     Shares requesting redemption shall cease to be entitled to distribution,
     voting rights and other benefits as of May 30 prior to the Redemption Date.
     However, if the Board of Directors postpones or delays action on Preferred
     Shares redemption request beyond June 30, the date for the suspension of
     such shareholders rights and benefits shall be delayed proportionately. The
     Board of Directors may in its sole discretion deny, delay, postpone or
     consent to any or all requests for redemption. The redemption amount to be
     paid for redemption of such Preferred Shares is the adjusted net capital
     contribution plus unpaid declared and accrued dividends, divided by the
     aggregate net capital contributions plus declared and accrued but unpaid
     dividends attributable to all Preferred Shares outstanding, multiplied by
     the net asset value of the Trust attributable to the Preferred Shares which
     shall be that percentage of the Trust's net asset value that the aggregate
     adjusted net capital contributions of all Preferred Shares bears to the
     adjusted net capital contributions of all Shares outstanding.

     The Trust has the power to redeem or prohibit the transfer of a sufficient
     number of Common and/or Preferred Shares or the exercise of warrants and/or
     options and to prohibit the transfer of shares to persons that would result
     in a violation of the Trust's shareholding requirements. Only with the
     explicit approval of the Trust's Board of Directors may a shareholder own
     more than 9.8% of the total outstanding shares.



                                       9
<PAGE>

                          CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)




8.   Earnings per share

     The following table represents a reconciliation of the numerators and
     denominators of the basic and diluted earnings per common share for the
     three and six months ended June 30, 2007 and 2006:
<TABLE>
<CAPTION>
                                                       Three months ended        Six months ended
                                                       ------------------        -----------------
                                                       2007          2006        2007         2006
                                                    ---------    ---------    ---------    ---------
<S>                                                 <C>          <C>          <C>          <C>
     Numerator:
     Net income (loss)                              ($135,964)   $   3,460    ($272,960)   $(374,032)

     Preferred dividends                                   --           --           --           --
                                                    ---------    ---------    ---------    ---------
     Numerator for basic and diluted earnings per
     share income (loss) available to common
     stockholders                                   ($135,964)   $   3,460    ($272,960)   $(374,032)
                                                    =========    =========    =========    =========
     Denominator:
         Basic weighted average shares                380,532      380,532      380,532      382,374

         Dilutive effect of options                        --           --           --           --
                                                    ---------    ---------    ---------    ---------
         Diluted weighted average shares              380,532      380,532      380,532      382,374
                                                    =========    =========    =========    =========

     Basic earnings per common share                $   (0.36)   $    0.01    $   (0.72)   $   (0.98)
                                                    =========    =========    =========    =========
     Diluted earnings per common share              $   (0.36)   $    0.01    $   (0.72)   $   (0.98)
                                                    =========    =========    =========    =========
</TABLE>





                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                       10
<PAGE>

                                     PART I
                                     ITEM 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OR
                                PLAN OF OPERATION

Certain statements contained herein are not based on historical information and
certain statements contained in future filings by the Trust with the SEC, in the
Trust's press releases or in the Trust's public and stockholder communications
may not be based on historical facts and are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by reference to a future period or
periods, or by the use of forward-looking terms such as "may", "will", "expect",
"anticipate", or similar terms. Actual results could materially differ from
those in the forward-looking statements due to a variety of factors.

Preparation of the Company's consolidated financial statements is based upon the
operating results of the Trust and CAFC. Management's discussion and analysis of
the results of operations for the three months ended March 31, 2007 and 2006
follows:

OVERVIEW

In May of 1997, the Trust registered its common shares with the Securities and
Exchange Commission under the Securities Act of 1933. On September 30, 1998, the
initial public offering of Common Shares was completed. Since October 1, 1998,
the common shares have been listed on the American Stock Exchange with the
exchange symbol of "CAA".

The Company's financial statements are the Consolidation of the Trust and CAFC.
During the first quarter of 2006, the Trust announced its intent to cease
mortgage loan originations by CAFC and to monetize CAFC's loan inventory. By
year end 2006, any loans not sold into the secondary mortgage market were
transferred to the Trust. During the first quarter of 2007, CAFC was an inactive
taxable subsidiary.

During the fourth quarter of 2006, the Company's shareholders overwhelmingly
voted to terminate the outside management and initiate internal management. On
December 29, 2006, the Former Manager's management and advisory contracts were
terminated and the Company commenced self-management.

The first six months of 2007 brought tumultuous changes to the
alternative/non-conforming residential mortgage industry. Many companies, both
larger and better capitalized than the Trust suffered insolvency, announced
significant workforce reductions, delayed earnings reports and experienced
precipitous drops in their share price. The most unfortunate companies have
sought bankruptcy protection. Trends which precipitated these changes included
increasing residential mortgage delinquencies, loan foreclosures and the sudden
withdrawal of investor interest in alternative/non-conforming residential
mortgage securities and residential whole loans.

The Trust's residential loan portfolio continues to produce unacceptable levels
of delinquency and non-performing assets. The mortgage portfolio's delinquency
characteristics reduced revenues and adjusted collateral values required
additional loan loss expenses (reserves). In response to these problems and to
maximize shareholder value, Management will to focus on efficient asset
management as the strategic alternative to non-performing loan sales at
depressed valuations. As non-performing assets are monetized, the Company's
investment focus will expand to provide a source of future profitability and
increased shareholder value.

As of January 1, 2007, the Trust had foreclosed real estate owned ("REO") of
$245,000 and approximately 33% of the mortgage loan portfolio were
non-performing assets (as measured by mortgage payments delinquencies in excess
of 60 days). Due to the partial financing of the mortgage loan portfolio with
debt, REO and non-performing mortgage loans were approximately 55% of total
shareholder equity and approximately 104% of common shareholder equity. As of
June 30, 2007, the Trust has REO for sale of approximately $1,849,221 and
approximately 30% of the mortgage loan portfolio is non-performing assets. REO
and non-performing mortgage loans declined to approximately 51% of total
shareholder equity and approximately 99% of common shareholder equity.

                                       11
<PAGE>
The Trust is a real estate investment trust ("REIT") and REIT's are generally
required to distribute at least 90% of their annual taxable income as dividend
payments. During 2005 and 2006, the Trust incurred taxable losses. On account of
these losses, dividend payments were curtailed during 2005. These taxable
losses, also known as Net Operating Losses ("NOL"), allow the Trust to retain
future taxable income equal to the cumulative amount of its NOL balance. The
Internal Revenue Code waives mandatory dividend payments until prior years
taxable losses are recovered.

When the Trust produces pre-NOL taxable income, the Trust's Board of Directors
will need to reconcile the opportunity to strengthen the Company's balance sheet
and the priority of restoring dividend payments. This issue will require
additional review and analysis by the Board of Directors.

The current interest rate environment has also contributed to operating losses
for the Trust. The rise in short term rates increased the cost of carrying a
mortgage portfolio. Meanwhile, the non-conforming residential mortgage market
has attracted better financed competitors willing to offer higher LTV
(loan-to-value) loans or more competitive pricing. These developments have
exerted downward pressure on the Trust's investment yield and investment spread.

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company are in accordance with
accounting principles generally accepted in the United States of America. The
Company's significant accounting policies are described in the notes to the
consolidated financial statements. Certain accounting policies require
management to make significant estimates and assumptions, which have a material
impact on the carrying value of certain assets and liabilities, and the Company
considers these to be critical accounting policies. The estimates and
assumptions used are based on historical experience and other factors, which
management believes to be reasonable under the circumstances. Actual results
could differ significantly from these estimates and assumptions, which could
have a material impact on the carrying value of assets and liabilities at the
balance sheet dates and results of operations for the reporting periods.

The following are critical accounting policies that require the most significant
estimates and assumptions that are particularly susceptible to a significant
change in the preparation of the financial statements and are not presented in
their relative order of importance.

Revenue recognition.  Interest income is recorded on the accrual basis of
accounting in accordance with the terms of the loans. When the payment of
principal or interest is 90 or more days past due, management reviews the
likelihood that the loan will be repaid. For these delinquent loans, management
continues to record interest income and establishes a loan loss reserve as
necessary to protect against losses in the loan portfolio including accrued
interest. However, if the mortgage's collateral is considered insufficient to
satisfy the outstanding balance, after estimated foreclosure and selling costs,
interest is not accrued.

Allowance for loan losses. A provision for loan losses in based on management's
evaluation of an amount that is adequate to absorb losses inherent in the
existing loan portfolio. The evaluation, which includes a review of all loans on
which full collection may not be reasonably assumed, considers among other
matters, general economic conditions, the fair market value or the estimated net
realizable value of the underlying collateral, past loan loss experience, trends
in loan delinquency and other factors that warrant recognition in providing for
an adequate loan loss allowance.

Allowance for Doubtful Accounts.  An allowance for accounts receivable claims is
based on management's evaluation of the likelihood of collection. The evaluation
is based on the payee's ability and willingness to pay the claim in full as well
as the costs associated with possible legal action.

Real estate owned. Real estate owned represents property acquired in foreclosure
of mortgage notes receivable. The real estate is carried at the lower of the
value of the mortgage note receivable less selling costs on the real estate or
fair market value. Certain estimates and assumptions are required in determining
the cost to sell or in estimating the fair market value of the real estate.

Stock option.   The Trust has issued stock options to certain employees of the
Manager and to its Directors. The stock options issued are accounted for using
the intrinsic-value method. Because the options were issued with exercise prices
no less than the market price of the Trust's common stock on the dates of grant
and because other key terms are fixed, use of the intrinsic-value method results
in the Trust not recognizing compensation expense for these options. If the
terms of these options were changed, variable accounting might need to be used,
and the Trust might then need to begin recognizing compensation expense for the
options.

Operating Strategy.
-------------------
As a portfolio lender, the Company has invested in California non-conforming
mortgage loans on one-to-four unit residential properties secured by first and
second deeds of trust. Historically, the Trust has limited its mortgage
investment to a cumulative loan to value ratio ("CLTV") that does not exceed 75%
of the underlying collateral. Prospectively, the Company will consider expanding
its investment policy to other REIT permissible assets.

CAFC's loan originating operations were suspended in the first quarter of 2006.
Substantial disposal of CAFC's assets occurred throughout 2006.

                                       12
<PAGE>
Loan Origination.   Since the suspension of loans originations by CAFC, the
Former Manager provided whole loans for the Mortgage Investment Business. On
December 29, 2006, the Former Manager was terminated. Prospectively, portfolio
loans may be acquired from unaffiliated third parties or the Former Manager. The
Former Manager and CAFC accounted for 100% of the loans acquired by the Trust in
2006. The Trust did not acquire any additional mortgages assets in 2007's first
quarter.

Loan Servicing.   Mortgage loan servicing consists of collecting payments from
borrowers, making required advances, accounting for principal and interest
payments, holding borrowed proceeds in escrow until fulfillment of mortgage loan
requirements, contacting delinquent borrowers, supervising foreclosures and
property dispositions in the event of unresolved defaults and performing other
administrative duties. The Company does not acquire or maintain a loan's
servicing rights, unless the mortgage loan is owned by the Company. Although the
Former Manager was terminated from management responsibility, loan servicing is
outsourced to the Former Manager. All or a portion of the aforementioned
servicing responsibilities contracted to the Former Manager, may be
subcontracted by the Former Manager. The Former Manager is paid $50 per month
per loan file for Loan Servicing and $500 per month per REO. The Loan Servicing
Agreement is cancelable with 30 days notice prior to the end of a calendar
quarter.

Commitments and Contingencies.     As of June 30, 2007, the Company's loan
portfolio included 33 loans totaling $12,381,922 of which eight loans totaling
$3,774,075 representing 30% of the loan portfolio were delinquent over two
payments. In assessing the collectibility of the loan portfolio, management has
established a loan loss reserve of $672,309.

As of December 31, 2006, the Company's loan portfolio included 39 loans totaling
$17,121,939 of which 12 loans totaling $5,874,559 representing 34% of the loan
portfolio were delinquent over two payments. In assessing the collectibility of
the loan portfolio, management has established a loan loss reserve
of $782,309.

The Trust may issue loan commitments on a conditional basis and generally funds
such loans upon removal of any conditions. The Trust did not have any
commitments to fund loans as of June 30, 2007 and 2006, respectively.

On December 14, 2005 the Trust unconditionally guaranteed CAFC's sale of
mortgage loans to Lehman Brothers Bank. During the first quarter of 2006, two
loans for $2,500,000 were sold to Lehman Bothers Bank pursuant to this
guarantee. No other loans were sold to Lehman Brothers Bank pursuant to this
guarantee.

As of June 30, 2007, the following table summarizes the Company's outstanding
repayment obligations:
<TABLE>
<CAPTION>

                                                   Amount of Commitment Expiration Per Period
       Maximum Other                   Total       -------------------------------------------
Commercial Commitments (a)            Amounts       Less than      1 - 3      4 - 5    After 5
    as of June 30, 2007              Committed       1 year        years      years     years
------------------------------      -----------    ---------   ------------  -------  -------
<S>                                  <C>                <C>     <C>            <C>       <C>
Lines of Credit (b)                  $3,930,068         0       $3,930,068     0         0
Standby Repurchase Obligations           0              0            0         0         0
Total Commercial Commitments         $3,930,068         0       $3,930,068     0         0
</TABLE>


(a)  Commercial commitments are funding commitments that could potentially
     require registrant performance in the event of demands by third parties or
     contingent events, such as under lines of credit extended or under
     guarantees of debt.

(b)  The Mortgage Investment Business outstanding obligations as of June 30,
     2007 due in 1-3 years were $3,930,068.

                                       13
<PAGE>

RESULTS OF OPERATIONS

The historical information presented herein is not necessarily indicative of
future operations.

Three and six months ended June 30, 2007 and 2006. Revenues for the three months
ended June 30, 2007 decreased to $309,245 as compared to $656,554 for the same
period in the prior year. The decrease in revenue, during the second three
months of 2007 was due to decreases in interest income of $291,502 and in loan
origination income of $58,796.

Expenses for the three months ended June 30, 2007 decreased to $435,553 as
compared to $625,348 for the same period in the prior year. The decrease in
expenses during the second three months of 2007 was primarily due to the
transition to self management which resulted in a net decrease of $144,052 in
servicing and management fees and from a decrease in interest expenses of
$194,369. The provision for loan losses was increased $105,627 during this three
month period.

Revenues for the six months ended June 30 2007 decreased to $650,281 as compared
to $1,516,961 for the same period in the prior year. The decrease in revenue
during the first six months of 2007 was due to decreases in interest income of
$588,994 loan origination income of $190,474 and service release premium of
$85,797.

Expenses for the six months ended June 30, 2007 decreased to $910,403 as
compared to $1,578,783 for the same period in the prior year. The decrease in
expenses during the first six months of 2007 was primarily due to decreases in
interest expenses of $382,070, loan servicing and management fees of $357,760
and general and administrative expenses of $127,462. The provision for loan
losses was increased $189,276 over this six month period.


LIQUIDITY AND CAPITAL RESOURCES

During 2006, the Company had access to a $25,000,000 repurchase facility that
was retired during the second quarter of 2006. During 2005, the Trust also
secured a $7,000,000 term facility, with a November 14, 2007 maturity and a one
year extension option. Management believes that cash flow from operations, the
mortgage loans that are paid off, additional credit facilities that may be
obtained during 2007 and, if necessary, the limited sale of investment mortgages
will be sufficient to meet the liquidity needs of the company's businesses for
the next twelve months.

Six months ended June 30, 2007 and 2006.   As of January 1, 2007 and 2006, the
Trust had $599,943 and $1,626,247 of cash and cash equivalents, respectively.
During the six month period ended June 30, 2007, cash and cash equivalents
decreased by $40,359. During the six month period ended June 30, 2006, cash and
cash equivalents decreased by $550,230. As of June 30, 2007 and 2006, cash and
cash equivalents were $559,584 and $1,076,017, respectively.

The following summarizes the changes in net cash provided by operating
activities, net cash used for investing activities, and net cash provided by
financing activities.

Net cash used in operating activities during the six months ended June 30, 2007
and 2006 was $400,866 and $503,691, respectively. During the first six months of
2007, net loss used $272,960, an increase in accounts receivable used $211,681,
and the provision for loan losses provided $221,649. During the first six months
of 2006, net loss used $374,032, a change in due to related parties used
$324,616 and a loss on real estate owned provided $239,850.

Net cash provided by investing activities for the six months ended June 30, 2007
and 2006 was $3,198,260 and $3,116,355, respectively. During the first six
months of 2007, a net decrease in mortgage notes receivable provided $2,900,928.
During the first six months of 2006, a net decrease in mortgage notes receivable
provided $4,938,356.

Net cash used in financing activities during the six months ended June 30, 2007
and 2006 was $2,837,753 and $3,162,894, respectively. During the first six
months of 2007, net payments of bank loans used cash of $2,837,753. During the
first six months of 2006, net payments of bank loans used cash of $3,008,667
while treasury stock purchases reduced cash by $154,227.

                                       14
<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk.   Market risk is the exposure to loss resulting from changes in
interest rates, credit spreads, foreign exchange rates, commodity prices, and
equity prices. The primary market risks to which the Company is exposed are
interest rate risk and credit risk.

Interest risk. Interest rate risk is highly sensitive to many factors, including
governmental, monetary and tax policies, domestic and international economic and
political considerations and other factors beyond the control of the Company.
Changes in the general level of the U.S. Treasury yield curve can have
significant effects on the market value of the Company's portfolio. The majority
of the Company's assets are fixed-rate loans with a spread to U.S. Treasuries.
The Trust's loans are valued on the March 31, 2007 and December 31, 2006 balance
sheet at the lower of cost or market.

As U.S. Treasury securities are priced to a lower yield and/or the spread to
U.S. Treasuries used to price the Company's assets are decreased, the market
value of the Company's portfolio may increase. Conversely, as U.S. Treasury
securities are priced to a higher yield and/or the spread to U.S. Treasuries
used to price the Company's assets is increased, the market value of the
Company's portfolio may decline. Changes in the level of the U.S. Treasury yield
curve can also affect, among other things, the prepayment assumptions used to
value certain of the Trust's loans. In addition, changes in the general level of
the United States Prime Rate or one month LIBOR can affect the Trust's net
interest income. The Company's borrowings are floating rate based on a spread
over the daily Prime Rate or one month LIBOR. As these rates increases or
decreases, the Company's interest expense will move in the same direction.

On account of the relatively short adjusted weighted average maturity of the
Company's portfolio loans (23 months), a variety of financial instruments
available to limit the effects of interest rate fluctuations on its operations
have not been utilized. The use of these types of derivatives (such as interest
rate swaps, caps, floors and other interest rate exchange contracts) to hedge
interest-earnings assets and/or interest-bearing liabilities carry risks,
including the risk that the net losses on a hedge position may exceed the amount
invested in such instruments. As the level of variable rate mortgage financing
of the portfolio increases or the weighted average maturity of the portfolio
increases, the Trust may utilize a variety of financial instruments to limit the
effects of interest rate fluctuations.

Credit risk.   Credit risk is the exposure to loss from loan defaults and
foreclosures. Default and foreclosure rates are subject to a wide variety of
factors, including, but not limited to, property values, supply/demand factors,
construction trends, consumer behavior, regional economics, interest rates, the
strength of the American economy and other factors beyond the control of the
Company.

All loans are subject to a certain probability of default and foreclosure. An
increase in default rates will reduce the book value of the Company's assets and
the Company's earnings and cash flow available to fund operations and pay
dividends.

The Company manages credit risk through the underwriting process, limiting loans
at the time of funding to 75% of the collateral's appraised value, establishing
loss assumptions and carefully monitoring loan performance. Nevertheless, the
Company assumes that a certain portion of its loans will default and adjusts the
allowance for loan losses based on that assumption.

Asset and liability management. Asset and liability management is concerned with
the timing and magnitude of the maturity of assets and liabilities. In general,
management's strategy is to approximately match the term of the Trust's
liabilities to the portfolio's adjusted weighted average maturity (23 months).

The majority of the Company's assets pay a fixed coupon and the income from such
assets are relatively unaffected by interest rate changes. The Company's
borrowings are currently under a variable rate line of credit that resets
monthly. Given this relationship between assets and liabilities, the Company's
interest rate sensitivity gap is highly negative. This implies that a period of
falling short term interest rates will tend to increase the Company's net
interest income, while a period of rising short term rates will tend to reduce
the Trust's net interest income.

                                       15
<PAGE>
                                     PART I
                                     ITEM 3.

                             CONTROLS AND PROCEDURES

(A)   Evaluation of Disclosure Controls and Procedures. The Chief Executive
Officer and the Principal Accounting Officer of the Trust have, based on their
evaluation of the Company's disclosure controls and procedures within 90 days of
the filing date of this report, evaluated the effectiveness of such controls and
procedures. Based on such evaluations, they have concluded that the Trust's
disclosure controls and procedures have effectively operated to ensure that all
material information relating to the Company and its operations and financial
condition has been made known to them by other officers and employees within the
Company and its Manager on a timely basis.

(B)  Changes in Internal Controls. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
those controls subsequent to the date of their evaluation. Accordingly, no
corrective actions with regard to such controls or procedures have been
required.

                                     PART II
                                OTHER INFORMATION

ITEM 1     LEGAL PROCEEDING

The Trust is involved in three legal proceedings as of June 30, 2007.

CAFC was named as defendant in a case filed in the Superior Court, Alameda
County, State of California on December 7, 2004. Plaintiff alleged that CAFC
made a fraudulent loan to him by cross collateralizing two separate properties.
The cross collateralization was necessary to grant the borrower the desired
loan, since there was insufficient equity in the primary property used as
collateral for the loan. Two amended complaints have been filed in addition to
the initial one. The Plaintiff represents himself in one complaint and is
represented by Counsel in the other.

Settlement of the first complaint allowed CAFC to foreclose on the primary
collateral and the borrowing was paid in full. Plaintiff, upon the Court's
insistence, obtained counsel for the second complaint, which is pending. The
Company believes the Plaintiff's action is without merit.

On April 14, 2006, the Company was served a summons alleging that the Company
was involved with misleading a former mortgage holder. Upon the satisfaction of
their mortgage claim from the proceeds of a Company provided mortgage, the
former mortgage holder released their escrow settlement to the new purchaser
without re-recording their subordinate mortgage claim. On July 14, 2006, the
property was sold at a Trustee sale and the Company's loan was paid in full. The
former mortgage holder's unrecorded claim was not satisfied at the
aforementioned Trustee sale. The Company believes the former mortgage holder's
action is without merit.

On March 29, 2007, the Company was served a summons alleging that the Company
intentionally interfered with the sale of real property by failing to provide
timely payoff information to consummate the sale and thereby caused Plaintiff to
lose the economic benefits of a sale. The Company believes the Plaintiff's
action is without merit and will vigorously defend itself.

ITEM 2     CHANGES IN SECURITIES

       No common shares and preferred shares were purchased for treasury stock
       during the six month period ended June 30, 2007.

ITEM 3     DEFAULTS UPON SENIOR SECURITIES

       None

ITEM 4     SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

       None

ITEM 5     OTHER INFORMATION

       None


                                       16
<PAGE>
ITEM 6     EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

Exhibit No
----------
     3.1  Charter Certificate of Incorporation and Amendment No. 1(1)
     3.2  Bylaws of the Registrant(1)
     3.3  Certificate of Amendment of Certificate of Incorporation(4)
     4.1  Form of Stock Certificate of Common Shares of the Registrant(2)
     10.1 Form of Management Agreement between the Registrant and Capital
          Alliance Advisors, Inc.(1) (terminated December 29, 2006)
     10.2 Form of Indemnity Agreement between the Registrant and its Directors
          and Officers(1)
     10.3 Form of Loan Origination and Loan Servicing Agreement between the
          Registrant and Capital Alliance Advisors, Inc.(1) (terminated December
          29, 2006)
     23.4 Consent of Landels Ripley & Diamond, LLP(4)
     24.1 Power of Attorney of Thomas B. Swartz(1)
     24.2 Power of Attorney of Dennis R. Konczal(1)
     24.4 Power of Attorney of Stanley C. Brooks(1)
     24.7 Power of Attorney of Richard J. Wrensen(5)

(1)  These exhibits were previously contained in Registrant's Registration
     Statement filed on Form S-11 with the Commission on September 9, 1996, and
     are incorporated by reference herein.

(2)  These exhibits were previously contained in Amendment No. 1 to the
     Registrant's Registration Statement filed on Form S-11 with the Commission
     on January 15, 1997, and are incorporated by reference herein.

(3)  These exhibits were previously contained in Post-Effective Amendment No. 3
     to the Registrant's Registration Statement filed on Form S-11 with the
     Commission on December 10, 1997, and are incorporated by reference herein.

(4)  These exhibits were previously contained in Form 10-Q for the period ending
     June 30, 1997 filed with the Commission on August 14, 1997, and are
     incorporated by reference herein.

(5)  This exhibit was previously contained in Form 10-K for the period ending
     December 31, 1998 filed with the Commission on April 10, 1999, and is
     incorporated by reference herein.


(b)  Reports on Form 8-K.

     Form 8-K was filed on:

          o    May 7, 2007 due to the press release of May 3, 2007 regarding the
               Shareholder letter.
          o    May 21, 2007 due to the press release of May 21, 2007 regarding
               earnings for the first quarter of 2007.
          o    May 25, 2007 due to the press release of May 25, 2007 regarding
               the announcement of a new independent director.


                                       17
<PAGE>



                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                      CAPITAL ALLIANCE INCOME TRUST LTD.,
                                         A Real Estate Investment Trust


Dated: August 13, 2007

                                       /s/  Richard J. Wrensen
                                       ------------------------
                                       Richard J. Wrensen
                                       President and Chief Executive Officer







                                       18
<PAGE>

                                  CERTIFICATION

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Capital Alliance Income Trust Ltd. (the
"Company") on Form 10-QSB for the period ending June 30, 2007 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Richard
J Wrensen, Chief Executive Officer and President of the Company, and I, Andrea
Barney, Principal Accounting Officer and Controller of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully compiles with the requirements of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and result of operations of
          the Company.


Dated:  August 13, 2007

                                   /s/ Richard J. Wrensen
                                   ----------------------
                                   Richard J. Wrensen
                                   President and Chief Executive Officer


                                   /s/ Andrea Barney
                                   -----------------
                                   Andrea Barney
                                   Principal Accounting Officer and Controller






                                       19

<PAGE>



                                  CERTIFICATION
              OF FORM 10-QSB OF CAPITAL ALLIANCE INCOME TRUST LTD.,
                     A REAL ESTATE INVESTMENT TRUST FOR THE
                           PERIOD ENDING JUNE 30, 2007

I, Richard J. Wrensen, certify that:

1.   I have reviewed this Form 10-QSB, dated August 10, 2007 of Capital Alliance
     Income Trust, Ltd., A Real Estate Investment Trust;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the small business issuer as of, and for, the periods presented in this
     report;

4.   The small business issuer's other certifying officer(s) and I are
     responsible for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
     internal control over financial reporting (as defined in Exchange Act Rules
     13a-15(f) and 15d-15(f)) for the small business issuer and have:

     a.  Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the small
         business issuer, including its consolidated subsidiaries, is made known
         to us by others within those entities, particularly during the period
         in which this report in being prepared;
     b.  Designed such internal control over financial reporting, or caused such
         internal control over financial reporting to be designed under our
         supervision, to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial statements for
         external purposes in accordance with generally accepted accounting
         principals;
     c.  Evaluated the effectiveness of the small business issuer's disclosure
         controls and procedures and presented in this report our conclusions
         about the effectiveness of the disclosure controls and procedures, as
         of the end of the period covered by this report based on such
         evaluation; and
     d.  Disclosed in this report any change in the small business issuer's
         internal control over financial reporting that occurred during the
         small business issuer's most recent fiscal quarter (the small business
         issuer's fourth fiscal quarter in the case of an annual report) that
         has materially affected, or is reasonably likely to materially affect,
         the small business issuer's internal control over financial reporting;
         and

5.   The small business issuer's other certifying officer(s) and I have
     disclosed, based on our most recent evaluation of internal control over
     financial reporting, to the small business issuer's auditors and the audit
     committee of the small business issuer's board of directors (or persons
     performing the equivalent functions):

     a.  All significant deficiencies and material weaknesses in the design or
         operation of internal controls over financial reporting which are
         reasonably likely to adversely affect the small business issuer's
         ability to record, process, summarize and report financial information;
         and
     b.  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the small business issuer's
         internal controls internal control over financial reporting.

Dated:        August 13, 2007


/s/ Richard J. Wrensen
----------------------
Richard J. Wrensen
President and Chief Executive Officer



<PAGE>

                                  CERTIFICATION
              OF FORM 10-QSB OF CAPITAL ALLIANCE INCOME TRUST LTD.,
                     A REAL ESTATE INVESTMENT TRUST FOR THE
                           PERIOD ENDING JUNE 30, 2007

I, Andrea Barney, certify that:

1.   I have reviewed this Form 10-QSB, dated August 10, 2007 of Capital Alliance
     Income Trust, Ltd., A Real Estate Investment Trust;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the small business issuer as of, and for, the periods presented in this
     report;

4.   The small business issuer's other certifying officer(s) and I are
     responsible for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
     internal control over financial reporting (as defined in Exchange Act Rules
     13a-15(f) and 15d-15(f)) for the small business issuer and have:

     a.  Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the small
         business issuer, including its consolidated subsidiaries, is made known
         to us by others within those entities, particularly during the period
         in which this report in being prepared;
     b.  Designed such internal control over financial reporting, or caused such
         internal control over financial reporting to be designed under our
         supervision, to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial statements for
         external purposes in accordance with generally accepted accounting
         principals;
     c.  Evaluated the effectiveness of the small business issuer's disclosure
         controls and procedures and presented in this report our conclusions
         about the effectiveness of the disclosure controls and procedures, as
         of the end of the period covered by this report based on such
         evaluation; and
     d.  Disclosed in this report any change in the small business issuer's
         internal control over financial reporting that occurred during the
         small business issuer's most recent fiscal quarter (the small business
         issuer's fourth fiscal quarter in the case of an annual report) that
         has materially affected, or is reasonably likely to materially affect,
         the small business issuer's internal control over financial reporting;
         and

5.   The small business issuer's other certifying officer(s) and I have
     disclosed, based on our most recent evaluation of internal control over
     financial reporting, to the small business issuer's auditors and the audit
     committee of the small business issuer's board of directors (or persons
     performing the equivalent functions):

     a.  All significant deficiencies and material weaknesses in the design or
         operation of internal controls over financial reporting which are
         reasonably likely to adversely affect the small business issuer's
         ability to record, process, summarize and report financial information;
         and
     b.  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the small business issuer's
         internal controls internal control over financial reporting.

Dated:        August 13, 2007


 /s/ Andrea Barney
 -----------------
 Andrea Barney
 Principal Accounting Officer and Controller


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