FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
                               SECTION 13 OR 15(d)
                   (As last amended by 34-31905, eff. 4/26/93)

                                   FORM 10-KSB

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 [Fee Required]

                   For the fiscal year ended December 31, 1995
                                       or
[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 [No Fee Required]
                  For the transition period.........to.........

                         Commission file number 0-14530

                    DAVIDSON INCOME REAL ESTATE, L.P.
              (Name of small business issuer in its charter)

       Delaware                                               62-1242144
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

One Insignia Financial Plaza, P.O. Box 1089
    Greenville, South Carolina                                  29602
(Address of principal executive offices)                      (Zip Code)

                    Issuer's telephone number (864) 239-1000

         Securities registered under Section 12(b) of the Exchange Act:

                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                      Units of Limited Partnership Interest
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 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    

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year.  $4,506,804

State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1995. Market Value information for the
Registrant's partnership interests is not available.  Should a trading market
develop for these interest, it is the Managing General Partners's belief that
such trading would not exceed $25,000,000.
                                                                

                       DOCUMENTS INCORPORATED BY REFERENCE
1.  Portions of the Prospectus of Registrant dated July 26, 1985 (included in
Registration Statement, No. 2-97539,  of Registrant) are incorporated by
reference into Parts I and III.

                                     PART I

Item 1.  Description of Business

      Davidson Income Real Estate, L.P. (the "Registrant" or "Partnership") is a
Delaware limited partnership organized in April 1985.  The general partners of
the Registrant are Davidson Diversified Properties, Inc., a Tennessee
corporation ("Managing General Partner"), David W. Talley and James T. Gunn
(collectively, "Individual General Partners") (collectively, the "General
Partners").

      The offering of the Registrant's limited partnership units ("Units")
commenced on July 26, 1985, and terminated on May 30, 1986.  The Registrant
received gross proceeds from the offering of $26,776,000 and net proceeds of
$25,700,160.

      The Registrant's primary business is to acquire, operate and hold
existing, income-producing residential and commercial real estate properties. 
Industry segment information is not relevant.  The Registrant does not engage in
any foreign operations nor derive any income from foreign sources.

      All of the net proceeds of the offering were invested in the Registrant's
four properties and in a 17.5% joint venture interest which owns one property. 
See "Item 2. Description of Properties," below for a description of the
Registrant's properties.

      The Registrant receives income from its properties and is responsible for
operating expenses, capital improvements and debt service payments under
mortgage obligations secured by the properties.  The Registrant financed its
properties primarily through non-recourse debt.  Therefore, in the event of
default, the lender can generally only look to the subject property for recovery
of amounts due.

      Both the income and expenses of operating the properties owned by the
Registrant are subject to factors outside of the Registrant's control, such as
oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
funds, changes in zoning laws, or changes in patterns or needs of users.  In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside of the control of the Registrant.

      A further description of the Partnership's business is included in
Management's Discussion and Analysis or Plan of Operation included in "Item 6"
of this form 10-KSB.

      The Registrant has no employees.  Management and administrative services
are performed by the Managing General Partner and by Insignia Management Group,
L.P., an affiliate of Insignia Financial Group, Inc. ("Insignia").  Effective
January 1, 1992, affiliates of Insignia began to provide partnership
administration, asset management, and investor services for the Partnership. 
See "Item 12. Certain Relationships and Related Transactions" for an enumeration
of the affiliates and the compensation and reimbursement received from the
Registrant during 1995 and 1994.

      The real estate business in which the Partnership is engaged is highly
competitive and the Partnership is not a significant factor in this industry. 
The Registrant's real property investments are subject to competition from
similar types of properties in the vicinities in which they are located.  In
addition, various limited partnerships have been formed by related parties to
engage in business which may be competitive with the Registrant.


Item 2.  Description of Properties


      The following tables set forth the Registrant's investments in properties:
<TABLE>
<CAPTION>

                              Date of                
 Property                     Purchase      Type of Ownership           Use
<S>                          <C>         <C>                          <C>
 Northsprings Apartments      11/13/85    Fee ownership subject        Apartment
 Atlanta, Georgia                         to first and second          120 units
                                          mortgages.
                                                                 
 Lakeside Apartments          05/20/86    Fee ownership subject        Apartment
 Charlotte, North Carolina                to first mortgage.           216 units
                                          
 Bexley House Apartments      09/30/86    Fee ownership subject        Apartment
 Columbus, Ohio                           to first and second          64 units
                                          mortgages.
                                          
 Covington Pointe             03/10/87    Fee ownership subject        Apartment
  Apartments                              to first and second          180 units
 Dallas, Texas                            mortgages.
                                         
 Brighton Crest Apartments    Phase I     Registrant has a 17.5%       Apartment
 Marietta, Georgia            06/30/87    interest in the Joint        320 units
                                          Venture which has fee
                              Phase II    ownership subject to 
                              12/15/87    first and second
                                          mortgages.

</TABLE>

Schedule of Properties:

                       Gross                                   
                     Carrying     Accumulated                          Federal
 Property              Value      Depreciation     Rate     Method    Tax Basis
                                                                               
 Northsprings        $4,495,342    $1,807,059    5-25 yrs    S/L    $ 3,826,410
 Lakeside             6,247,227     2,423,360    5-25 yrs    S/L      5,068,325
 Bexley House         3,450,580     1,225,817    5-25 yrs    S/L      2,891,763
 Covington Pointe     9,271,802     2,955,408    5-25 yrs    S/L      7,123,599
                                                                               
                    $23,464,951    $8,411,644                       $18,910,097


   See Note A to the financial statements included in "Item 7" for a description
of  the Partnership's depreciation policy.


Schedule of Mortgages:

<TABLE>
<CAPTION>
                         Principal                                       Principal
                         Balance At    Stated                             Balance
                        December 31,  Interest    Period    Maturity      Due At
 Property                   1995        Rate     Amortized    Date       Maturity
<S>                    <C>             <C>      <C>        <C>          <C>                          
 Northsprings                                                                      
    1st mortgage        $ 1,935,054     7.83%    28.67 yrs  10/15/03     $1,701,388
    2nd mortgage             61,200     7.83%       (1)     10/15/03         61,200
                                                                                   
 Lakeside                 3,827,984    10.75%    7.00 yrs   07/01/96      3,812,335
                                                                                  
 Bexley House                                                                      
    1st mortgage          1,365,032     7.60%    21.40 yrs  11/15/02      1,052,381
    2nd mortgage             45,142     7.60%       (1)     11/15/02         45,142
                                                                                   
 Covington Pointe                                                                  
    1st mortgage          4,740,950     7.83%    28.67 yrs  10/15/03      4,168,660
    2nd mortgage            149,940     7.83%       (1)     10/15/03        149,940
                                                                                   
      Total              12,125,302                                                
                                                                                   
 Less unamortized                                                                  
    discounts              (193,199)                                               
                                                                                   
                        $11,932,103                                                

<FN>
(1) Interest only payments.

</TABLE>

     Average annual rental rate and occupancy for 1995 and 1994 for each
property:

                                  Average Annual                  Average 
                               Rental Rates Per Unit              Occupancy

 Property                       1995           1994          1995          1994
                                                         
 Northsprings                  $8,331         $7,660          96%           97%
 Lakeside                       5,711          5,429          97%           91%
 Bexley House                  11,113         10,978          91%           90%
 Covington Pointe               9,084          9,061          91%           92%


       The Managing General Partner attributes the increase in  occupancy at
Lakeside Apartments to a strong Charlotte market, the successful marketing
efforts in the Apartment Guide and use of relocation services.

       As noted under "Item 1. Description of Business," the real estate
industry is highly competitive.  All of the properties of the Partnership are
subject to competition from other residential apartment complexes in the area. 
The Managing General Partner believes that all of the properties are adequately
insured.  The multi-family residential properties' lease terms are for one year
or less.  No residential tenant leases 10% or more of the available rental
space.

       Real estate taxes and rates in 1995 for each property were:

                                      1995          1995
                                    Billing         Rate
                                        
  Northsprings                     $ 57,533         4.03
  Lakeside                           78,020         1.31
  Bexley House                       87,697         8.35
  Covington Pointe                  206,618         2.56
                                       
                             
Item 3.  Legal Proceedings

      The Registrant is unaware of any pending or outstanding litigation that is
not of a routine nature.  The Managing General Partner of the Registrant
believes that all such matters will be resolved without a material adverse
effect upon the Partnership's financial condition, results of operations, or
liquidity.


Item 4. Submission of Matters to a Vote of Security Holders

      During the fourth quarter of 1995, no matter was submitted to a vote of
security holders through the solicitation of proxies or otherwise.



                                    PART II


Item 5. Market for Partnership Equity and Related Partner Matters

      As of December 31, 1995, there was minimal trading of the Units in the
secondary market establishing a high and low value of $152 per unit and $35 per
unit, respectively, as quoted in the January 31, 1995, Stanger Report.  There
are 3,149 holders of record owning an aggregate of 26,776 units.  No public
trading has developed for the Units, and it is not anticipated that such a
market will develop in the future.  Distributions of $600,706 were made in 1995
while distributions of $204,874 were made during 1994.  Future distributions
will depend on the levels of cash generated from operations, refinancings,
property sales and the availability of cash reserves.  Distributions may also be
restricted by the requirement to deposit net operating income (as defined in the
mortgage notes) from the respective properties to the Reserve Accounts until the
Reserve Accounts are funded amounts equal to $400 per apartment unit for
Northsprings and Covington Pointe and $1,000 per apartment unit for Bexley
House.  

      Pursuant to the terms of the Partnership Agreement, there are restrictions
on the ability of the Limited Partners to transfer their Units.  In all cases,
the General Partners must consent to any transfer.

      The Revenue Act of 1987 contained provisions which have an adverse impact
on investors in "publicly traded partnerships."  Accordingly, the General
Partners have established a policy of imposing limited restrictions on the
transferability of the Units in secondary market transactions.  Implementation
of this policy should prevent a public trading market from developing and may
impact the ability of an investor to liquidate his investment quickly.  It is
expected that such policy will remain in effect until such time, if ever, as
further clarification of the Revenue Act of 1987 may permit the Registrant to
lessen the scope of the restrictions.


Item 6.  Management's Discussion and Analysis or Plan of Operation

Results of Operations

      The Partnership's net loss for the year ended December 31, 1995, was 
$216,376 compared to a net loss of $308,178 for the corresponding period of
1994.  The decrease in net loss in 1995 is primarily attributable to increased
rental revenue as a result of monthly rental rate increases at all properties
and an increase in occupancy at Lakeside Apartments.  Other income has increased
as a result of increased cleaning and damage fees at Lakeside Apartments due to
the higher occupancy and turnover rates, and increased lease cancellation fees
at Covington Pointe Apartments due to tenant turnover.  

      Partially offsetting the decrease in net loss was an increase in
maintenance expense and an increase in loss on disposal of property. 
Maintenance expense increased due to maintenance projects and asbestos removal
performed at the properties in 1995.  Lakeside and Northsprings Apartments
completed major landscaping projects to improve the properties' appearances. 
Northsprings incurred additional maintenance expense due to the removal of
asbestos found at the property.  Roofs were replaced at both Northsprings and
Lakeside Apartments during 1995 resulting in the loss on disposal of property.

      The Partnership owns 17.5% of Sterling Crest Joint Venture.  Equity in the
income of the joint venture increased as a result of an increase in net income
of Sterling Crest Joint Venture's investment property, Brighton Crest.  Brighton
Crest's net income increased due to an increase in rental rates and an increase
in other income due to increased lease cancellation fees.

      As part of the ongoing business plan of the Partnership, the Managing
General Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense.  As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level.  However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

      At December 31, 1995, the Partnership had unrestricted cash of $875,770
compared to $1,147,454 at December 31, 1994.  Net cash provided by operating
activities decreased as a result of the decrease in accounts payable and accrued
property taxes due to the timing of payments.  Cash provided by escrows for
taxes and insurance increased due to an increase in tax payments from the
escrows as a result of an increase in the tax assessed values for Covington
Pointe and Northsprings.  Cash provided by accounts receivable decreased in 1995
as a result of a tax refund received during the year ended December 31, 1994,
for the overpayment of 1993 property taxes by Northsprings.  Net cash used in
investing activities increased primarily as a result of an increase in property
improvements and replacements and a decrease in cash from receipts from
restricted escrows.  Receipts from restricted escrows decreased due to the
depletion of reserves during 1994.  Net cash used in financing activities
increased due to an increase in distributions during 1995 which was partially
offset by the payment of amounts due to affiliates during the first quarter of
1994.

      The Partnership has no material capital programs scheduled to be performed
in 1996, although certain routine capital expenditures and maintenance expenses
have been budgeted.  These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or is received from the
capital reserve accounts.

      The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership.  Such assets are currently
thought to be sufficient for any near-term needs of the Partnership.  The
mortgage indebtedness of $11,932,103, net of discount, is amortized over varying
periods with required balloon payments ranging from July 1996 to October 2003,
at which time the properties will either be refinanced or sold.  Refinancing for
the debt encumbering Lakeside Apartments which matures in July 1996 is currently
being discussed with the existing lender, however, there is no assurance that
the refinancing discussions will ultimately be successful.   Future cash
distributions will depend on the levels of net cash generated from operations,
capital expenditure requirements, property sales and the availability of cash
reserves.  Distributions paid to partners during the years ended December 31,
1995 and 1994, were $600,706 and $262,393.



Item 7.  Financial Statements


DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP      

LIST OF CONSOLIDATED FINANCIAL STATEMENTS


         Report of Independent Auditors

         Consolidated Balance Sheet - December 31, 1995

         Consolidated Statements of Operations - Years ended December 31, 1995
           and 1994

         Consolidated Statements of Changes in Partners  Capital (Deficit) - 
         Years ended December 31, 1995 and 1994

         Consolidated Statements of Cash Flows - Years ended December 31, 1995
           and 1994

         Notes to Consolidated Financial Statements


                Report of Ernst & Young LLP, Independent Auditors




The Partners
Davidson Income Real Estate, L.P.


We have audited the accompanying consolidated balance sheet of Davidson Income
Real Estate, L.P. (A Limited Partnership) as of December 31, 1995, and the
related consolidated statements of operations, changes in partners' capital
(deficit) and cash flows for each of the two years in the period ended December
31, 1995.  These financial statements are the responsibility of the
Partnership's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Davidson Income Real Estate, L.P. (A Limited Partnership) as of December 31,
1995, and the consolidated results of its operations and its cash flows for each
of the two years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.



                                                            /s/ERNST & YOUNG LLP


Greenville, South Carolina
February 15, 1996


                                                                     

                 DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEET


                                December 31, 1995


 Assets                                                                       

    Cash:                                                                     
       Unrestricted                                                $   875,770
       Restricted--tenant security deposits                            102,759
    Accounts receivable                                                 10,305
    Escrow for taxes                                                   281,203
    Restricted escrows                                                 258,607
    Other assets                                                       312,709
    Investment properties: (Notes C & F)                                      
       Land                                        $ 4,119,544                

       Buildings and related personal property      19,345,407                
                                                    23,464,951                
       Less accumulated depreciation                (8,411,644)     15,053,307

    Investment in Joint Venture (Note B)                               325,423
                                                                             
                                                                   $17,220,083
                                                                             
 Liabilities and Partners' Capital (Deficit)                                  
 Liabilities                                                                  
    Accounts payable                                               $   202,856
    Tenant security deposits                                           102,001
    Accrued taxes                                                      294,315
    Other liabilities                                                  139,611
    Mortgage notes payable (Note C)                                 11,932,103
                                                                              
 Partners' Capital (Deficit)                                                  
    General partners                               $  (632,817)               
    Limited partners (26,776 units                                            
       issued and outstanding)                       5,182,014       4,549,197
                                                                              
                                                                   $17,220,083


           See Accompanying Notes to Consolidated Financial Statements

                 DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                             
                                                        Years Ended December 31, 
                                                           1995            1994     
<S>                                                  <C>             <C>
 Revenues:                                                                       
   Rental income                                      $ 4,268,191     $ 4,055,151
   Other income                                           238,613         198,319
           Total revenues                               4,506,804       4,253,470
                                                                                 
 Expenses:                                                                       
   Operating                                            1,212,521       1,204,562
   General and administrative                             240,034         226,802
   Property management fees                               221,930         210,096
     Maintenance                                          657,389         587,655
     Depreciation                                         782,111         738,544
     Interest                                           1,144,555       1,150,523
     Property taxes                                       432,678         414,433
           Total expenses                               4,691,218       4,532,615
                                                                                
                                                                                
 Loss on disposal of property                             (88,825)        (71,501)
 Equity in income of joint venture (Note B)                56,863          42,468
                                                                                 
           Net loss (Note D)                          $  (216,376)    $  (308,178) 
                                                                                
                                                                               
 Net loss allocated to general partners (3%)          $    (6,491)    $    (9,245)
 Net loss allocated to limited partners (97%)            (209,885)       (298,933)
                                                                              
                                                      $  (216,376)    $  (308,178)
                                                                   
 Net loss per limited partnership unit                $     (7.84)    $    (11.16)  


<FN>
           See Accompanying Notes to Consolidated Financial Statements

</TABLE>

                 DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP

        CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) 
 
<TABLE>
<CAPTION>                                                                              
                                 Limited                 
                               Partnership    General      Limited
                                   Units     Partners      Partners       Total    
<S>                             <C>         <C>         <C>           <C>                       
 Original capital                                                                 
    contributions                26,776      $  1,000    $26,776,000   $26,777,000

 Partners' capital (deficit)                                                      
    at December 31, 1993         26,776     $(592,299)   $ 6,471,630   $ 5,879,331

 Distributions paid                                                               
    to partners                      --        (6,732)      (198,142)     (204,874)

 Net loss for the year                                                            
    ended December 31, 1994          --        (9,245)      (298,933)     (308,178)

 Partners' capital (deficit)                                                      
    at December 31, 1994         26,776      (608,276)     5,974,555     5,366,279

 Distributions paid                                                               
    to partners                      --       (18,050)      (582,656)     (600,706)

 Net loss for the year                                                            
    ended December 31, 1995          --        (6,491)      (209,885)     (216,376)

 Partners' capital (deficit)                                                      
    at December 31, 1995         26,776     $(632,817)   $ 5,182,014   $ 4,549,197

<FN>

           See Accompanying Notes to Consolidated Financial Statements
</TABLE>

                 DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                        
                                                                             
                                                        Years Ended December 31,
                                                           1995         1994    
<S>                                                   <C>           <C>
 Cash flows from operating activities:                                         
    Net loss                                           $ (216,376)   $ (308,178)
    Adjustments to reconcile net loss to net                                   
     cash provided by operating activities:                                    
       Depreciation                                       782,111       738,544
       Amortization of discounts and loan costs            80,020        74,597
       Equity in income of joint venture                  (56,863)      (42,468)
       Loss on disposition of property                     88,825        71,501
       Change in accounts:                                                     
        Restricted cash                                   (18,883)      (11,364)
        Accounts receivable                                (3,620)       46,195
        Escrow for taxes                                   77,474      (109,258)
        Accounts payable                                  (20,177)       16,482
        Accrued property taxes                            (51,466)      102,630
        Tenant security deposit liabilities                16,050        13,439
        Other liabilities                                 (23,093)       66,168
          Net cash provided by operating activities       654,002       658,288
                                                                               
 Cash flows from investing activities:                                         
    Property improvements and replacements               (373,563)     (294,654)
    Deposits to restricted escrows                        (10,117)      (17,415)
    Receipts from restricted escrows                       24,435       350,723
    Distributions from joint venture                      175,000        93,531
          Net cash (used in) provided by                                       
            investing activities                         (184,245)      132,185
                                                                               
 Cash flows from financing activities:                                         
    Payments on mortgage notes payable                 $ (140,735)   $ (129,344)
    Due to affiliates                                          --      (250,000)
    Distributions paid                                   (600,706)     (262,393)
    Loan cost                                                  --       (40,924)
          Net cash used in financing activities          (741,441)     (682,661)
                                                                               
 Net (decrease) increase in cash                         (271,684)      107,812
                                                                               
 Cash at beginning of period                            1,147,454     1,039,642
 Cash at end of period                                 $  875,770    $1,147,454
                                                                              
 Supplemental disclosure of cash flow information:                             
    Cash paid for interest                             $1,064,535    $1,075,926

</TABLE>


SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY

Property improvements and replacements

   Accounts payable was adjusted $108,255 and $10,794 at December 31, 1995, and
December 31, 1994, respectively, for non-cash amounts in connection with
property improvements and replacements.

           See Accompanying Notes to Consolidated Financial Statements

                 DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP

                   Notes to Consolidated Financial Statements

                                December 31, 1995

Note A   Organization and Significant Accounting Policies

Organization:    Davidson  Income  Real  Estate,  L.P.  (the   "Partnership   or
"Registrant") is  a Delaware  limited  partnership organized  in April  1985  to
acquire and operate residential and commercial real estate properties.

Principles  of  Consolidation:   The  financial statements  of  the  Partnership
include all of the accounts of the Partnership, Bexley House, L.P., and Davidson
IRE Associates,  L.P.  The Partnership  owns 99.99% of  Bexley House,  L.P., and
99.99%  of  Davidson IRE  Associates,  L.P.    All  significant interpartnership
balances have been eliminated.

Use  of Estimates:  The  preparation of financial  statements in conformity with
generally accepted  accounting principles requires  management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes.  Actual results could differ from those estimates.

Allocations  to Partners:   Net  income (loss)  of the  Partnership  and taxable
income (loss)  are allocated 97% to  the limited partners and  3% to the general
partners.  Distributions from  distributable cash from operations  are allocated
among the  limited partners  and  the general  partners in  accordance with  the
agreement of  limited partnership.   Distributions of cash  from operations  per
limited partnership unit were $21.76  and $7.40 for 1995 and 1994, respectively.
The  weighted average number  of limited partnership units  outstanding for 1995
and 1994 was 26,776 units.

Net income (loss) of the Partnership and taxable income (loss) are allocated 97%
to the limited partners and 3% to the general partners,  except for such amounts
which  are  allocated  prior  to  the  Partnership  meeting  the  minimum  close
requirements  as  defined  in  the  partnership  agreement.    Distributions  of
available cash from operations are  allocated 97% to the limited partners and 3%
to the  general partners.  Cash  from sales or refinancing  are allocated 97% to
limited partners  and 3%  to general  partners until  the limited  partners have
received an amount  of cumulative distributions from sales or  refinancings that
equal original  invested capital plus  an amount which, when added  to the prior
distributions  to  limited  partners   will  equal  12%  per  annum   cumulative
noncompounded on  Adjusted Invested  Capital,  as defined  in the  agreement  of
limited partnership.   Thereafter, upon payment to  an affiliate of the  general
partners certain real estate  commissions and incentive fees as described in the
limited  partnership agreement,  remaining cash  from sales or  refinancings are
allocated  97% to  limited partners and  3% to general partners.   In connection
with the liquidation of the Partnership, cash from sales or refinancings and any
remaining working capital reserves shall be allocated among, and distributed to,
the partners  in proportion  to, and  to the extent of,  their positive  capital
account balances.


Note A   Organization and Significant Accounting Policies (continued)

Restricted Escrows

       Capital Improvement  Reserves  -  At  the  time  of  the  refinancing  of
Northsprings  and  the  financing  of  Covington Pointe  in  1993,  $162,915 and
$161,250 of the  proceeds were designated for "capital improvement  escrows" for
certain capital improvements.  At December 31, 1995, Northsprings and  Covington
Pointe had unexpended balances of $55,359 and $11,675 for capital  improvements.
Upon completion  of scheduled  property improvements, any excess  funds will  be
returned for property operations.
 
At  the time of the refinancing of Bexley House Apartments mortgage note payable
in  1992, $122,000  of the proceeds were  designated for  a  capital improvement
escrow  for certain capital improvements.  At December 31, 1995, $3,355 remained
in escrow  for 1996 capital  improvements and any excess funds  will be returned
for property operations.

       Reserve Account  -  In  addition  to  the  Capital  Improvement  Reserves
established  in  1993,  general  reserve accounts  of  $48,000  and  $72,000  on
Northsprings  and  Covington Pointe,  respectively,  were  established  with the
refinancing and  financing proceeds  for the properties involved.   These  funds
were  established  to cover  necessary  repairs  and  replacements  of  existing
improvements, debt  services, out-of-pocket  expenses incurred  for ordinary and
necessary  administrative  tasks,  and  payments  of  real  property  taxes  and
insurance premiums.   The  Partnership  was required  to deposit  net  operating
income (as defined in the  mortgage notes) from the properties to the respective
reserve accounts until  the reserve accounts equaled  $400 per apartment unit or
$48,000  for Northsprings and  $72,000 for  Covington Pointe.   At  December 31,
1995,  the  account  balances  were  $50,354  and  $72,206, respectively,  which
includes interest earned on these funds.

During  1992, a  general reserve  account of  $64,000  was established  with the
refinancing proceeds for  Bexley House.   These funds were established  to cover
necessary repairs and replacements of  existing improvements, debt service, out-
of-pocket expenses incurred for ordinary and necessary administrative tasks, and
payment  of real  property  taxes and  insurance premiums.   The  Partnership is
required to deposit net operating income (as defined in  the mortgage note) from
the refinanced property to  the reserve account until the reserve account equals
$1,000 per  apartment unit  or  $64,000 in  total.   At December  31, 1995,  the
account balance was $65,658, which includes interest earned on these funds.

Escrows for Taxes:  These  escrows are held by the Partnership for Bexley House,
Covington  Pointe,  and  Northsprings.   The  mortgagor  holds  the  escrow  for
Lakeside.  All escrow funds are designated for the payment of real estate taxes.

Present Value  Discounts:   Periodically, the Partnership incurs  debt at  below
market rates  for similar  debt.   Present value  discounts are  recorded on the
basis of  prevailing market rates  and are amortized on an  interest method over
the life of the related debt.  The amortization expense is included in  interest
expense.

Note A   Organization and Significant Accounting Policies (continued)

Investment Properties:   During  the  fourth quarter  of 1995,  the  Partnership
adopted  FASB Statement  No. 121,  Accounting for  the Impairment  of Long-Lived
Assets  and for Long-Lived Assets  to be Disposed  Of, which requires impairment
losses to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount.   The impairment loss
is measured by  comparing the fair  value of the  asset to its carrying  amount.
The effect of adoption was not material.

Depreciation:  Depreciation  is calculated by the straight-line method  over the
estimated lives of the investment properties and related personal property.  For
Federal income  tax purposes, the  accelerated cost recovery method  is used (1)
for real property over 18  years for additions after March 15,  1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1,
1987, and (2) for personal property over 5 years for additions prior to  January
1,  1987.   As a  result of  the Tax  Reform Act  of 1986,  for additions  after
December  31, 1986, the modified  accelerated cost  recovery method is  used for
depreciation of (1) real property additions over 27 1/2  years, and (2) personal
property additions over 7 years.

Cash  and Cash  Equivalents:   The Partnership  considers unrestricted  cash and
certificates  of deposit  to be  cash.   At certain  times, the  amount  of cash
deposited at a bank may exceed the limit on insured deposits.

Loan Costs:  Loan costs are included in other assets and  are being amortized on
a  straight-line basis over the life of  the loans.  The amortization expense is
included in interest expense.

Leases:  The Partnership generally leases apartment units for twelve-month terms
or  less.  The Partnership recognizes income as  earned on leases.  The Managing
General  Partner  finds  it  necessary   to  offer  rental  concessions   during
particularly slow months or  in response to heavy competition from other similar
complexes in the area.  During  1995, the properties offered various concessions
including one month free rent and variable move-in  allowances.  Concessions are
charged to expense as incurred.  

Restricted Cash--Tenant  Security Deposits:   The  Partnership requires security
deposits from  all apartment  lessees for  the duration of the  lease which  are
considered to be restricted cash.  Deposits are refunded when the tenant vacates
the apartment if there has been no damage to the unit.

Joint Venture:   The Partnership accounts for  its investment in Sterling  Crest
Joint Venture using the equity method of accounting.

Reclassifications:    Certain reclassifications  have  been  made  to  the  1994
balances to conform to the 1995 presentation.

Note A   Organization and Significant Accounting Policies (continued)

Advertising:   The Partnership  expenses the costs of  advertising as  incurred.
Advertising expense, included in operating expenses, was $92,840 and $87,516 for
the years ended December 31, 1995 and 1994, respectively.

Fair  Value:    In  1995,  the Partnership  implemented  Statement  of Financial
Accounting  Standards  No.  107,  "Disclosure  about  Fair  Value  of  Financial
Instruments,"  which  requires   disclosure  of  fair  value  information  about
financial instruments for which  it is practicable to estimate that value.   The
carrying amount of the Partnership's cash and cash equivalents approximates fair
value due to short-term maturities.  The Partnership estimates the fair value of
its fixed rate  mortgages by discounted cash  flow analysis, based  on estimated
borrowing rates currently available to the Partnership.  The carrying amounts of
variable-rate mortgages approximate fair value due to frequent re-pricing.

Note B   Investment in Joint Venture

The Partnership  owns  a 17.5%  interest in  Sterling Crest  Joint Venture  with
Davidson Growth Plus, L.P.,  an affiliate of the Managing General Partner  which
owns the  remaining 82.5% of  the joint venture.   In connection with  the joint
venture s purchase of Phase I of Brighton Crest Apartments on June 30, 1987, the
Partnership  invested  $2,726,696  in  the  joint venture.    The  joint venture
purchased Phase II of Brighton Crest Apartments on December 15, 1987.

Summary financial information for Sterling Crest Joint Venture is as follows:


                                                                              
                                         December 31,        
                                    1995               1994  
                                                             
 Total assets                   $9,170,623        $10,093,765
 Total liabilities              (6,728,392)        (6,976,465)
                                                           
 Total venturers' equity        $2,442,231        $ 3,117,300
                                                             

                                         December 31,        
                                    1995               1994  
                                                             
 Total revenues                $ 2,391,532        $ 2,241,824
 Total expenses                 (2,066,601)        (1,999,150)
                                                             
                               $   324,931        $   242,674



In  1995  and  1994, the  Partnership  received  distributions of  $175,000  and
$93,531, respectively, from the Joint Venture.


Note C - Mortgage Notes Payable

The principal terms of the mortgage notes payable are as follows:


                   Principal      Monthly                          Principal
                   Balance At     Payment    Stated                 Balance
                   December 31,   Including  Interest   Maturity    Due At
 Property              1995       Interest    Rate        Date     Maturity 
                                                        
 Northsprings                                           
  1st mortgage     $ 1,935,054    $ 14,461    7.83%     10/15/03  $1,701,388
  2nd mortgage          61,200         399    7.83%     10/15/03      61,200
                                                        
 Lakeside            3,827,984      37,367   10.75%     07/01/96   3,812,335
                                                       
 Bexley House                                           
  1st mortgage       1,365,032      11,520    7.60%     11/15/02   1,052,381
  2nd mortgage          45,142         286    7.60%     11/15/02      45,142
                                                                            
 Covington Pointe                                       
  1st mortgage       4,740,950      35,428    7.83%     10/15/03   4,168,660
  2nd mortgage         149,940         978    7.83%     10/15/03     149,940
                                                        
 Total              12,125,302    $100,439              
                                                        
 Less unamortized                                       
 discounts            (193,199)                         
                                                      
                   $11,932,103                          

The estimated fair  values of the Partnership's  aggregate debt is  $12,176,626.
This  value  represents a  general approximation  of possible  value and  is not
necessarily indicative of  the amounts the Partnership may pay in  actual market
transactions.

The mortgage  notes payable are  non-recourse and  are secured by  pledge of the
respective apartment properties  and by pledge of  revenues from the  respective
apartment  properties.  Certain of  the  notes require  prepayment penalties  if
repaid  prior to  maturity  and prohibit  resale  of the  properties subject  to
existing indebtedness. 

The Partnership  exercised interest  rate buy-down options  reducing the  stated
rate from 8.76%  to 7.60% for Bexley House  and 8.13% to 7.83%  for Northsprings
and Covington Pointe.  The fees  for the interest rate reductions  were $242,732
and are  being amortized as  loan discounts  using the interest  method over the
life  of the  loans.   The discount  fees are  reflected as  a reduction  of the
mortgage notes payable and increases the effective rate of the debt to 8.76% for
Bexley House and 8.13% for Northsprings and Covington Pointe.


Note C - Mortgage Notes Payable (continued)

Refinancing for  the debt encumbering Lakeside Apartments which  matures in July
1996 is currently being discussed with the existing lender, however, there is no
assurance that the refinancing discussions will ultimately be successful.

Scheduled principal  payments of  mortgage notes payable  subsequent to December
31, 1995, are as follows:


                  1996                        $ 3,942,433            
                  1997                            123,651            
                  1998                            133,593            
                  1999                            144,335            
                  2000                            155,940            
            Thereafter                          7,625,350            
                                              $12,125,302            


Note D   Income Taxes

The Partnership has received a  ruling from the Internal Revenue Service that it
will   be  classified  as  a   partnership  for  Federal  income  tax  purposes.
Accordingly, no provision for  income taxes is made in the financial  statements
of the  Partnership.  Taxable income or  loss of the Partnership  is reported in
the income tax returns of its partners.

The following is a reconciliation of reported net loss and Federal taxable loss:

                                                                              
                                             1995               1994  
                                                                      
 Net loss as reported                     $(216,376)         $(308,178)
 Add (deduct):                                                        
     Depreciation differences               (56,417)           (99,132)
     Equity in Joint Venture                (38,069)            (2,853)
     Miscellaneous                           84,175             69,236
     Prepaid rents                          (18,874)            64,005
                                                                     
 Federal taxable loss                     $(245,561)         $(276,922)
                                                                      
 Federal taxable loss                                                 
     per limited partnership unit         $   (8.90)         $  (10.03)
                                          
Note D - Income Taxes (continued)

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities:


      Net assets as reported                                  $ 4,549,197
      Land and buildings                                        3,176,096
      Accumulated depreciation                                    680,694
      Syndication                                               3,809,021
      Other                                                       950,646
      Net assets - Federal tax basis                          $13,165,654



Note E   Transactions with Affiliated Parties

The Partnership  has  no employees  and  is dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management and  administration  of  all
partnership activities.   The  partnership agreement  provides  for payments  to
affiliates for  services and  as reimbursement  of certain expenses incurred  by
affiliates  on  behalf  of the  Partnership.    Transactions with  affiliates of
Insignia Financial Group, Inc. in 1995 and 1994 are:

 
                                                       1995          1994 
                                                                          
      Property management fees                      $221,930      $210,096
      Reimbursement for services of affiliates       171,056       154,758
      Construction service fees                       13,991         4,476


The Partnership insures  its properties under a master policy through  an agency
and insurer unaffiliated with the Managing General Partner.  An affiliate of the
Managing General  Partner acquired,  in the acquisition of  a business,  certain
financial obligations from an insurance  agency which was later  acquired by the
agent who placed the  current year's master policy.   The current  agent assumed
the financial obligations to the affiliate of the Managing General  Partner, who
receives payments  on  these obligations  from the  agent.   The amount  of  the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
Managing  General  Partner   by  virtue  of  the  agent's  obligations   is  not
significant.



Note F - Real Estate and Accumulated Depreciation            


                                                       
                                            Initial Cost             
                                            To Partnership           
                                                                    Cost
                                                   Buildings     Capitalized
                                                  and Related   (Written Down)
                                                    Personal    Subsequent to
 Description           Encumbrances       Land      Property     Acquisition 
                                                  
 Northsprings          $ 1,996,254    $  736,021  $ 4,195,924   $  (436,603)
                                                 
 Lakeside                3,827,984     1,259,254    5,791,309      (803,336)
                                                  
 Bexley House            1,410,174       646,518    3,066,691      (262,629)
                                                  
 Covington Pointe        4,890,890     1,935,043    7,041,470       295,289
                                                  
   Totals              $12,125,302    $4,576,836  $20,095,394   $(1,207,279)


<TABLE>
<CAPTION>

                        Gross Amount At Which Carried
                             At December 31, 1995     

                                 Buildings                                                  
                                And Related                                                 
                                  Personal                   Accumulated        Date of       Date       Depreciable
Description       Land           Property         Total      Depreciation   Construction   Acquired      Life-Years 
<S>            <C>            <C>            <C>           <C>                  <C>          <C>            <C>     
Northsprings    $  596,800     $ 3,898,542    $ 4,495,342   $  1,807,059         1969         11/85          5-25
                                                                                           
Lakeside         1,046,092        5,201,135      6,247,227     2,423,360         1980         05/86          5-25
                                                                                                         
Bexley House       541,609        2,908,971      3,450,580     1,225,817         1972         09/86          5-25
                                                                                            
Covington Pointe 1,935,043        7,336,759      9,271,802     2,955,408         1982         03/87          5-25
                                                                                            
Totals          $4,119,544      $19,345,407    $23,464,951   $ 8,411,644                    

</TABLE>                                                                 
 

Note F - Real Estate and Accumulated Depreciation (continued)

Reconciliation of  Real Estate and Accumulated Depreciation :

                                             Years Ended December 31,   
                                                1995            1994   

 Real Estate                                                           
 Balance at beginning of year               $23,229,978     $23,081,494
      Property improvements                     481,818         305,448
      Disposal of property                     (246,845)       (156,964)
 Balance at End of Year                     $23,464,951     $23,229,978
                                                                      
 Accumulated Depreciation                                              
 Balance at beginning of year               $ 7,787,553     $ 7,134,472
     Additions charged to expense               782,111         738,544
     Disposal of property                      (158,020)        (85,463)
 Balance at End of Year                     $ 8,411,644     $ 7,787,553


The  aggregate cost  of  the real  estate  for Federal  income tax  purposes  at
December 31,  1995 and  1994 is  $26,641,047 and  $26,159,229.  The  accumulated
depreciation taken for Federal income tax purposes at December 31, 1995 and 1994
is $7,730,950 and $6,892,422.


Note G   Commitments

The Partnership Agreement provides for the Managing General Partner to receive a
fee for managing the affairs of the Partnership.  The fee is 2% of adjusted cash
from  operations, as defined in the  partnership agreement.  The  fee is payable
only after  the Partnership  has distributed to all  limited partners,  adjusted
cash from operations in any year equal to 10% of their adjusted invested capital
as defined in  the partnership agreement.   No fees  were payable for  the years
ended December  31, 1995,  or  December 31,  1994.   Such  fee will  be  payable
retroactively  in the event adjusted cash from operations in any year equals 10%
of adjusted invested capital.  Because of the uncertainty  of any payments under
this agreement, no amounts have been accrued.

Item 8. Changes  in  and  Disagreements   with  Accountants  on  Accounting  and
        Financial Disclosures

      None.

                                    PART III


Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
        with Section 16(a) of the Exchange Act

     The  Registrant  does not  have any  directors or  officers.   The Managing
General Partner, Davidson Diversified  Properties, Inc., is responsible for  the
management and control  of substantially all of the Registrant's  operations and
has general responsibility  and ultimate authority in all matters  affecting the
Registrant's  business.  The  Individual General Partners, in  their capacity as
such, did not devote  any material amount of business  time or attention to  the
Registrant's affairs.  

      The present officers of the Managing General Partner are listed below:

Name                             Age         Position

Carroll D. Vinson                55          President

Robert D. Long, Jr.              28          Controller and Principal
                                             Accounting Officer

William H. Jarrard, Jr.          49          Vice President

John K. Lines                    36          Vice President and Secretary

Kelley M. Buechler               38          Assistant Secretary



    Carroll D.  Vinson has  been President  of Davidson  Diversified Properties,
Inc. since August of 1994.   Prior to that, from April 1993 to August 1994,  Mr.
Vinson was affiliated with Crisp, Hughes &  Co. (regional CPA firm) and  engaged
in various other investment  and consulting activities.  Briefly, in early 1993,
Mr.  Vinson  served  as  President  and  Chief  Executive  Officer  of   Angeles
Corporation,  a real estate investment firm.   From 1991 to 1993, Mr. Vinson was
employed by Insignia in various capacities including Managing Director-President
during 1991.   From 1986 to 1990, Mr. Vinson  was President and Director of U.S.
Shelter Corporation,  a real estate  services company, which sold  substantially
all of its assets to Insignia in December 1990.
    
    Robert  D. Long,  Jr.  is  Controller and  Principal Accounting  Officer  of
Davidson  Diversified  Properties, Inc.    Prior to  joining Metropolitan  Asset
Enhancement, L.P.,  and  subsidiaries,  he  was  an  auditor for  the  State  of
Tennessee and  was associated  with the  accounting firm  of Harshman  Lewis and
Associates.  He is a graduate of The University of Memphis.

    William H. Jarrard, Jr. is Managing Director - Partnership Administration of
Insignia  Financial Group,  Inc.  ("Insignia").  He is  also Vice  President  of
Davidson Diversified  Properties, Inc.  During the five years  prior to  joining
Insignia in 1991, he served in a similar capacity for U.S. Shelter.  Mr. Jarrard
is  a graduate  of  the  University of  South  Carolina and  a  certified public
accountant.

    John K. Lines has been  General Counsel and Secretary of Insignia since June
1994.    From May  1993 until  June 1994,  Mr. Lines  was the  Assistant General
Counsel and Vice  President of Ocwen  Financial Corporation in West  Palm Beach,
Florida.   From October 1991 until  April 1993, Mr. Lines  was a Senior Attorney
with  Banc One Corporation in Columbus, Ohio.  From May 1984 until October 1991,
Mr. Lines was employed as an Associate Attorney with Squire Sanders & Dempsey in
Columbus, Ohio.

    Kelley  M. Buechler is  Assistant Secretary  of Insignia.   During  the five
years  prior to joining Insignia  in 1991, she served in  a similar capacity for
U.S. Shelter.  Ms. Buechler is a graduate of the University of North Carolina.

Item 10.   Executive Compensation

      The Registrant  was not  required to  and did  not pay  remuneration  to
officers  and/or directors of the Managing General Partner  during 1995 or 1994.
See "Item 12." below and Note E of the Notes to the financial statements in Item
7  for a  discussion  of compensation  and reimbursements  paid  to the  General
Partners and certain affiliates.


Item 11.   Security Ownership of Certain Beneficial Owners and Management

      As  of  December 31,  1995,  the  only person  or  entity  known by  the
Registrant  to be  the beneficial  owner of  more than  5% of  the Units  of the
Registrant is set forth below:


                                               Amount and Nature of    Percent 
Entity                     Title of Class      Beneficial Ownership    of Class

Third National Bank for    Units of Limited        3,000 Units @         11.2%
 Hospital Corporation of   Partnership Interest   $1,000/Unit    
 America                                                             
One Park Plaza
Nashville, TN 37202


    As of December 31, 1995, no director or officer  of the Managing General
Partner owns, nor  do the directors or officers as  a whole own more  than 1% of
the  Registrant's Units.  No  such director or officer had  any right to acquire
beneficial ownership of additional Units of the Registrant.


Item 12.   Certain Relationships and Related Transactions

    Davidson Diversified  Properties, Inc., the Managing  General Partner of the
Registrant,  is  owned  by   MAE  GP  Corporation,  which  is  wholly  owned  by
Metropolitan Asset Enhancement. L.P., an affiliate of Insignia.

    Effective  January  1, 1992,  management  and  administrative  services were
assumed by  affiliates  of Insignia.    Management fees  paid to  affiliates  of
Insignia   in  1995  and   1994  were   $221,930  and   $210,096,  respectively.
Reimbursements of administrative fees paid to affiliates of Insignia in 1995 and
1994 were $160,347 and $144,610, respectively.

    The Partnership  Agreement provides  for  the  Managing General  Partner  to
receive  a fee for  managing the affairs of  the Registrant.   The fee  is 2% of
adjusted cash from operations, as defined in the Partnership Agreement.  The fee
is payable only  after the Registrant  has distributed to all  limited partners,
adjusted  cash from  operations  in  any year  equal  to 10%  of  their adjusted
invested  capital as  defined  in the  Partnership Agreement.    Because of  the
uncertainty regarding the payment of the fee, the fee has not been accrued.


Item 13.   Exhibits and Reports on Form 8-K

         (a)   Exhibits:  See Exhibit Index contained herein.

               Exhibit 27,  Financial Data Schedule,  is filed as  an exhibit to
               this report.

         (b)   Reports on Form 8-K  filed in the  fourth quarter of fiscal  year
               1995:

               None.


                                   SIGNATURES


        In  accordance  with  Section  13 or  15(d)  of  the  Exchange Act,  the
Registrant caused  this report to  be signed  on its behalf  by the undersigned,
thereunto duly authorized.



                                 DAVIDSON INCOME REAL ESTATE, L.P.

                                 By:   Davidson Diversified Properties, Inc.,
                                       as Managing General Partner



                                 By:   /s/ Carroll D. Vinson                
                                       Carroll D. Vinson
                                       President


                                 Date:  March 18, 1996



    In accordance with  the Exchange Act, this report has  been signed below
by the following person on behalf of the Registrant and in the capacities and on
the date indicated.



/s/ Carroll D. Vinson                       President         March 18, 1996
Carroll D. Vinson



/s/ Robert D. Long, Jr.                     Controller        March 18, 1996
Robert D. Long, Jr.                         and Principal     
                                            Accounting Officer




                                  EXHIBIT INDEX


Exhibit


3        Agreement  of  Limited  Partnership  is incorporated  by  reference  to
         Exhibit A  to the Prospectus of  the Registrant dated July  26, 1985 as
         filed with the Commission pursuant to Rule 424(b) under the Act.

3A       Amendment   to  Partnership   Agreement  dated   October  1,   1985  is
         incorporated by  reference  to Exhibit  3A to  the Registrant's  Annual
         Report on Form 10-K for the fiscal year ended December 31, 1987.

4        Certificate of Limited Partnership dated April 29, 1985 is incorporated
         by reference to Exhibit 4 to the Registrant's Registration Statement on
         Form S-11 dated May 7, 1985.

4A       Certificate of  Amendment to  Certificate of Limited  Partnership dated
         July 16, 1985  is incorporated by reference to  Exhibit 4B in Amendment
         No. 1 to Registration Statement No. 2-97539, dated July 24, 1985.

10A      Agent's  Agreement dated July 1, 1985 between the Registrant and Harvey
         Freeman &  Sons, Inc., is  incorporated by reference to  Exhibit 10B in
         Amendment No. 1 to  Registration Statement No. 2-97539, dated  July 24,
         1985.

10B      Agreement Among Agents dated July 1, 1985 by and among Harvey Freeman &
         Sons, Inc., Harvey  Freeman & Sons, Inc. of Arkansas,  Harvey Freeman &
         Sons, Inc. of Florida, Harvey  Freeman & Sons, Inc. of Georgia,  Harvey
         Freeman  & Sons,  Inc.  of  Indiana, Harvey  Freeman  &  Sons, Inc.  of
         Kentucky,  Harvey Freeman & Sons, Inc. of Mississippi, Harvey Freeman &
         Sons of Missouri, Inc., Harvey Freeman & Sons,  Inc. of North Carolina,
         Harvey Freeman & Sons, Inc. of Ohio and Harvey  Freeman & Sons, Inc. of
         South Carolina is incorporated by reference to Exhibit 10C in Amendment
         No. 1 to Registration Statement No. 2-97539, dated July 24, 1985.

10C      Acquisition  and  Disposition Services  Agreement  dated  July 1,  1985
         between the Registrant and Criswell Freeman Company is  incorporated by
         reference to Exhibit 10D  in Amendment No. 1 to  Registration Statement
         No. 2-97539, dated July 24, 1985.

10D      Contract for Sale  of Real  Estate for North  Springs apartments  dated
         October 16, 1985 between  James B. Miller, Karina Miller,  Dahlis Winn,
         Christine  Abrams  and  William Lichirie,  as  Tenants  in  Common  and
         Tennessee Trust Company  is incorporated by reference  to Exhibit 10(a)
         to the Registrant's Current Report on Form 8-K dated November 13, 1985.

10E      Assignment  of Contract  for  Sale of  Real  Estate for  North  Springs
         Apartments dated November 12,  1985 between Tennessee Trust Company and
         the Registrant is  incorporated by  reference to Exhibit  10(b) to  the
         Registrant's Current Report on Form 8-K dated November 13, 1985.
 

10F      Promissory Note dated February 14, 1969 executed by Mt. Pleasant Plaza,
         Inc.,  a Georgia  corporation payable  to The  Fulton National  Bank of
         Atlanta, a corporation having its principal place of business in Fulton
         County, Georgia, is  incorporated by  reference to Exhibit  10G to  the
         Registrant's  Annual  Report on  Form  10-K for  the fiscal  year ended
         December 31, 1985.

10G      Agreement  dated December  24, 1969  between Massachusetts  Mutual Life
         Insurance Company, a Massachusetts  corporation and Mt. Pleasant Plaza,
         Inc.,  a  corporation  of  the State  of  Georgia,  is incorporated  by
         reference to Exhibit 10H to the Registrant's Annual Report on Form 10-K
         for the fiscal year ended December 31, 1985.

10H      Purchase Agreement for Lakeside  Apartments dated April 4, 1986 between
         Lakeside Apartments  Venture, a North Carolina  general partnership and
         Tennessee Trust  Company, a  Tennessee corporation, is  incorporated by
         reference to Exhibit 10(a)  to the Registrant's Current report  on Form
         8-K dated May 20, 1986.

10I      Assignment  of Agreement  dated  May 16,  1986 between  Tennessee Trust
         Company, a Tennessee corporation, and the Registrant is incorporated by
         reference to Exhibit 10(b)  to the Registrant's Current Report  on Form
         8-K dated May 20, 1986.

10J      Deed  of  Trust Note  dated June  13, 1989  executed by  the Registrant
         payable to  John Hancock  Variable Life  Insurance Company  relating to
         Lakeside Apartments.

10K      Deed  of  Trust and  Security  Agreement dated  April 28,  1980 between
         Lakeside Properties, Ltd., a North Carolina limited partnership, Gibson
         L. Smith, Jr., Trustee and Continental Illinois National Bank and Trust
         Company of Chicago is incorporated by reference to Exhibit 10(d) to the
         Registrant's Current Report on Form 80-K dated May 20, 1986.

10L      Contract for  Sale of Real Estate  for The Bexley House  dated July 16,
         1986 between Bexley  House, Limited,  an Ohio  limited partnership  and
         Tennessee  Trust company is incorporated by  reference to Exhibit 10(a)
         to  the Registrant's  Current Report  on Form  8-K dated  September 30,
         1986.

10M      Reinstatement and Amendment of Contract for Sale of Real Estate for The
         Bexley  House dated September 4, 1986 between Bexley House, Limited, an
         Ohio  limited  partnership and  Tennessee  Trust  Company, a  Tennessee
         corporation,  is incorporated  by  reference to  Exhibit  10(b) to  the
         Registrant's Current Report on Form 8-K dated September 30, 1986.

10N      Amendment  to Reinstated and  Amended Contract for Sale  of Real Estate
         for The Bexley  House dated  September 19, 1986  between Bexley  House,
         Limited, an  Ohio limited  partnership and  Tennessee Trust  Company, a
         Tennessee corporation, is incorporated by reference to Exhibit 10(c) to
         the Registrant's Current Report on Form 80K dated September 30, 1986.

10O      Assignment of Contract for Sale of Real Estate dated September 30, 1986
         between Tennessee Trust company  and the Registrant is  incorporated by
         reference to Exhibit 10(d) to the Registrant's urrent Report on Form 8-
         K dated September 30, 1986.

10P      Limited Warranty  Deed dated September  28, 1986 between  Bexley House,
         Ltd., an Ohio limited partnership and the Registrant is incorporated by
         reference to Exhibit 10(e)  to the Registrant's Current Report  on Form
         8-K dated September 30, 1986.

10Q      Contract  for Sale of Real Estate for Covington Pointe Apartments dated
         January 20, 1987 between F.G.M.C. Investment Corp., a Texas corporation
         Tennessee Trust  Company, a  Tennessee corporation, is  incorporated by
         reference to Exhibit 10(a)  to the Registrant's Current Report  on Form
         8-K dated March 10, 1987.

10R      Amendment  to Contract for Purchase of Real Estate for Covington Pointe
         Apartments  dated January 23, 1987 between F.G.M.C. Investment Corp., a
         Texas corporation Tennessee Trust  Company, a Tennessee corporation, is
         incorporated by reference to Exhibit 10(b) to the  Registrant's Current
         Report on Form 8-K dated March 10, 1987.

10S      Assignment of Contract for Purchase of Real Estate for Covington Pointe
         Apartments  dated March 2, 1987 between Tennessee Trust Company and the
         Registrant  is incorporated  by  reference  to  Exhibit  10(c)  to  the
         Registrant's Current Report on Form 8-K dated March 10,1987.

10T      Contract for  Purchase of  Real Estate  for Phase  I of  Sterling Crest
         Apartments  dated March 10,  1987  between  Sterling Crest  Development
         Partners,  Ltd., a  Georgia  limited partnership,  and Tennessee  Trust
         Company,  a  Tennessee corporation,  is  incorporated  by reference  to
         Exhibit  10(d) to  the Registrant's  Current Report  on Form  8-K dated
         March 10, 1987.

10U      Mortgage Note dated March  23, 1987 executed by the  Registrant payable
         to  BancOhio   National  Bank,  relating   to  The  Bexley   House,  is
         incorporated by reference to Exhibit a(1) to the Registrant's Quarterly
         Report on Form 10-Q for the quarter ended March 31, 1987.

10V      Open-End  Mortgage, Assignment  of Rents  and Security  Agreement dated
         March 23, 1987 executed by the Registrant in favor of BancOhio National
         Bank  relating to  The Bexley  House, is  incorporated by  reference to
         Exhibit  a(2) to the Registrant's Quarterly Report on Form 10-Q for the
         quarter ended March 31, 1987.

10W      Mortgage Note dated March  23, 1987 executed by the  Registrant payable
         to  BancOhio  National   Bank,  relating  to   The  Bexley  House,   is
         incorporated by reference to Exhibit a(3) to the Registrant's Quarterly
         Report on Form 10-Q for the quarter ended March 31, 1987.

10X      Open-End  Mortgage, Assignment  of Rents  and Security  Agreement dated
         March 23, 1987 executed by the Registrant in favor of BancOhio National
         Bank  relating to  The Bexley  House, is  incorporated by  reference to
         Exhibit  a(4) to the Registrant's Quarterly Report on Form 10-Q for the
         quarter ended March 31, 1987.

10Y      Sterling  Crest Joint Venture Agreement dated June 29, 1987 between the
         Registrant  and  Freeman  Georgia  Ventures, Inc.  is  incorporated  by
         reference to Exhibit 10(b)  to the Registrant's Current Report  on Form
         8-K dated June 30, 1987.

10Z      Assignment of  Contract for  Purchase of  Real Estate  for Phase  I  of
         Sterling  Crest  Apartments dated  June  29,  1987  is incorporated  by
         reference to  Exhibit  10(c)  to the  Registrant's  Current  Report  on
         Form 8-K dated June 30, 1987.

10AA     Warranty Deed  dated June 30,  1987 between Sterling  Crest Development
         Partners, Ltd. and  Sterling Crest  Joint Venture,  is incorporated  by
         reference to Exhibit 10(d)  to the Registrant's Current Report  on Form
         8-K dated June 30, 1987.

10BB     Sub-Management Agreement dated  June 30, 1987 between  Harvey Freeman &
         Sons, Inc. and Sterling Property Management Company, is incorporated by
         reference to Exhibit 10(k)  to the Registrant's Current Report  on Form
         8-K dated June 30, 1987.

10CC     Property  Management Agreement  dated  June 30,  1987 between  Sterling
         Crest Joint Venture and Harvey Freemen & Sons, Inc., is incorporated by
         reference to Exhibit 10(l)  to the Registrant's Current Report  on Form
         8-K dated June 30, 1987.

10DD     Contract for Purchase  of Real Estate  for Phase  II of Sterling  Crest
         Apartments  dated March  10,  1987 between  Sterling Crest  Development
         Partners, Ltd. and Tennessee Trust Company is incorporated by reference
         to Exhibit  10(a) to the Registrant's  Report on Form  8 dated December
         29, 1987.

10EE     Tri-Party Agreement  dated May  22, 1987  among North  Carolina Federal
         Savings &  Loan Association, Sterling Crest  Development Partners, Ltd.
         and  Tennessee Trust Company relating to  Sterling Crest Apartments, is
         incorporated by reference  to Exhibit 10(b) to the  Registrant's Report
         on Form 8 dated December 29, 1987.

10FF     Assignment of  Contract  for  Purchase of  Real  Estate  and  Tri-Party
         Agreement dated November  4, 1987 between  Tennessee Trust Company  and
         Sterling  Crest Joint Venture relating to Sterling Crest Apartments, is
         incorporated by reference  to Exhibit 10(c) to  the Registrant's Report
         on Form 8 dated December 29, 1987.

10GG     Amended  and  Restated  Sterling  Crest  Joint  Venture  Joint  Venture
         Agreement dated  June 29,  1987 among  the Registrant, Freeman  Georgia
         Ventures,  Inc., and  Freeman  Growth Plus,  L.P.,  is incorporated  by
         reference to Exhibit 10(d) to  the Registrant's Report on Form  8 dated
         December 29, 1987.

10HH     Memorandum  of   Understanding  among  SEC   Realty  Corp.,   Tennessee
         Properties, L.P., Freeman Mortgage  Corporation, J. Richard Freeman, W.
         Criswell Freeman and Jacques-Miller Properties, Inc. is incorporated by
         reference to Exhibit 10MM to the Registrant's Annual Report on Form 10-
         K for the fiscal year ended December 31, 1988.

10II     Partnership Administration  and  Consultation Agreement  among  Freeman
         Properties,   Inc.,  Freeman  Diversified  Properties,  Inc.,  residual
         Equities Limited and Jacques-Miller Properties, Inc. is incorporated by
         reference to Exhibit 10NN to the Registrant's Annual Report on Form 10-
         K for the fiscal year ended December 31, 1988.

10JJ     Termination  Agreement, dated December  31, 1991  among Jacques-Miller,
         Inc.,   Jacques-Miller   Property   Management,  Davidson   Diversified
         Properties, Inc., and Supar, Inc.

10KK     Assignment   of  Limited  Partnership  Interest  of  Freeman  Equities,
         Limited,   dated  December 31,   1991   between  Davidson   Diversified
         Properties, Inc. and Insignia Jacques-Miller, L.P.

10LL     Assignment of  General Partner Interests of  Freeman Equities, Limited,
         dated December  31, 1991 between Davidson  Diversified Properties, Inc.
         and MAE GP Corporation.

10MM     Stock certificate, dated December 31,  1991 showing ownership of  1,000
         shares of Davidson Diversified Properties, Inc. by MAE GP Corporation.

10NN     Contracts related to refinancing of debt:

       (a) First Deeds of Trust  and Security Agreements dated October  28, 1992
           between  Bexley  House, L.P.  and  First  Commonwealth Realty  Credit
           Corporation, a Virginia Corporation, securing Bexley House Apartments
           is  incorporated by reference to Exhibit 10NN (a) to the Registrant's
           Annual Report on Form 10-KSB  for the fiscal year ended  December 31,
           1992.

       (b) Seconds Deeds of Trust and Security Agreements dated October 28, 1992
           between  Bexley  House, L.P.  and  First  Commonwealth Realty  Credit
           Corporation, a Virginia Corporation, securing Bexley House Apartments
           is  incorporated by reference to Exhibit 10NN (b) to the Registrant's
           Annual Report  on Form 10-KSB for the fiscal  year ended December 31,
           1992.

       (c) First  Assignments of Leases and Rents dated October 28, 1992 between
           Bexley House, L.P. and  First Commonwealth Realty Credit Corporation,
           a  Virginia   Corporation,  securing   Bexley  House   Apartments  is
           incorporated  by reference to  Exhibit 10NN  (c) to  the Registrant's
           Annual Report on Form 10-KSB  for the fiscal year ended December  31,
           1992. 

       (d) Second Assignments of Leases and Rents dated October 28, 1992 between
           Bexley House, L.P. and  First Commonwealth Realty Credit Corporation,
           a  Virginia  Corporation,  securing   Bexley  House  Apartments    is
           incorporated by  reference to  Exhibit 10NN  (d) to the  Registrant's
           Annual Report on  Form 10-KSB for the fiscal  year ended December 31,
           1992.

       (e) First  Deeds of  Trust Notes  dated October  28, 1992  between Bexley
           House,  L.P.  and  First  Commonwealth  Realty  Credit   Corporation,
           relating to Bexley House  Apartments is incorporated by  reference to
           Exhibit 10NN (e) to the Registrant's Annual Report on Form 10-KSB for
           the fiscal year ended December 31, 1992.

       (f) Second Deeds of  Trust Notes  dated October 28,  1992 between  Bexley
           House,  L.P.  and  First   Commonwealth  Realty  Credit  Corporation,
           relating to  Bexley House Apartments is incorporated  by reference to
           Exhibit 10NN (f) to the Registrant's Annual Report on Form 10-KSB for
           the fiscal year ended December 31, 1992.

10OO   Contracts related to refinancing of debt:

       (a) First Deeds of Trust and Security Agreements dated September 30, 1993
           between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
           a  Virginia   Corporation,   securing  Northsprings   Apartments   is
           incorporated  by reference  to Exhibit 10OO  (a) to  the Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (b) Second Deeds  of Trust and  Security Agreements  dated September  30,
           1993  between Davidson  IRE Associates,  L.P. and  Lexington Mortgage
           Company, a Virginia Corporation,  securing Northsprings Apartments is
           incorporated by  reference to  Exhibit 10OO  (b) to  the Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (c) First  Assignments  of Leases  and  Rents  dated  September 30,  1993
           between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
           a   Virginia  Corporation,   securing   Northsprings  Apartments   is
           incorporated by  reference to  Exhibit 10OO  (c) to  the Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (d) Second  Assignments  of Leases  and  Rents dated  September  30, 1993
           between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
           a  Virginia   Corporation,   securing  Northsprings   Apartments   is
           incorporated  by reference  to Exhibit 10OO  (d) to  the Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (e) First  Deeds of Trust Notes dated September 30, 1993 between Davidson
           IRE  Associates, L.P.  and  Lexington Mortgage  Company, relating  to
           Northsprings Apartments is incorporated  by reference to Exhibit 10OO
           (e)  to  the Registrant's  Quarterly  Report on  Form 10-QSB  for the
           quarter ended September 30, 1993.

       (f) Second Deeds of Trust Notes dated September 30, 1993 between Davidson
           IRE  Associates, L.P.  and  Lexington Mortgage  Company, relating  to
           Northsprings Apartments is incorporated  by reference to Exhibit 10OO
           (f)  to  the Registrant's  Quarterly  Report on  Form 10-QSB  for the
           quarter ended September 30, 1993.

10PP   Contracts related to refinancing of debt:

       (a) First Deeds of Trust and Security Agreements dated September 30, 1993
           between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
           a  Virginia  Corporation,  securing  Covington  Pointe  Apartments is
           incorporated by reference  to Exhibit  10PP (a)  to the  Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (b) Second Deeds  of Trust  and Security  Agreements dated  September 30,
           1993  between Davidson  IRE Associates,  L.P. and  Lexington Mortgage
           Company, a Virginia Corporation, securing Covington Pointe Apartments
           is  incorporated by reference to Exhibit 10PP (b) to the Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (c) First  Assignments  of  Leases and  Rents  dated  September 30,  1993
           between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
           a  Virginia  Corporation,  securing  Covington  Pointe  Apartments is
           incorporated  by reference to  Exhibit 10PP  (c) to  the Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (d) Second  Assignments  of Leases  and  Rents dated  September  30, 1993
           between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
           a  Virginia  Corporation,  securing  Covington  Pointe  Apartments is
           incorporated by  reference to  Exhibit 10PP  (d) to the  Registrant's
           Quarterly Report on Form  10-QSB for the quarter ended  September 30,
           1993.

       (e) First  Deeds of Trust Notes dated September 30, 1993 between Davidson
           IRE  Associates, L.P.  and  Lexington Mortgage  Company, relating  to
           Covington Pointe  Apartments is incorporated by  reference to Exhibit
           10PP  (e) to the Registrant's Quarterly Report on Form 10-QSB for the
           quarter ended September 30, 1993.

       (f) Second Deeds of Trust Notes dated September 30, 1993 between Davidson
           IRE  Associates, L.P.  and  Lexington Mortgage  Company, relating  to
           Covington Pointe  Apartments is incorporated by  reference to Exhibit
           10PP (f)  to the Registrant's Quarterly Report on Form 10-QSB for the
           quarter ended September 30, 1993.

16     Letter from the  Registrant's former independent accountant regarding its
       concurrence with the statements made by the Registrant is incorporated by
       reference to the exhibit filed with Form 8-K dated September 30, 1992.

27     Financial Data Schedule.

99A    Agreement of Limited Partnership  for Davidson IRE GP Limited Partnership
       between Davidson  Diversified Properties,  Inc. and  Davidson Income Real
       Estate,  L.P. entered  into  on  September 15,  1993 is  incorporated  by
       reference to Exhibit 99A to the Registrant's Quarterly Report on Form 10-
       QSB for the quarter ended September 30, 1993.

99B    Agreement  of  Limited  Partnership  for  Davidson  IRE  Associates, L.P.
       between  Davidson  IRE GP  Limited Partnership  and Davidson  Income Real
       Estate,  L.P  is  incorporated  by  reference  to  Exhibit  99B  to   the
       Registrant's  Quarterly  Report on  Form  10-QSB  for  the  quarter ended
       September 30, 1993.


99C    Agreement of  Limited Partnership for Bexley  House L.P. between Davidson
       Income GP  Limited Partnership  and  Davidson  Income Real  Estate,  L.P.
       entered into on October 13,  1992 is incorporated by reference to Exhibit
       99C  to the Registrant's Annual Report on Form 10-KSB for the fiscal year
       ended December 31, 1992.