--------------------------------------------------------------------------------

                          U. S. SECURITIES AND EXCHANGE
                        COMMISSION Washington, D.C. 20549

                               ------------------



                                   FORM 10-KSB


                               ------------------



                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2004


                               ------------------



                         Commission file number 0-11973

                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
             Organized pursuant to the Laws of the State of Maryland


                               ------------------



        Internal Revenue Service - Employer Identification No. 52-1321492

                 11200 Rockville Pike, Rockville, Maryland 20852

                                 (301) 468-9200


                               ------------------



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

                        UNITS OF LIMITED PARTNER INTEREST


                               ------------------



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

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not 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 $1,255,137.

The units of limited  partner  interest of the  registrant are not traded in any
market.  Therefore,  the units of limited partner  interest had neither a market
selling  price nor an average bid or asked price within the 60 days prior to the
date of this filing.

--------------------------------------------------------------------------------
<PAGE>



                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                        2004 ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS

                                                                          Page

                                     PART I


Item 1.  Business......................................................... I-1
Item 2.  Properties....................................................... I-5
Item 3.  Legal Proceedings................................................ I-5
Item 4.  Submission of Matters to a Vote of Security Holders.............. I-5


                                     PART II

Item 5.  Market for the Registrant's Partnership Interests
           and Related Partnership Matters ............................... II-1
Item 6.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations...................................... II-3
Item 7.  Financial Statements............................................. II-8
Item 8.  Changes In and Disagreements With Accountants
           on Accounting and Financial Disclosure......................... II-8
Item 8A. Controls and Procedures.......................................... II-8
Item 8B. Other Information................................................ II-9


                                    PART III

Item 9.  Directors and Executive Officers of the Registrant............... III-1
Item 10. Executive Compensation........................................... III-2
Item 11. Security Ownership of Certain Beneficial Owners and Management... III-2
Item 12. Certain Relationships and Related Transactions................... III-3
Item 13. Exhibits......................................................... III-3
Item 14. Principal Accountant Fees and Services........................... III-4

Signatures................................................................ III-6

Report of Independent Registered Public Accounting Firm................... III-7

Financial Statements...................................................... III-8


<PAGE>
                                     PART I
                                     ------

ITEM 1. BUSINESS
----------------

     Capital Realty  Investors-II  Limited  Partnership  (the  Partnership) is a
limited  partnership which was formed under the Maryland Revised Uniform Limited
Partnership  Act on March 23, 1983. On May 6, 1983,  the  Partnership  commenced
offering 50,000 units of additional  limited partner  interest  through a public
offering  which  was  managed  by  Merrill  Lynch,  Pierce,  Fenner  and  Smith,
Incorporated.  The  Partnership  closed the offering on June 20,  1983,  when it
became fully  subscribed.  As of December 31, 2004, 90 units of limited  partner
interest had been abandoned.

     The General  Partners of the Partnership are C.R.I.,  Inc. (CRI),  which is
the  Managing  General  Partner,  and  current and former  shareholders  of CRI.
Services for the  Partnership  are performed by CRI, as the  Partnership  has no
employees of its own.

     The  Partnership  was  formed  to  invest  in  real  estate,  which  is the
Partnership's  principal  business  activity,  by acquiring and holding  limited
partner interests in limited partnerships (Local Partnerships).  The Partnership
originally made investments in 22 Local  Partnerships.  As of December 31, 2004,
the Partnership retained investments in eight Local Partnerships.  Each of these
Local Partnerships owns either a federal or state government-assisted  apartment
complex, which provides housing principally to the elderly and/or to individuals
and families of low or moderate income, or a conventionally  financed  apartment
complex. The original objectives of these investments,  not necessarily in order
of importance, were to:

     (i)  preserve and protect the Partnership's capital;
     (ii) provide,  during  the  early  years of the  Partnership's  operations,
          current tax  benefits to the  partners in the form of tax losses which
          the partners could use to offset income from other sources;
     (iii)provide  capital  appreciation  through  increases in the value of the
          Partnership's   investments  and  increased  equity  through  periodic
          payments on the indebtedness on the apartment complexes; and
     (iv) provide  cash   distributions   from  sale  or   refinancing   of  the
          Partnership's  investments  and,  on  a  limited  basis,  from  rental
          operations.

See Part II, Item 6, Management's Discussion and Analysis of Financial Condition
and Results of  Operations,  for a discussion of factors  affecting the original
investment objectives.

     The Local Partnerships in which the Partnership  invested were organized by
private  developers  who acquired  the sites,  or options  thereon,  applied for
mortgage financing and applicable  mortgage insurance and/or subsidies,  and who
generally  remain as the local general  partners in the Local  Partnerships.  In
most  cases,  the  local  general  partners  of the  Local  Partnerships  retain
responsibility  for maintaining,  operating and managing the projects.  However,
under certain  circumstances,  the Local  Partnerships'  partnership  agreements
permit removal of the local general partner and  replacement  with another local
general  partner or with an  affiliate  of the  Partnership's  Managing  General
Partner.

     See Part I, Item 4, hereof,  for a discussion of the Partnership's  Plan of
Liquidation  and  Dissolution,  which was approved by a majority of the units of
limited partner interest on March 22, 2004.

                                       I-1

<PAGE>
                                     PART I
                                     ------

ITEM 1. BUSINESS - Continued
        --------

     As a result of its investment in the Local  Partnerships,  the  Partnership
became the principal  limited partner in 22 (eight  remaining as of December 31,
2004)  Local  Partnerships.  As  a  limited  partner,  the  Partnership's  legal
liability  for  obligations  of  the  Local   Partnerships  is  limited  to  its
investment.  In most cases, an affiliate of the Managing  General Partner of the
Partnership  is also a  general  partner  of the Local  Partnerships.  The local
general  partners and  affiliates  of the Managing  General  Partner may operate
other apartment  complexes which may be in competition for eligible tenants with
the Local Partnerships' apartment complexes.

     Although each of the Local  Partnerships in which the Partnership  invested
owns an  apartment  complex that must  compete in the  marketplace  for tenants,
interest subsidies and/or rent supplements from governmental  agencies generally
make it possible to offer certain of these dwelling units to eligible tenants at
a cost  significantly  below  the  market  rate  for  comparable  conventionally
financed  dwelling units.  Based on available data, the Managing General Partner
believes there to be no material risk of market competition in the operations of
the  apartment  complexes  described  below  which  would  adversely  impact the
Partnership.

                                       I-2

<PAGE>
                                     PART I
                                     ------

ITEM 1. BUSINESS - Continued
        --------

     A schedule of the apartment  complexes owned by Local Partnerships in which
the Partnership has an investment as of December 31, 2004, follows.

<TABLE>
<CAPTION>

                            SCHEDULE OF APARTMENT COMPLEXES OWNED BY LOCAL PARTNERSHIPS
                             IN WHICH CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
                                               HAS AN INVESTMENT(1)


                                                                                                     Units
                            Mortgage                                                             Authorized for     Expiration
 Name and Location         Payable at         Financed and/or Insured              Number of       Low Income           of
of Apartment Complex      12/31/04 (2)        and/or Subsidized Under             Rental Units     Subsidies       HAP Contract
--------------------      ------------     -----------------------------          ------------   --------------    -------------
<S>                       <C>              <C>                                    <C>            <C>               <C>
Chevy Chase Park          $ 2,681,147      Metropolitan Savings Bank                   232            232           09/22/05 (4)
 Centerville, OH                            Federal Housing Administration

Four Winds West               797,758      GMAC HUD Insured through Section             62             62           10/14/09 (3)
 Birmingham, AL                             221 (d)(4) of the National Housing
                                            Act (NHA)/Section 8

Golden Acres                1,103,608      California Housing Finance Agency            46             45           09/30/13
 Chowchilla, CA                             (CHFA)/Section 8

Mercy Terrace               8,126,474      Section 221(d)(4) of the NHA/               158            158           11/30/09 (3)
 San Francisco, CA                          Section 8

Orangewood Plaza            1,826,500      CHFA                                         40             33           07/01/14
 Orange Cove, CA

Posada Vallarta            13,916,903      Conventional                                336             70           10/31/07 (3)
 Phoenix, AZ

Troy Manor Apts.              814,852      Rural Housing & Community                    50             50           10/28/05 (3)
 Troy, AL                                   Development Services/Section 8

Westgate Tower Apts.        1,521,051      Michigan Sate Housing Develop-              148              0                 --
 Westland, MI                               ment Authority/236
                          -----------                                             --------       --------

Totals (8 Properties)     $30,788,293                                                1,072            650
                          ===========                                             ========       ========

</TABLE>


                                   (continued)

                                       I-3

<PAGE>
                                     PART I
                                     ------

ITEM 1. BUSINESS - Continued
        --------
<TABLE>
<CAPTION>
                                     SCHEDULE OF APARTMENT COMPLEXES OWNED BY LOCAL PARTNERSHIPS
                                      IN WHICH CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
                                                  HAS AN INVESTMENT(1) - Continued

                                                                                        Average Effective Annual
                                        Units Occupied As                                    Rental Per Unit
                                    Percentage of Total Units                              for the Years Ended
                                        As of December 31,                                    December 31,
 Name and Location             ------------------------------------      ------------------------------------------------------
of Apartment Complex           2004    2003     2002   2001    2000        2004        2003        2002        2001       2000
--------------------           ----    ----     ----   ----    ----      -------     -------     -------     -------    -------
<S>                            <C>     <C>      <C>    <C>     <C>       <C>         <C>         <C>         <C>        <C>
Chevy Chase Park                97%     96%      98%    97%     98%      $ 6,730     $ 6,505     $ 6,411     $ 7,608    $ 4,141
 Centerville, OH

Four Winds West                 92%    100%      98%   100%     99%        5,449       5,505       5,433       5,152      5,190
 Birmingham, AL

Golden Acres                    99%    100%      96%    99%     98%        6,391       6,527       6,364       6,498      6,355
 Chowchilla, CA

Mercy Terrace                   94%     98%      99%    93%    100%       17,362      17,089      14,717      14,717     14,794
 San Francisco, CA

Orangewood Plaza               100%    100%     100%   100%    100%        2,612       2,523       2,559       2,503      2,435
 Orange Cove, CA

Posada Vallarta                 91%     94%      90%    94%     98%        6,568       6,551       6,861       7,175      6,841
 Phoenix, AZ

Troy Manor Apts.               100%    100%     100%   100%    100%        5,074       4,997       4,881       4,758      4,685
 Troy, AL

Westgate Tower Apts.            96%     91%      93%    96%     97%        4,412       4,033       4,136       4,018      3,739
 Westland, MI
                               ---     ---      ---    ---     ---       -------     -------     -------     -------    -------

Totals (8 Properties) (5)       96%     97%      97%    97%     99%      $ 6,825     $ 6,716     $ 6,420     $ 6,554    $ 6,022
                               ===     ===      ===    ===     ===       =======     =======     =======     =======    =======

</TABLE>

(1)  All properties are multifamily  housing  complexes.  No single tenant rents
     10%  or  more  of the  rentable  square  footage.  Residential  leases  are
     typically one year or less in length,  with varying  expiration  dates, and
     substantially all rentable space is for residential purposes.
(2)  The amounts  provided are the balances of first  mortgage  loans payable by
     the Local Partnerships as of December 31, 2004.
(3)  The Section 8 HAP contract  expiration  date reflects an extension from the
     original expiration date, in accordance with Federal legislation.
(4)  Entered  Mark-up-to-Market program in September 2000, for a five year term,
     subject to the annual availability of funding by Congress.  The property is
     under contract for sale, with closing expected in mid-2005. There can be no
     assurance that the property will be sold.
(5)  The totals for the percentage of units  occupied and the average  effective
     annual rental per unit are based on a simple average.

     On November 17, 2004, the Partnership's interest in Arrowhead was sold. See
the notes to financial  statements for additional  information  concerning  this
sale.

     On November 17, 2004, the Partnership's  interest in Moorings was sold. See
the notes to financial  statements for additional  information  concerning  this
sale.

     On December 29, 2004,  the  Partnership's  interest in Country  Place I was
sold.  See  the  notes  to  financial  statements  for  additional   information
concerning this sale.


     On December 29, 2004,  the  Partnership's  interest in Country Place II was
sold.  See  the  notes  to  financial  statements  for  additional   information
concerning this sale.

                                      I-4

<PAGE>
                                     PART I
                                     ------

ITEM 1. BUSINESS - Continued
        --------

     In December 2004, a contract for the sale of the property  related to Chevy
Chase  was  signed.  See  the  notes  to  financial  statements  for  additional
information concerning the possible sale.


ITEM 2. PROPERTIES

     Through its ownership of limited partner  interests in Local  Partnerships,
Capital Realty Investors-II Limited Partnership  indirectly holds an interest in
the  real  estate  owned by the  Local  Partnerships.  See  Part I,  Item 1, for
information concerning these properties.


ITEM 3. LEGAL PROCEEDINGS

     There are no material pending legal proceedings to which the Partnership is
a party.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        ---------------------------------------------------

     On February 4, 2004, the  Partnership  filed a Definitive  Proxy  Statement
pursuant to Section 14(a) of the Securities  Exchange Act of 1934, and mailed it
to limited partners to solicit consents for approval of the following:

     (1)  the sale of all of the Partnership's assets and the dissolution of the
          Partnership pursuant to a Plan of Liquidation and Dissolution, and the
          amendment of the Partnership's Limited Partnership Agreement to permit
          the Managing General Partner,  CRI, to be eligible to receive property
          disposition  fees from the  Partnership on the same basis as such fees
          may currently be paid to Local General  Partners,  real estate brokers
          or other  third  party  intermediaries  employed  to sell  Partnership
          properties, to the extent that CRI markets and sells the Partnership's
          properties instead of such persons (a "Disposition Fee");

     (2)  the amendment of the Partnership's  Limited  Partnership  Agreement to
          permit CRI to be eligible to receive a partnership  liquidation fee in
          the amount of $500,000,  payable only if the Managing  General Partner
          is  successful in  liquidating  all of the  Partnership's  investments
          within 36 months from the date the  liquidation is approved [March 22,
          2004], in recognition  that one or more of the properties in which the
          Partnership  holds an  interest  might not be  saleable to parties not
          affiliated  with the respective  Local  Partnership  due to the amount
          and/or  terms  of  their  current   indebtedness   (the   "Partnership
          Liquidation Fee"); and

     (3)  to authorize the Managing General Partner, in its sole discretion,  to
          elect to extend the period during which  Consents of Limited  Partners
          may be solicited and voted,  but not beyond 60 days from the date that
          the Consent Solicitation Statement was sent to the Limited Partners.

                                       I-5

<PAGE>
                                     PART I
                                     ------

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - Continued
        ---------------------------------------------------

     The matters for which consent was solicited are collectively referred to as
the "Liquidation."

     The record date for voting was  December  31,  2003,  and the final  voting
deadline  was March 22,  2004.  A  tabulation  of votes  received  by the voting
deadline follows.

<TABLE>
<CAPTION>
                                             FOR                  AGAINST                ABSTAIN                 TOTAL
                                      -----------------      -----------------      ------------------      -----------------
                                      Units of               Units of               Units of                Units of
                                      limited                limited                limited                 limited
                                      partner                partner                partner                 partner
         Description                  interest   Percent     interest   Percent     interest    Percent     Interest    Percent
         -----------                  --------   -------     --------   -------     --------    -------     --------    -------
         <S>                          <C>        <C>         <C>        <C>         <C>         <C>         <C>         <C>
         Sale, dissolution and
           five percent
           Disposition Fee             28,699     57.5%       1,264       2.5%         268        0.5%       30,231      60.6%

         $500,000 Partnership
           Liquidation Fee             25,842     51.8%       3,546       7.1%         844        1.7%       30,231      60.6%

         Extension of
           solicitation period         27,975     56.1%       1,767       3.5%         489        1.0%       30,231      60.6%

</TABLE>

     There can be no assurance that the Liquidation  will be completed  pursuant
to the Plan of Liquidation and Dissolution.

                                       I-6

<PAGE>
                                     PART II
                                     -------

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS
        -------------------------------------------------
          AND RELATED PARTNERSHIP MATTERS
          ------------------------------

     (a)  There is no  established  market for the purchase and sale of units of
          additional  limited  partner  interest  (Units)  in  the  Partnership,
          although various informal  secondary market services exist. Due to the
          limited markets, however, investors may be unable to sell or otherwise
          dispose of their Units.

                             Registered Tender Offer
                             -----------------------

          On January 23, 2004,  Equity  Resource Fund XXII (Equity)  initiated a
          registered  tender  offer to purchase  up to 5,000 of the  outstanding
          Units in the  Partnership at a price of $175 per Unit;  the offer,  as
          extended,  expired  March 23, 2004.  Equity is  unaffiliated  with the
          Partnership  or the Managing  General  Partner.  The price offered was
          determined solely at the discretion of Equity and does not necessarily
          represent the fair market value of each Unit.

          In response to the registered  tender offer,  on February 4, 2004, the
          Managing  General Partner filed Schedule  14D-9.  In that filing,  the
          Managing General Partner  recommended that Limited Partners reject the
          offer because it viewed the offer price as inadequate.

                           Unregistered Tender Offers
                           --------------------------

          On January 26,  2004,  Peachtree  Partners  (Peachtree)  initiated  an
          unregistered  tender  offer to  purchase up to 4.9%  (including  1,525
          Units or 3.1% already owned by affiliates) of the outstanding Units in
          the  Partnership  at a price of $175 per Unit less a  transfer  fee of
          $100 per  investor;  the offer  expired  March 23, 2004.  On March 14,
          2003,  Peachtree initiated an unregistered tender offer to purchase an
          unspecified  number of the  outstanding  Units in the Partnership at a
          price of $100 per Unit; the offer expired April 18, 2003. Peachtree is
          unaffiliated with the Partnership or the Managing General Partner. The
          prices offered were  determined  solely at the discretion of Peachtree
          and do not necessarily represent the fair market value of each Unit.

          The Managing  General Partner did not express any opinion and remained
          neutral toward the 2003 unregistered  tender offer for the purchase of
          Units described above,  and in its Definitive  Proxy Statement,  dated
          February 4, 2004,  recommended  that Limited  Partners reject the 2004
          unregistered  tender  offer  because  it  viewed  the  offer  price as
          inadequate.

     (b)  As of March  24,  2005,  there  were  approximately  3,035  registered
          holders of Units in the Partnership.

     (c)  On November 12, 2003,  the  Partnership  made a cash  distribution  of
          $1,347,570  ($27 per Unit) to  Limited  Partners  who were  holders of
          record as of November 1, 2003, and a cash  distribution  of $41,677 to
          General  Partners.   The   distributions   were  from  cash  resources
          accumulated from operations and distributions from Local Partnerships.

                                      II-1

<PAGE>
                                     PART II
                                     -------

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS
        -------------------------------------------------
          AND RELATED PARTNERSHIP MATTERS - Continued
          -------------------------------

          On January 31,  2005,  the  Partnership  made a cash  distribution  of
          $9,582,720  ($192 per Unit) to Limited  Partners  who were  holders of
          record as of December 31, 2004. The distribution consisted of proceeds
          received from the sales of the  Partnership's  interests in Arrowhead,
          Moorings, Country Place I and Country Place II.

                                      II-2

<PAGE>
                                     PART II
                                     -------


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
          CONDITION AND RESULTS OF OPERATIONS
          -----------------------------------

     Capital  Realty  Investors-II   Limited   Partnership's  (the  Partnership)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  section  is  based  on  the  financial   statements,   and  contains
information  that  may  be  considered  forward  looking,  including  statements
regarding  the effect of  governmental  regulations.  Actual  results may differ
materially from those  described in the forward  looking  statements and will be
affected  by  a  variety  of  factors  including  national  and  local  economic
conditions,  the  general  level of  interest  rates,  governmental  regulations
affecting  the  Partnership  and  interpretations  of  those  regulations,   the
competitive  environment in which the Partnership operates, and the availability
of working capital.

                          Critical Accounting Policies
                          ----------------------------

     The  Partnership has disclosed its selection and application of significant
accounting  policies in Note 1 of the notes to financial  statements included in
this annual report on Form 10-KSB at December 31, 2004. The Partnership accounts
for its investments in partnerships (Local Partnerships) using the equity method
because the Partnership is a limited partner in the Local Partnerships. As such,
the  Partnership has no control over the selection and application of accounting
policies, or the use of estimates, by the Local Partnerships.  Environmental and
operational  trends,  events and uncertainties  that might affect the properties
owned by the Local  Partnerships would not necessarily have a significant impact
on the Partnership's  application of the equity method of accounting,  since the
equity  method  has  been  suspended  for  six  Local  Partnerships  which  have
cumulative  losses in excess of the amount of the  Partnership's  investments in
those Local Partnerships.

                          New Accounting Pronouncement
                          ----------------------------

     In December  2003,  the Financial  Accounting  Standards  Board issued FASB
Interpretation  No. 46  (revised  December  2003) (FIN 46-R),  Consolidation  of
Variable  Interest  Entities.  FIN 46-R clarifies the  application of Accounting
Research Bulletin 51, Consolidated  Financial  Statements,  for certain entities
that do not  have  sufficient  equity  at risk for the  entity  to  finance  its
activities without additional  subordinated financial support from other parties
or in which equity  investors do not have the  characteristics  of a controlling
financial interest  ("variable interest  entities").  Variable interest entities
within  the  scope of FIN 46-R  will be  required  to be  consolidated  by their
primary  beneficiary.  The primary  beneficiary of a variable interest entity is
determined  to be the party that  absorbs a majority  of the  entity's  expected
losses,  receives a majority of its  expected  returns,  or both.  The  Managing
General Partner has evaluated the Partnership's  investments in partnerships and
has  determined  that  they  are  not  variable  interest  entities  subject  to
consolidation by the Partnership under the provisions of FIN 46-R.

                                     General
                                     -------

     The  Partnership  has invested,  through Local  Partnerships,  primarily in
federal or state  government-assisted  apartment  complexes  intended to provide
housing  to  low  and  moderate  income  tenants.   In  conjunction   with  such
governmental  assistance,  which  includes  federal  and/or  state  financing at
below-market  interest  rates  and  rental  subsidies,   certain  of  the  Local
Partnerships agreed to regulatory  limitations on (i) cash  distributions,  (ii)
use  of the  properties,  and  (iii)  sale  or  refinancing.  These  limitations
typically were designed to remain in place for the life of the mortgage.

                                      II-3

<PAGE>
                                     PART II
                                     -------


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
          CONDITION AND RESULTS OF OPERATIONS - Continued
          -----------------------------------


     The original  investment  objectives of the  Partnership  primarily were to
deliver  tax  benefits,  as  well  as  cash  proceeds  upon  disposition  of the
properties,   through  the  Partnership's   investment  in  Local  Partnerships.
Regulatory  restrictions on cash  distributions  from the properties limited the
original projections of annual cash distributions from property operations.

     The original investment objectives of the Partnership have been affected by
the Tax Reform Act of 1986,  which  virtually  eliminated many of the incentives
for the new  construction or the sale of existing low income housing  properties
by limiting the use of passive loss  deductions.  Therefore,  C.R.I.,  Inc. (the
Managing General Partner) continues to concentrate on transferring the source of
investment  yield from tax  benefits  to cash flow  wherever  possible,  thereby
potentially enhancing the ability of the Partnership to share in the appreciated
value of the properties.

     The Managing  General  Partner has  received  consent from the holders of a
majority of the units of limited  partner  interest for the  liquidation  of the
Partnership.  (See  Part  I,  Item  4.)  There  can  be no  assurance  that  the
Liquidation  will  be  completed   pursuant  to  the  Plan  of  Liquidation  and
Dissolution.  The following paragraphs discuss the operations of the Partnership
and the properties in which it is invested during this period of liquidation.

     The Managing  General Partner has sold, and will continue to sell,  certain
properties by utilizing  opportunities  presented by federal  affordable housing
legislation,  favorable financing terms and preservation incentives available to
tax credit and not-for-profit purchasers. Some of the rental properties owned by
the Local  Partnerships  are financed by state  housing  agencies.  The Managing
General  Partner has sold or  refinanced,  and will  continue  to sell,  certain
properties pursuant to programs developed by these agencies.  These programs may
include  opportunities  to sell a property to a qualifying  purchaser  who would
agree to maintain the property as low to moderate income  housing.  The Managing
General  Partner  continues to monitor  certain state housing agency programs to
ascertain  whether the properties would qualify within the parameters of a given
program and whether these programs would provide an appropriate economic benefit
to the limited partners of the Partnership.

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of  project-based  Section 8 Rental Housing  Assistance  Payments
(HAP)  provided by the U.S.  Department of Housing and Urban  Development  (HUD)
pursuant  to Section 8 HAP  contracts.  Current  legislation  allows all expired
Section 8 HAP contracts  with rents at less than 100% of fair market rents to be
renewed for up to one year.  Expiring  Section 8 HAP  contracts  with rents that
exceed  100% of fair market  rents  could be renewed for up to one year,  but at
rents  reduced  to 100% of fair  market  rents  (Mark-to-Market).  All  expiring
Section 8 HAP  contracts  with rents  exceeding  comparable  market  rents,  and
properties  with mortgage  loans insured by the Federal  Housing  Administration
(FHA), became subject to the Mark-to-Market legislation.

     Mark-to-Market (M2M) implementation will reduce rental income at properties
that are currently  subsidized  at  higher-than-market  rental  rates,  and will
therefore  lower cash flow  available to meet  mortgage  payments and  operating
expenses.  In some instances,  a property will be able to meet its existing debt
service  payments  after the  reduction  in rental  income.  In this  case,  the
property  may enter  the M2M  "Lite"  program  which  would  not  require a debt
restructuring.  In the remaining  instances,  the affected  property may undergo
debt restructuring  according to terms determined by an individual  property and
operations  evaluation.  This would  involve  reducing the first  mortgage  loan
balance to an amount  supportable  by the  property's  operations,  taking  into
account the property's operating expenses and reduced income. The balance of the
amount  written  down from the  first  mortgage  loan  would be  converted  to a
non-performing but accruing (soft) second mortgage loan. When the existing first
mortgage loan is bifurcated  into a first and second  mortgage  loan,  the newly
created second  mortgage loan will accrue  interest at a below-market  rate. The
Internal Revenue Service issued a ruling in July 1998,  however,  that concluded
that the below-market  rate of interest would not generate  additional  ordinary
income. Each property subject to M2M will be affected in a different manner, and
it is very  difficult to predict the exact form of  restructuring,  or potential
tax  liabilities to the limited  partners,  at this time. All  properties,  upon
entering  the M2M program  (excluding  M2M Lite),  are required to enter into an
agreement restricting the property's use to affordable housing for 30 years.

                                                       II-4

<PAGE>
                                     PART II
                                     -------


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
          CONDITION AND RESULTS OF OPERATIONS - Continued
          -----------------------------------

     Finally, under HUD's "Mark-up-to-Market"  program, properties with expiring
Section 8 HAP  contracts  that are located in high-rent  areas as defined by HUD
are eligible for rent increases  which would be necessary to bring Section 8 HAP
contract rents into line with market rate rents.  For properties  that enter the
program and have interest rate  subsidized FHA loans,  the rents are adjusted to
take into  account  the  benefits  the  property is already  receiving  from the
below-market  interest rate by means of a HUD-determined  adjustment factor. The
purpose of this program is to provide  incentives to owners of  properties  with
expiring  Section 8 HAP contracts not to convert these properties to market rate
housing.

     In return for  receiving  market  rate rents under  Mark-up-to-Market,  the
property  owner must enter into a five year  conditional  Section 8 HAP contract
with HUD,  subject  to the  annual  availability  of  funding  by  Congress.  In
addition,  property  owners who enter into the  Mark-up-to-  Market program will
receive  increased  cash flow as the limited  dividend  will be  increased in an
amount equal to the increase in gross rental revenues.

     There were no major changes in federal housing policy in 2004.

     Troy Manor  Associates  (Troy Manor) has a Section 8 HAP contract  covering
100%  of  its  apartment  units  which  expires  in  October  2005.  Troy  Manor
anticipates  a one-year  renewal of its Section 8 HAP  Contract  at  expiration.
Chevy Chase Park, Ltd. (Chevy Chase) has a Section 8 HAP contract  covering 100%
of its  apartment  units which  expired in September  2000.  The Local  Managing
General Partner entered Chevy Chase into the  Mark-up-to-Market  program at that
time,  for a five  year  term.  The  Section  8 HAP  contract  has been  renewed
annually.  Chevy Chase is under  contract  for sale,  with  closing  expected in
mid-2005.  There  can be no  assurance  that the  property  will be sold.  As of
December 31, 2004, the carrying amount of the  Partnership's  investments in two
Local  Partnerships with Section 8 HAP contracts  expiring in the next 12 months
was $968,441.

     The Managing  General  Partner  continues to seek  strategies  to deal with
affordable  housing  requirements.  While the Managing  General  Partner  cannot
predict the  outcome for any  particular  property  at this time,  the  Managing
General  Partner will  continue to work with the Local  Partnerships  to develop
strategies that maximize the benefits to investors.

                                      II-5

<PAGE>
                                     PART II
                                     -------


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
          CONDITION AND RESULTS OF OPERATIONS - Continued
          -----------------------------------

                          Financial Condition/Liquidity
                          -----------------------------

     As of December 31, 2004, the Partnership had approximately  3,033 investors
who held a total of 49,910 units of additional  limited  partner  interest which
were  originally sold for the aggregate  amount of $49,910,000.  The Partnership
originally made investments in 22 Local  Partnerships,  of which eight remain at
December 31, 2004. The Partnership's liquidity, with unrestricted cash resources
of  $15,311,566  as of December 31,  2004,  along with  anticipated  future cash
distributions  from the Local  Partnerships,  is expected to be adequate to meet
its current and  anticipated  operating  cash needs.  On January 25,  2005,  the
Managing  General Partner  declared a cash  distribution of $9,582,720 ($192 per
Unit) to Additional  Limited  Partners who were holders of record as of December
31, 2004;  the  distribution  was paid  January 31, 2005.  As of March 24, 2005,
there were no material commitments for capital expenditures.

     During  2004 and 2003,  the  Partnership  received  cash  distributions  of
$1,165,200 and $1,200,394, respectively, from the Local Partnerships.

     The Partnership's  remaining  obligation with respect to its investments in
Local  Partnerships,  in the form of a  nonrecourse  purchase  money  note which
matured  September 1, 2003, has a principal  balance of $1,400,000  plus accrued
interest of $2,752,262 as of December 31, 2004,  and is payable in full upon the
earliest  of: (i) sale or  refinancing  of the  respective  Local  Partnership's
rental  property;  (ii) payment in full of the  respective  Local  Partnership's
permanent loan; or (iii) maturity.

     The  purchase  money note,  which is  nonrecourse  to the  Partnership,  is
secured by the Partnership's  interest in the Westgate Local Partnership,  which
owns Westgate Tower Apartments (Westgate). The underlying property does not have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money note's  principal and accrued  interest.  In conjunction with the approved
Plan of Liquidation and  Dissolution of the  Partnership,  the Managing  General
Partner is actively  marketing Westgate for sale. The noteholders have agreed to
accept the  proceeds of such sale as a discounted  payoff of the purchase  money
note's  principal and accrued  interest.  The discounted  payoff would result in
cancellation  of  indebtedness  income to the Limited  Partners,  which would be
taxed at a federal tax rate of up to 35 percent.  There can be no assurance that
a sale of Westgate and discounted payoff of the purchase money note will occur.

     The Managing  General Partner has received  consent from a majority of Unit
Holders  for the  liquidation  of the  Partnership.  (See Part I, Item 4.) It is
anticipated that the Partnership's obligation, discussed above, would be retired
in  conjunction  with  such  Liquidation.  There  can be no  assurance  that the
Liquidation  will  be  completed   pursuant  to  the  Plan  of  Liquidation  and
Dissolution.

     The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient  cash is available for operating  requirements.
For the year  ended  December  31,  2004,  the  receipt  of  distributions  from
partnerships was adequate to support net cash used in operating activities. Cash
and  cash  equivalents  increased  $12,331,788  during  2004,  primarily  due to
proceeds received from disposition of investment in partnerships related to four
properties.  For the year ended December 31, 2004, $924,641 of the distributions
received were from Local Partnerships for which the Partnership's carrying value
was zero at December 31, 2004 (equity method suspended). The Partnership expects
to  receive  a  similar  or lower  amount  of  distributions  from  these  Local
Partnerships  in  future  years  as  more  Section  8  HAP  contracts   approach
expiration, should the related properties enter the Mark-to-Market program, with
the resulting reduction in rental revenues.



                                      II-6

<PAGE>
                                     PART II
                                     -------


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
          CONDITION AND RESULTS OF OPERATIONS - Continued
          -----------------------------------

     On  November  12,  2003,  the  Partnership  made  a  cash  distribution  of
$1,347,570  ($27 per Unit) to Limited  Partners who were holders of record as of
November 1, 2003, and a cash  distribution of $41,677 to General  Partners.  The
distributions   were  from  cash  resources   accumulated  from  operations  and
distributions from Local Partnerships. On January 31, 2005, the Partnership made
a cash distribution of $9,582,720 ($192 per Unit) to Additional Limited Partners
who were holders of record as of December 31, 2004. The  distribution  consisted
of proceeds received from the sale of the Partnership's  interests in Arrowhead,
Moorings,  Country  Place I and Country Place II. The Managing  General  Partner
currently  intends to retain all of the  Partnership's  remaining  undistributed
cash for operating cash reserves pending further distributions under its Plan of
Liquidation and Dissolution.

                              Results of Operations
                              ---------------------

2004 Versus 2003
----------------

     The  Partnership's  net  income  for the  year  ended  December  31,  2004,
increased  from 2003,  primarily due to gain on  disposition  of  investments in
partnerships  related to the sale of the  Partnership's  interests in Arrowhead,
Moorings,  Country  Place I and  Country  Place  II.  Also  contributing  to the
increase  were  increases  in share of income  from  partnerships  and  interest
revenue,  and decreases in professional fees and amortization of deferred costs,
partially  offset by an  increase in general and  administrative  expenses.  The
increase  in share of income  from  partnerships  is  primarily  related  to the
impairment  loss  recognized  in  2003,  which  reduced  the  Partnership's  net
capitalized  acquisition  fees and net  property  purchase  costs in five  Local
Partnerships to zero in 2003, and increases in rental revenue at four properties
in 2004,  partially offset by a decrease in cash distributions  received in 2004
and which were recorded as income (equity method  suspended).  Interest  revenue
increased  in 2004 as a result of higher cash  balances  and  interest  rates in
2004.  Professional fees decreased due to lower legal expenses.  Amortization of
deferred costs  decreased in 2004 as a result of the impairment  loss recognized
in 2003,  as discussed  above.  General and  administrative  expenses  increased
primarily due to higher reimbursed payroll costs.

     For financial reporting purposes, the Partnership,  as a limited partner in
the Local  Partnerships,  does not record losses from the Local  Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result, the Partnership's  share of income from partnerships for the years ended
December 31, 2004 and 2003, did not include losses of $1,328,409 and $1,328,524,
respectively.  Distributions of $242,754 and $343,586, received from seven Local
Partnerships during 2004 and 2003, respectively, and for which the Partnership's
carrying value is zero (equity method suspended),  were recorded as increases in
the Partnership's share of income from partnerships in the year received.

                                    Inflation
                                    ---------

     Inflation  allows for increases in rental  rates,  usually  offsetting  any
higher operating and replacement costs.  Furthermore,  inflation  generally does
not impact the fixed rate long-term financing under which the Partnership's real
property investments were purchased.


                                      II-7

<PAGE>
                                     PART II
                                     -------


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
          CONDITION AND RESULTS OF OPERATIONS - Continued
          -----------------------------------

     The  combined  rental  revenues  of  the   Partnership's   remaining  eight
properties for the five years ended December 31, 2004,  follow.  Combined rental
revenue  amounts  have been  adjusted to reflect  property  sales and  interests
transferred in 2004 and in prior years.

<TABLE>
<CAPTION>


                                                       For the years ended December 31,
                           --------------------------------------------------------------------------------------------------
                              2004                  2003                  2002                  2001                  2000
                           -----------           ----------            ----------            ----------            ----------
<S>                        <C>                   <C>                   <C>                   <C>                   <C>
Combined Rental
  Revenue                  $8,154,364            $7,999,763            $7,722,970            $8,051,995            $7,095,732

Annual Percentage
  Increase (decrease)                    1.9%                 3.6%                    (4.1)%                13.5%

</TABLE>


ITEM 7. FINANCIAL STATEMENTS
        --------------------

     The information required by this item is contained in Part III.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
        ---------------------------------------------
          ON ACCOUNTING AND FINANCIAL DISCLOSURE
          --------------------------------------

     None.


ITEM 8A. CONTROLS AND PROCEDURES
         -----------------------

     In February 2005,  representatives  of the Managing  General Partner of the
Partnership  carried out an  evaluation of the  effectiveness  of the design and
operation of the Partnership's  disclosure controls and procedures,  pursuant to
Exchange Act Rules  13a-15 and 15d-15.  The  Managing  General  Partner does not
expect that the  Partnership's  disclosure  controls and procedures will prevent
all error and all fraud.  A control  system,  no matter how well  conceived  and
operated,  can provide only  reasonable  assurance  that the  objectives  of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource  constraints,  and the benefits of controls must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues have been detected.  These inherent  limitations  include the
realities that judgments in  decision-making  can be faulty, and that breakdowns
can occur  because  of simple  error or  mistake.  The  design of any  system of
controls also is based in part upon certain  assumptions about the likelihood of
future  events,  and there can be no  assurance  that any design will succeed in
achieving its stated goals under all  potential  future  conditions.  Over time,
controls may become inadequate  because of changes in conditions,  or the degree
of compliance  with the policies or procedures may  deteriorate.  Because of the
inherent  limitations in a cost-effective  control system,  misstatements due to
error or fraud  may  occur  and not be  detected.  Based  on the  February  2005
evaluation,  and subject to the foregoing,  the Principal  Executive Officer and
Principal Financial Officer concluded that the Partnership's disclosure controls
and  procedures are effective as of the end of the period covered by this report
to alert them in a timely  manner to any  material  information  relating to the
Partnership that must be included in the Partnership's periodic SEC filings, and
particularly  during  the  period in which  this  report is being  prepared.  In
addition,  there have been no significant changes in the Partnership's  internal
control over financial  reporting that occurred  during the  Partnership's  most
recent fiscal quarter that has materially  affected,  or is reasonably likely to
materially affect, the Partnership's internal control over financial reporting.

                                      II-8

<PAGE>
                                     PART II
                                     -------

ITEM 8B. OTHER INFORMATION
         -----------------

     There has not been any information  required to be disclosed in a report on
Form 8-K during the quarter ended December 31, 2004,  but not reported,  whether
or not otherwise required by this Form 10-KSB at December 31, 2004.

                                      II-9

<PAGE>
                                    PART III
                                    --------

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
        --------------------------------------------------

     (a)  and (b)

          The  Partnership has no directors,  executive  officers or significant
          employees of its own.

     (a)  and (b)

          The names, ages and business experience of the directors and executive
          officers of C.R.I.,  Inc. (CRI),  the Managing  General Partner of the
          Partnership, follow.

William B. Dockser, 68, has been the Chairman of the Board and a Director of CRI
since 1974.  Prior to forming  CRI, he served as  President of Kaufman and Broad
Asset Management,  Inc., an affiliate of Kaufman and Broad,  Inc., which managed
publicly held limited  partnerships created to invest in low and moderate income
multifamily apartment properties.  Prior to joining Kaufman and Broad, he served
in various positions at HUD,  culminating in the post of Deputy FHA Commissioner
and Deputy Assistant Secretary for Housing Production and Mortgage Credit, where
he was responsible for all federally insured housing production programs. Before
coming to the Washington,  D.C., area, Mr. Dockser was a practicing  attorney in
Boston and served as a special  Assistant  Attorney General for the Commonwealth
of  Massachusetts.  He holds a Bachelor of Laws degree from Yale  University Law
School and a Bachelor of Arts degree, cum laude, from Harvard University.

H. William Willoughby,  58, has been President,  Secretary and a Director of CRI
since January 1990,  and was Senior  Executive Vice  President,  Secretary and a
Director  of CRI  from  1974 to  1989.  He is  principally  responsible  for the
financial  management of CRI and its associated  partnerships.  Prior to joining
CRI in 1974,  he was Vice  President  of Shelter  Corporation  of America  and a
number of its subsidiaries  dealing principally with real estate development and
equity  financing.  Before  joining  Shelter  Corporation,  he was a senior  tax
accountant with Arthur  Andersen & Co. He holds a Juris Doctor degree,  a Master
of Business  Administration  degree and a Bachelor of Science degree in Business
Administration from the University of South Dakota.

     (c)  There is no family relationship between any of the foregoing directors
          and executive officers.

     (d)  Involvement in certain legal proceedings.

          None.

                                      III-1

<PAGE>
                                    PART III
                                    --------

ITEM 10. EXECUTIVE COMPENSATION
         ----------------------

     (a), (b), (c), (d), (e), (f), (g), and (h)

          The Partnership has no officers or directors.  However,  in accordance
          with  the  Partnership  Agreement,  and as  disclosed  in  the  public
          offering,  various  kinds of  compensation  and fees  were paid or are
          payable  to the  General  Partners  and their  affiliates.  Additional
          information  required  by  this  Item  10 is  incorporated  herein  by
          reference  to  Notes  3 and 4 of the  notes  to  financial  statements
          contained in Part III.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         -----------------------------------------------
           AND MANAGEMENT
           --------------

     (a)  Security ownership of certain beneficial owners.

          The following  table sets forth  certain  information  concerning  any
          person  (including any "group") who is known by the  Partnership to be
          the  beneficial  owner of more than five  percent  of the  issued  and
          outstanding units of additional  limited partner interest (Units),  at
          March 24, 2005.

<TABLE>
<CAPTION>
                                                                         % of Total
              Name and Address              Amount and Nature           Units Issued
              of Beneficial Owner        of Beneficial Ownership      and Outstanding
          -------------------------      -----------------------      ---------------
          <S>                            <C>                          <C>
          Equity Resource Group,                10,244 Units               20.5%
            Incorporated, et. al.
          44 Brattle Street
          Cambridge, MA 02138
</TABLE>


     (b)  Security ownership of management.

          The following  table sets forth  certain  information  concerning  all
          Units  beneficially  owned, as of March 24, 2005, by each director and
          by all  directors  and  officers  as a group of the  Managing  General
          Partner of the Partnership.
<TABLE>
<CAPTION>
                                                                         % of Total
              Name of                       Amount and Nature          Units Issued
          Beneficial Owner               of Beneficial Ownership      and Outstanding
          ----------------               -----------------------      ---------------
          <S>                            <C>                          <C>
          William B. Dockser                      None                      0.0%
          H. William Willoughby                   None                      0.0%
          All Directors and Officers
            as a Group (2 persons)                None                      0.0%
</TABLE>

     (c)  Changes in control.

          There exists no arrangement known to the Partnership, the operation of
          which may, at a subsequent date,  result in a change in control of the
          Partnership. There is a provision in the Limited Partnership Agreement
          which  allows,  under  certain  circumstances,  the  ability to change
          control.

                                      III-2

<PAGE>
                                    PART III
                                    --------

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

     (a)  and (b)

          Transactions with management and others.

          The  Partnership  has no  directors  or  officers.  In  addition,  the
          Partnership  has  had no  transactions  with  individual  officers  or
          directors of the Managing  General  Partner of the  Partnership  other
          than any indirect interest such officers and directors may have in the
          amounts  paid to the Managing  General  Partner or its  affiliates  by
          virtue of their stock ownership in CRI. Item 10 of this report,  which
          contains  a  discussion  of the fees and  other  compensation  paid or
          accrued  by  the   Partnership  to  the  General   Partners  or  their
          affiliates,  is incorporated herein by reference.  Note 3 of the notes
          to  financial   statements  contained  in  Part  III,  which  contains
          disclosure of related party transactions,  is also incorporated herein
          by reference.

     (c)  Certain business relationships.

          The  Partnership's  response to Item 12(a) is  incorporated  herein by
          reference.  In addition,  the Partnership has no business relationship
          with  entities of which the  officers  and  directors  of the Managing
          General Partner of the  Partnership are officers,  directors or equity
          owners other than as set forth in the  Partnership's  response to Item
          12(a).

     (d)  Transactions with promoters.

          Not applicable.


ITEM 13. EXHIBITS
         --------

          Index of  Exhibits  (Listed  according  to the number  assigned in the
          table in Item 601 of Regulation S-B.)

          Exhibit  No.  2 - Plan of  acquisition,  reorganization,  arrangement,
          liquidation, or succession.

          a.   Definitive  Proxy   Statement.   (Incorporated  by  reference  to
               Registrant's Definitive Proxy Statement dated February 4, 2004.)

          Exhibit No. 3 - Articles of Incorporation and bylaws.

          a.   Certificate of Limited Partnership of Capital Realty Investors-II
               Limited Partnership.  (Incorporated by reference to Exhibit No. 4
               to Registrant's  Registration Statement on Form S-11, as amended,
               dated April 28, 1983.)

          Exhibit No. 4 - Instruments  defining the rights of security  holders,
          including indentures.

          a.   Limited  Partnership  Agreement  of Capital  Realty  Investors-II
               Limited Partnership.  (Incorporated by reference to Exhibit No. 4
               to Registrant's  Registration Statement on Form S-11, as amended,
               dated April 28, 1983.)


                                      III-3

<PAGE>
                                    PART III
                                    --------

ITEM 13. EXHIBITS - Continued
         --------

          Exhibit No. 10 - Material Contracts.

          a.   Management  Services  Agreement  between CRI and  Capital  Realty
               Investors- II Limited Partnership.  (Incorporated by reference to
               Exhibit No. 10(b) to Registrant's  Registration Statement on Form
               S-11, as amended, dated April 28, 1983.)

          Exhibit No.  31.1 -  Certification of Principal Executive Officer,
                               pursuant to 18 U.S.C. Section 1350, as adopted
                               pursuant to Section 302 of the
                               Sarbanes-Oxley Act of 2002.

          Exhibit No. 31.2 -   Certification of Principal Financial Officer,
                               pursuant to 18 U.S.C. Section 1350, as adopted
                               pursuant to Section 302 of the Sarbanes-Oxley
                               Act of 2002.

          Exhibit No. 32 -     Certification of Principal Executive Officer and
                               Principal Financial Officer, pursuant to 18
                               U.S.C. Section 1350, as adopted
                               pursuant to Section 906 of the
                               Sarbanes-Oxley Act of 2002.

          Exhibit No. 99 - Additional Exhibits.

          a.   Prospectus of the Partnership,  dated May 6, 1983.  (Incorporated
               by reference to Registrant's Registration Statement on Form S-11,
               as amended, dated April 28, 1983.)

          b.   Reports of other auditors relating to the audits of the financial
               statements  of  Local   Partnerships   in  which  Capital  Realty
               Investors-II Limited Partnership has invested.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
         --------------------------------------

     During the years ended December 31, 2004 and 2003, the Partnership retained
Grant Thornton LLP to provide services as follows.


                                     Year Ended December 31,
                                  ----------------------------
                                    2004                2003
                                  --------            --------

         Audit fees               $ 81,000            $ 73,500
         Audit-related fees            528                  --
         Tax fees (1)               20,500              19,000
         All other fees                 --                  --
                                  --------            --------

                     Total        $102,028            $ 92,500
                                  ========            ========

          (1)  Preparation of Partnership federal and state tax returns.



                                      III-4

<PAGE>
                                    PART III
                                    --------

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES - Continued
         --------------------------------------

     The Partnership has no directors or officers. The Board of Directors of the
Managing General Partner of the Partnership, serving as the audit committee, has
approved in advance  100% of the fees paid to, and  services  provided by, Grant
Thornton LLP. Prior to approving  Grant  Thornton LLP's  providing any non-audit
services,  the  Board  of  Directors  of the  Managing  General  Partner  of the
Partnership   would  assess  whether  the  provision  of  those  services  would
compromise  Grant  Thornton  LLP's  independence.  Grant  Thornton  LLP provided
partnership tax return preparation  services during the years ended December 31,
2004 and  2003,  which  services  it was  determined  did not  compromise  Grant
Thornton LLP's independence.




                                      III-5

<PAGE>
                                   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.


                                  CAPITAL REALTY INVESTORS-II
                                    LIMITED PARTNERSHIP
                                  ----------------------------------------------
                                  (Registrant)

                                  by:  C.R.I., Inc.
                                       -----------------------------------------
                                       Managing General Partner



March 24, 2005                         by: /s/ William B. Dockser
--------------                             -------------------------------------
DATE                                       William B. Dockser,
                                             Director, Chairman of the Board,
                                             and Treasurer
                                             (Principal Executive Officer)


     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.


March 24, 2005                         by:  /s/ H. William Willoughby
-------------                               ------------------------------------
DATE                                        H. William Willoughby,
                                              Director, President,
                                              and Secretary



March 24, 2005                         by: /s/ Michael J. Tuszka
--------------                             -------------------------------------
DATE                                       Michael J. Tuszka,
                                             Vice President
                                             and Chief Accounting Officer
                                             (Principal Financial Officer
                                             and Principal Accounting Officer)

                                      III-6

<PAGE>



Report of Independent Registered Public Accounting Firm


To the Partners
Capital Realty Investors-II Limited Partnership.

We have audited the accompanying  balance sheets of Capital Realty  Investors-II
Limited  Partnership (a Maryland limited  partnership)  (the  Partnership) as of
December 31, 2004 and 2003, and the related statements of operations, changes in
partners'  (deficit)  capital,  and cash flows for the years then  ended.  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 did not audit the financial statements of the Local Partnerships.
The  Partnership's  share of income  from these Local  Partnerships  constitutes
$988,833 and $839,415 of income in 2004 and 2003, respectively,  included in the
Partnership's 2004 and 2003 net income. The financial  statements of these Local
Partnerships  were audited by other  auditors  whose  reports  thereon have been
furnished to us, and our opinion expressed herein,  insofar as it relates to the
amount included for these Local  Partnerships,  is based solely upon the reports
of the other auditors.

We conducted our audits in accordance  with the Standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial statements are free from material misstatement. The Partnership is not
required  to have,  nor were we  engaged  to  perform  an audit of its  internal
control over financial reporting.  Our audit included  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion  on  the  effectiveness  of  the  Partnership's  internal  control  over
financial  reporting.  Accordingly,  we express no such  opinion.  An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall  financial  statement  presentation.  We believe that our audits and the
reports of other auditors provide a reasonable basis for our opinion.

In our  opinion,  based upon our audits and the reports of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the financial position of Capital Realty Investors-II  Limited Partnership as of
December  31,  2004 and 2003,  and the  results  of its  operations,  changes in
partners'  (deficit)  capital  and its cash flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

As described in Note 1 to the financial statements, the Partnership has received
limited  partner  approval  of  the  Partnership's  plan  to  sell  all  of  the
Partnership's  assets  and  dissolve  the  Partnership  pursuant  to a  Plan  of
Liquidation and Dissolution. There can be no assurance that the Liquidation will
be completed pursuant to the Plan of Liquidation and Dissolution.


                                                             Grant Thornton LLP


Vienna, Virginia
March 18, 2005




                                      III-7

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                                 BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                      ----------------------------
                                                                                          2004            2003
                                                                                      ------------    ------------
<S>                                                                                   <C>             <C>
Investments in and advances to partnerships .......................................   $         --    $    854,495
Investment in partnerships held for sale ..........................................      1,491,380         508,229
Cash and cash equivalents .........................................................     15,311,566       2,979,778
Sales proceeds receivable .........................................................        832,879              --
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $121,219 in 2003 .............................             --          57,667
Property purchase costs,
  net of accumulated amortization of $161,573 in 2003 .............................             --          82,098
Other assets ......................................................................            572              40
                                                                                      ------------    ------------

   Total assets ...................................................................   $ 17,636,397    $  4,482,307
                                                                                      ============    ============




                        LIABILITIES AND PARTNERS' CAPITAL



Due on investments in partnerships ................................................   $  1,400,000    $  1,400,000
Accrued interest payable ..........................................................      2,752,262       2,626,262
Accounts payable and accrued expenses .............................................        138,537         145,687
Disposition fees payable to related party .........................................      1,210,408              --
                                                                                      ------------    ------------

   Total liabilities ..............................................................      5,501,207       4,171,949
                                                                                      ------------    ------------

Commitments and contingencies

Partners' capital:

  Capital paid in:
    General Partners ..............................................................          2,000           2,000
    Limited Partners ..............................................................     50,015,000      50,015,000
                                                                                      ------------    ------------

                                                                                        50,017,000      50,017,000

  Less:
    Accumulated distributions to partners .........................................    (15,293,973)    (15,293,973)
    Offering costs ................................................................     (5,278,980)     (5,278,980)
    Accumulated losses ............................................................    (17,308,857)    (29,133,689)
                                                                                      ------------    ------------

      Total partners' capital .....................................................     12,135,190         310,358
                                                                                      ------------    ------------

      Total liabilities and partners' capital .....................................   $ 17,636,397    $  4,482,307
                                                                                      ============    ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.
                                      III-8

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                           For the years ended
                                                                               December 31,
                                                                       ----------------------------
                                                                          2004             2003
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
Share of income from partnerships ..................................   $  1,220,530    $  1,089,155
                                                                       ------------    ------------

Other revenue and expenses:

  Revenue:
    Interest .......................................................         34,607          27,578
    Gain from extinguishment of debt ...............................             --         670,099
                                                                       ------------    ------------

                                                                             34,607         697,677
                                                                       ------------    ------------

  Expenses:
    Interest .......................................................        126,000         126,000
    General and administrative .....................................        357,199         276,857
    Management fee .................................................        249,996         249,996
    Professional fees ..............................................        117,280         121,817
    Amortization of deferred costs .................................         11,891          24,550
                                                                       ------------    ------------

                                                                            862,366         799,220
                                                                       ------------    ------------

      Total other revenue and expenses .............................       (827,759)       (101,543)
                                                                       ------------    ------------

Income before gain on disposition of investment in partnerships ....        392,771         987,612

Gain on disposition of investment in partnerships ..................     11,432,061              --
                                                                       ------------    ------------

Net income .........................................................   $ 11,824,832    $    987,612
                                                                       ============    ============


Net income allocated to General Partners (1.51%) ...................   $    178,555    $     14,913
                                                                       ============    ============

Net income allocated to Initial and Special Limited Partners (1.49%)   $    176,190    $     14,715
                                                                       ============    ============

Net income allocated to Additional Limited Partners (97%) ..........   $ 11,470,087    $    957,984
                                                                       ============    ============

Net income per unit of Additional Limited Partner Interest,
  based on 49,910 units outstanding ................................   $     229.82    $      19.19
                                                                       ============    ============

</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                      III-9

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

              STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL

<TABLE>
<CAPTION>
                                                                              Initial and
                                                                                Special         Additional
                                                              General           Limited          Limited
                                                              Partners          Partners         Partners             Total
                                                             ----------       -----------      ------------        ------------
<S>                                                          <C>              <C>              <C>                 <C>
Partners' (deficit) capital, January 1, 2003                 $(592,580)       $ (571,151)      $ 1,875,724         $   711,993

  Net income                                                    14,913            14,715           957,984             987,612

  Distribution of $27.00 per unit
    of Additional Limited Partner Interest                          --                --        (1,347,570)         (1,347,570)

  Distribution to General Partners                             (41,677)               --                --             (41,677)
                                                             ---------         ---------       -----------         -----------

Partners' (deficit) capital, December 31, 2003                (619,344)         (556,436)        1,486,138             310,358

  Net income                                                   178,555           176,190        11,470,087          11,824,832
                                                             ---------         ---------       -----------         -----------

Partners' (deficit) capital, December 31, 2004               $(440,789)        $(380,246)      $12,956,225         $12,135,190
                                                             =========         =========       ===========         ===========

</TABLE>


                   The accompanying notes are an integral part
                         of these financial statements.

                                     III-10

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                      For the years ended
                                                                                          December 31,
                                                                                  ----------------------------
                                                                                      2004            2003
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
Cash flows from operating activities:
  Net income ..................................................................   $ 11,824,832    $    987,612

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships .........................................     (1,220,530)     (1,089,155)
    Amortization of deferred costs ............................................         11,891          24,550
    Gain on disposition of investment in partnerships .........................    (11,432,061)             --
    Gain from extinguishment of debt ..........................................             --        (670,099)

    Changes in assets and liabilities:
      (Increase) decrease in other assets .....................................           (532)        335,805
      Increase in accrued interest payable ....................................        126,000         126,000
      (Decrease) increase in accounts payable and accrued expenses ............         (7,150)         32,386
      Increase in accrued interest receivable on advances .....................           (333)             --
                                                                                  ------------    ------------

        Net cash provided by (used in) operating activities ...................       (697,883)       (252,901)
                                                                                  ------------    ------------


Cash flows from investing activities:
  Receipt of distributions from partnerships ..................................      1,165,200       1,200,394
  Proceeds from disposition of investment
    in partnerships, net of disposition fees paid
    to related party of $895,241 ..............................................     11,888,880              --
  Additional sales proceeds ...................................................            591           1,043
  Advance to Local Partnership ................................................        (25,000)             --
                                                                                  ------------    ------------

        Net cash provided by investing activities .............................     13,029,671       1,201,437
                                                                                  ------------    ------------


Cash flows from financing activities:
  Distribution to General Partners ............................................             --         (41,677)
  Distribution to Additional Limited Partners .................................             --      (1,347,570)
                                                                                  ------------    ------------

        Net cash used in financing activities .................................             --      (1,389,247)
                                                                                  ------------    ------------


Net increase (decrease) in cash and cash equivalents ..........................     12,331,788        (440,711)

Cash and cash equivalents, beginning of year ..................................      2,979,778       3,420,489
                                                                                  ------------    ------------

Cash and cash equivalents, end of year ........................................   $ 15,311,566    $  2,979,778
                                                                                  ============    ============



Supplemental disclosure of cash flow information: Non-cash investing activity:
    Proceeds from disposition of investment
    in partnership, accrued in 2004, collected in 2005 ........................   $    832,879    $         --
                                                                                  ============    ============

    Disposition fees due to related party,
    accrued in 2004, paid in 2005 .............................................   $  1,210,408    $         --
                                                                                  ============    ============

</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                     III-11

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a.   Organization
          ------------

          Capital Realty Investors-II  Limited Partnership (the Partnership) was
     formed under the Maryland Revised Uniform Limited  Partnership Act on March
     23,  1983,  and shall  continue  until  December 31,  2037,  unless  sooner
     dissolved in accordance  with the terms of the Partnership  Agreement.  The
     Partnership  was formed to invest in real estate by  acquiring  and holding
     limited  partner  interests in limited  partnerships  (Local  Partnerships)
     which  own and  operate  federal  or  state  government-assisted  apartment
     properties  which  provide  housing   principally  to  the  elderly  or  to
     individuals  and  families of low or  moderate  income,  or  conventionally
     financed apartment properties, located throughout the United States.

          The General Partners of the Partnership are C.R.I.,  Inc. (CRI), which
     is the Managing  General  Partner,  and current and former  shareholders of
     CRI. The Initial  Limited  Partner is  Rockville  Pike  Associates  Limited
     Partnership-II,  a  limited  partnership  which  includes  certain  current
     officers and former employees of CRI or its affiliates. The Special Limited
     Partner  had  been  Two  Broadway  Associates  II,  a  limited  partnership
     comprised of an affiliate and employees of Merrill Lynch, Pierce,  Fenner &
     Smith, Incorporated.  Effective January 1, 2002, Two Broadway Associates II
     transferred its interest to MLH Merger Corporation and three individuals.

          The  Partnership  sold 50,000  units at $1,000 per unit of  additional
     limited partner interest through a public offering. The offering period was
     terminated  on June  20,  1983.  As of  December  31,  2004,  90  units  of
     additional limited partner interest had been abandoned.

     b.   Method of accounting
          --------------------

          The  financial  statements  of the  Partnership  are  prepared  on the
     accrual  basis of  accounting  in  conformity  with  accounting  principles
     generally accepted in the United States of America.

     c.   Investments in and advances to partnerships
          -------------------------------------------

          The investments in and advances to Local Partnerships (see Note 2) are
     accounted for by the equity  method  because the  Partnership  is a limited
     partner in the Local  Partnerships.  Under this method, the carrying amount
     of the investments in and advances to Local  Partnerships is (i) reduced by
     distributions  received and (ii) increased or reduced by the  Partnership's
     share of earnings or losses, respectively, of the Local Partnerships. As of
     December 31, 2004 and 2003, the Partnership's share of cumulative losses of
     six  and  nine  of  the  Local  Partnerships  exceeded  the  amount  of the
     Partnership's  investments in and advances to those Local  Partnerships  by
     $19,686,964  and  $20,239,849,  respectively.  Since the Partnership has no
     further  obligation  to advance  funds or provide  financing to these Local
     Partnerships, the excess losses have not been reflected in the accompanying
     financial statements. Distributions of $242,754 and $343,586, received from
     seven Local Partnerships during 2004 and 2003, respectively,  and for which
     the Partnership's  carrying value is zero (equity method  suspended),  were
     recorded  as   increases  in  the   Partnership's   share  of  income  from
     partnerships in the year received.


                                     III-12

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

          Costs incurred in connection  with acquiring  these  investments  have
     been  capitalized and are being amortized  using the  straight-line  method
     over the  estimated  useful  lives  of the  properties  owned by the  Local
     Partnerships.

     d.   Investment in partnerships held for sale or transfer
          ----------------------------------------------------

          Due to the possible sale of the Chevy Chase Park,  Ltd.  (Chevy Chase)
     property,  as further discussed in Note 2.f., the Partnership's  investment
     in Chevy Chase was reclassified to investment in partnerships held for sale
     in the accompanying balance sheet at December 31, 2004. Due to the possible
     sale of the  Partnership's  interest  in Mercy  Terrace  Associates  (Mercy
     Terrace),  as further discussed in Note 2.f., the Partnership's  investment
     in Mercy Terrace was  reclassified  to investment in  partnership  held for
     sale in the  accompanying  balance  sheet at December 31, 2004.  Due to the
     possible sale of the Westgate  Tower Limited  Dividend  Housing  Associates
     (Westgate)  property,  as further discussed in Note 2.a., the Partnership's
     investment in Westgate was reclassified to investment in partnerships  held
     for sale in the accompanying balance sheet at December 31, 2004.

          In accordance with its approved Plan of Liquidation  and  Dissolution,
     the Partnership is actively marketing its remaining five investments:

          1)   Four Winds West Company, Ltd. (Four Winds West)
          2)   Chowchilla Elderly Associates, Ltd. (Golden Acres)
          3)   Orangewood Plaza Limited Partnership (Orangewood Plaza)
          4)   Posada Associates Limited Partnership (Posada Vallarta)
          5)   Troy Apartments Ltd. (Troy Manor)

     Therefore,   as  further  discussed  in  Note  2.f.,  the  Partnership  has
     reclassified  these five investments to investment in partnerships held for
     sale in the accompanying balance sheet at December 31, 2004.

          Assets held for sale are not recorded in excess of their estimated net
     realizable value.

     e.   Cash and cash equivalents
          -------------------------

          Cash and cash equivalents  consist of all money market funds, time and
     demand  deposits,  and repurchase  agreements  with original  maturities of
     three months or less.

     f.   Offering costs
          --------------

          The Partnership incurred certain costs in connection with the offering
     and selling of units of additional  limited  partner  interest.  Such costs
     were recorded as a reduction of partners' capital when incurred.

     g.   Income taxes
          ------------

          For federal and state income tax purposes, each partner reports on his
     or her  personal  income tax  return his or her share of the  Partnership's
     income or loss as determined  for tax purposes.  Accordingly,  no provision
     has been made for income taxes in these financial statements.

                                     III-13

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     h.   Use of estimates
          ----------------

          In  preparing  financial  statements  in  conformity  with  accounting
     principles  generally  accepted  in  the  United  States  of  America,  the
     Partnership is required to make estimates and  assumptions  that affect the
     reported amounts of assets and liabilities and the disclosure of contingent
     assets and  liabilities  at the date of the  financial  statements,  and of
     revenues and expenses  during the reporting  periods.  Actual results could
     differ from those estimates.

     i.   Fair value of financial instruments
          -----------------------------------

          The financial  statements  include estimated fair value information as
     of December  31, 2004,  as required by  Statement  of Financial  Accounting
     Standards No. 107 (SFAS No. 107),  Disclosure About Fair Value of Financial
     Instruments.   Such  information,   which  pertains  to  the  Partnership's
     financial instruments (primarily cash and cash equivalents and the purchase
     money  note),  is based on the  requirements  set forth in SFAS No. 107 and
     does  not  purport  to  represent  the  aggregate  net  fair  value  of the
     Partnership.

          The  balance  sheet  carrying  amounts  for cash and cash  equivalents
     approximate estimated fair values of such assets.

          The  Partnership has determined that it is not practicable to estimate
     the fair value of the purchase money note due to: (i) the lack of an active
     market for this type of financial  instrument,  (ii) the variable nature of
     purchase money note interest  payments as a result of fluctuating cash flow
     distributions  received from the related Local  Partnership,  and (iii) the
     excessive costs  associated  with an independent  appraisal of the purchase
     money note.

     j.   New accounting pronouncement
          ----------------------------

          In December 2003, the Financial Accounting Standards Board issued FASB
     Interpretation No. 46 (revised December 2003) (FIN 46-R),  Consolidation of
     Variable  Interest   Entities.   FIN  46-R  clarifies  the  application  of
     Accounting Research Bulletin 51,  Consolidated  Financial  Statements,  for
     certain entities that do not have sufficient  equity at risk for the entity
     to finance its activities without additional subordinated financial support
     from  other  parties  or  in  which  equity   investors  do  not  have  the
     characteristics  of a controlling  financial interest  ("variable  interest
     entities"). Variable interest entities within the scope of FIN 46-R will be
     required  to be  consolidated  by their  primary  beneficiary.  The primary
     beneficiary  of a variable  interest  entity is  determined to be the party
     that  absorbs a  majority  of the  entity's  expected  losses,  receives  a
     majority of its expected returns, or both. The Managing General Partner has
     evaluated the  Partnership's  investment in partnerships and has determined
     that they are not variable  interest  entities  subject to consolidation by
     the Partnership under the provisions of FIN 46-R.


                                     III-14

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     k.   Definitive Proxy Statement
          --------------------------

          On  February  4,  2004,  the  Partnership  filed  a  Definitive  Proxy
     Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934,
     and mailed it to limited  partners to solicit  consents for approval of the
     following:

     (1)  The sale of all of the Partnership's assets and the dissolution of the
          Partnership pursuant to a Plan of Liquidation and Dissolution, and the
          amendment of the Partnership's Limited Partnership Agreement to permit
          the Managing General Partner,  CRI, to be eligible to receive property
          disposition  fees from the  Partnership on the same basis as such fees
          may currently be paid to Local General  Partners,  real estate brokers
          or other  third  party  intermediaries  employed  to sell  Partnership
          properties, to the extent that CRI markets and sells the Partnership's
          properties instead of such persons (a "Disposition Fee");

     (2)  The amendment of the Partnership's  Limited  Partnership  Agreement to
          permit CRI to be eligible to receive a partnership  liquidation fee in
          the amount of $500,000,  payable only if the Managing  General Partner
          is  successful in  liquidating  all of the  Partnership's  investments
          within 36 months from the date the  liquidation is approved [March 22,
          2004], in recognition  that one or more of the properties in which the
          Partnership  holds an  interest  might not be  saleable to parties not
          affiliated  with the respective  Local  Partnership  due to the amount
          and/or  terms  of  their  current   indebtedness   (the   "Partnership
          Liquidation Fee"); and

     (3)  To authorize the Managing General Partner, in its sole discretion,  to
          elect to extend the period during which  Consents of Limited  Partners
          may be  solicited  and voted,  but not beyond sixty (60) days from the
          date that the Consent  Solicitation  Statement was sent to the Limited
          Partners.

     The matters for which consent was solicited are collectively referred to as
     the "Liquidation."

          The record date for voting was December 31, 2003, and the final voting
     deadline was March 22, 2004. A tabulation  of votes  received by the voting
     deadline follows.

<TABLE>
<CAPTION>
                                             FOR                  AGAINST                ABSTAIN                 TOTAL
                                      -----------------      -----------------      ------------------      -----------------
                                      Units of               Units of               Units of                Units of
                                      limited                limited                limited                 limited
                                      partner                partner                partner                 partner
         Description                  interest   Percent     interest   Percent     interest    Percent     Interest    Percent
         -----------                  --------   -------     --------   -------     --------    -------     --------    -------
         <S>                          <C>        <C>         <C>        <C>         <C>         <C>         <C>         <C>
         Sale, dissolution and
           five percent
           Disposition Fee             28,699     57.5%       1,264       2.5%         268        0.5%       30,231      60.6%

         $500,000 Partnership
           Liquidation Fee             25,842     51.8%       3,546       7.1%         844        1.7%       30,231      60.6%

         Extension of
           solicitation period         27,975     56.1%       1,767       3.5%         489        1.0%       30,231      60.6%

</TABLE>

          There  can be no  assurance  that the  Liquidation  will be  completed
     pursuant to the Plan of Liquidation and Dissolution.



                                     III-15

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

     a.   Due on investments in partnerships and accrued interest payable
          ---------------------------------------------------------------

          As of December 31, 2004 and 2003, the Partnership held limited partner
     interests  in eight and 12 Local  Partnerships,  respectively,  which  were
     organized to develop, construct, own, maintain and operate rental apartment
     properties.  The remaining amounts due on the  Partnership's  investment in
     one Local Partnership follow.


                                                       December 31,
                                              ------------------------------
                                                 2004                2003
                                              ----------          ----------

         Purchase money note due in 2003      $1,400,000          $1,400,000

         Accrued interest payable              2,752,262           2,626,262
                                              ----------          ----------

               Total                          $4,152,262          $4,026,262
                                              ==========          ==========


          The remaining  purchase  money note,  which matured  September 1, 2003
     (see below),  has a stated  interest rate of 9%. The purchase money note is
     nonrecourse,  but its terms  provide for payment in full upon the  earliest
     of: (i) sale or refinancing  of the Local  Partnership's  rental  property;
     (ii) payment in full of the Local  Partnership's  permanent  loan; or (iii)
     maturity.

          The purchase money note, which is nonrecourse to the  Partnership,  is
     secured by the  Partnership's  interest in the Westgate Local  Partnership,
     which owns Westgate Tower Apartments  (Westgate).  The underlying  property
     does not have sufficient  appreciation and equity to enable the Partnership
     to pay the  purchase  money  note's  principal  and  accrued  interest.  In
     conjunction  with the approved Plan of Liquidation  and  Dissolution of the
     Partnership,  the Managing General Partner is actively  marketing  Westgate
     for sale. The  noteholders  have agreed to accept the proceeds of such sale
     as a discounted  payoff of the purchase money note's  principal and accrued
     interest.   The  discounted   payoff  would  result  in   cancellation   of
     indebtedness  income to the  Limited  Partners,  which  would be taxed at a
     federal tax rate of up to 35 percent. There can be no assurance that a sale
     of Westgate and discounted payoff of the purchase money note will occur.

          Interest  expense on the  Partnership's  purchase  money notes for the
     years  ended  December  31,  2004 and  2003,  was  $126,000  and  $126,000,
     respectively.  The accrued  interest  payable on the purchase money note of
     $2,752,262 and  $2,626,262 as of December 31, 2004 and 2003,  respectively,
     is in default.

                                    Princeton
                                    ---------

          The  Partnership  defaulted  on its  purchase  money  note  related to
     Princeton Community Village Associates (Princeton) on January 1, 1999, when
     the note matured and was not paid.  The default amount  included  principal
     and accrued interest of $500,000 and $1,422,064, respectively. On August 9,
     1999, the noteholder filed a complaint  seeking  declaratory  judgment that
     the  Partnership had forfeited its interest in Princeton to the noteholder.
     The litigation  was settled  effective  January 1, 2000,  when the Managing
     General Partner entered into an agreement with the noteholder which granted
     the noteholder  four options to purchase the  Partnership's  98.99% limited
     partner  interest in Princeton  over a three and one-half  year period,  in
     exchange for the cancellation of pro-rata  portions of the then outstanding
     balance  of  the  purchase  money  note.  As  part  of the  agreement,  the
     noteholder extended the maturity date of the purchase money note to January
     1, 2004, and the Partnership  made a payment to the noteholder on April 21,
     2000,  which was applied against accrued  interest  payable on the purchase
     money note. However,  pursuant to the option agreement with the noteholder,
     the  noteholder  could  exercise its option to acquire the final portion of
     the Partnership's interest between January 1, 2003 and June 30, 2003.

                                     III-16

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

          On January 1, 2003,  pursuant to the option agreement,  the noteholder
     purchased  the   Partnership's   remaining   limited  partner  interest  in
     Princeton,  the consideration for which was the cancellation of $677,676 of
     purchase money note principal and accrued  interest.  The purchase resulted
     in gain on  extinguishment  of debt of  $670,099  for  financial  statement
     purposes and a total gain of $362,168 for federal tax purposes in 2003.  On
     April 30, 2002, pursuant to the option agreement,  the noteholder purchased
     one-half of the  Partnership's  then-remaining  limited partner interest in
     Princeton,  the consideration for which was the cancellation of $606,700 of
     purchase  money note accrued  interest.  The  purchase  resulted in gain on
     extinguishment of debt of $599,123 for financial  statement  purposes and a
     total gain of $1,783,122  for federal tax purposes in 2002. On both June 1,
     2001 and May 31, 2000,  pursuant to the option  agreement,  the  noteholder
     purchased 26% of the  Partnership's  original  limited partner  interest in
     Princeton,  the  consideration  for  which was the  cancellation  of a like
     percentage  of the  outstanding  purchase  money note  accrued  interest of
     $392,333 and $493,027, respectively,  resulting in gain from extinguishment
     of debt of $384,123 and $484,862 for financial  statement  purposes in 2001
     and 2000,  respectively,  and in a total gain of $1,583,512  and $1,921,910
     for federal tax purposes in 2001 and 2000, respectively.

                                    Westgate
                                    --------

          The  Partnership  defaulted on its one remaining  purchase money note,
     related to Westgate  Limited Dividend Housing  Association  (Westgate),  on
     September 1, 2003,  when the note (as  extended)  matured and was not paid.
     The default amount  included  principal and accrued  interest of $1,400,000
     and $2,584,492,  respectively.  As of March 24, 2005, principal and accrued
     interest  of  $1,400,000  and  $2,780,914,   respectively,   were  due.  In
     conjunction  with the approved Plan of Liquidation  and  Dissolution of the
     Partnership,  the Managing General Partner is actively  marketing  Westgate
     for sale. The  noteholders  have agreed to accept the proceeds of such sale
     as a discounted  payoff of the purchase money note's  principal and accrued
     interest.   The  discounted   payoff  would  result  in   cancellation   of
     indebtedness  income to the  Limited  Partners,  which  would be taxed at a
     federal tax rate of up to 35 percent. There can be no assurance that a sale
     of Westgate and discounted payoff of the purchase money note will occur.

          Interest expense on the Partnership's Westgate purchase money note was
     $126,000  for each of the years  ended  December  31,  2004 and  2003.  The
     accrued  interest  payable on the  purchase  money note of  $2,752,262  and
     $2,626,262 as of December 31, 2004 and December 31, 2003, respectively,  is
     in default.

                                     III-17

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

          Due to the  possible  sale of the property  related to  Westgate,  the
     Partnership's   basis  in  the  Local  Partnership,   along  with  the  net
     unamortized  amount of acquisition fees and property purchase costs,  which
     totaled  $486,187  and  $508,229 as of December  31, 2004 and  December 31,
     2003,  respectively,  has been  reclassified  to investment in partnerships
     held for sale in the accompanying balance sheets.

     b.   Interests  in  profits,  losses and cash  distributions  made by Local
          ----------------------------------------------------------------------
            Partnerships
            ------------

          The Partnership has a 92.99% to 99.99% interest in profits, losses and
     cash  distributions  (as  restricted  by various  federal and state housing
     agencies)   (collectively,   the  Agencies)  of  each  Local   Partnership.
     Affiliates of the Managing  General  Partner of the  Partnership are also a
     general  partner  of each Local  Partnership.  As  stipulated  by the Local
     Partnerships'  partnership agreements,  the Local Partnerships are required
     to make annual cash  distributions  from surplus cash flow, if any.  During
     2004 and 2003,  the  Partnership  received cash  distributions  from rental
     operations  of  the  Local   Partnerships  of  $1,165,200  and  $1,200,394,
     respectively.   As  of  December   31,  2004  and  2003,   five  and  nine,
     respectively,  of the Local  Partnerships  had  aggregate  surplus cash, as
     defined by their respective regulatory Agencies, in the amounts of $680,641
     and $1,304,064,  respectively,  which may be available for  distribution in
     accordance with their respective regulatory Agencies' regulations.

          The cash  distributions  to the Partnership from the operations of the
     Local  Partnerships  may be  limited  by the  Agencies'  regulations.  Such
     regulations limit annual cash  distributions to a percentage of the owner's
     equity investment in a rental property.  Funds in excess of those which may
     be distributed to owners are generally  required to be placed in a residual
     receipts  account  held by the  governing  state or federal  agency for the
     benefit of the  property.  In addition,  local  general  partners  have the
     authority to withhold funds if needed for property  repairs,  improvements,
     or other property needs.

          Upon sale or refinancing  of a property owned by a Local  Partnership,
     or upon the  liquidation  of a Local  Partnership,  the proceeds  from such
     sale,  refinancing or liquidation  shall be distributed in accordance  with
     the  respective   provisions  of  each  Local   Partnership's   partnership
     agreement.  In  accordance  with such  provisions,  the  Partnership  would
     receive  from such  proceeds  its  respective  percentage  interest  of any
     remaining  proceeds,  after payment of (i) all debts and liabilities of the
     Local Partnership and certain other items,  (ii) the Partnership's  capital
     contributions   plus  certain   specified   amounts  as  outlined  in  each
     partnership  agreement,  and (iii) certain special distributions to general
     partners and related entities of the Local Partnership.

                                     III-18

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     c.   Impairment analysis
          -------------------

          The  Managing  General  Partner  considered   impairment  of  the  net
     capitalized  acquisition fees and net property purchase costs. An aggregate
     impairment  loss of $94,889 was  recognized  during 2003, and included as a
     reduction  in  share  of  income  from  partnerships  on  the  accompanying
     statement of operations for the year ended December 31, 2003, as follows.

<TABLE>
<CAPTION>

     Local Partnership                            Property            Impairment Loss
     -----------------                           ------------         ---------------
     <S>                                         <C>                  <C>
     Chowchilla Elderly Associates, Ltd.         Golden Acres            $ 9,510
     Mercy Terrace Associates                    Mercy Terrace            36,411
     Orangewood Plaza Limited Partnership        Orangewood Plaza         11,360
     Posada Associates Limited Partnership       Posada Vallarta          27,053
     Troy Apartments Ltd.                        Troy Manor               10,555
                                                                         -------
                                                                         $94,889
                                                                         =======
</TABLE>

     d.   Advance to Local Partnership
          ----------------------------

                                 Four Winds West
                                 ---------------

          In October 2004, the Partnership  advanced  $25,000 to Four Winds West
     Company,  Ltd., (Four Winds West) to assist with current cash requirements.
     For financial reporting purposes,  this advance has been reduced to zero by
     the  Partnership  as a  result  of  current  losses  at the  related  Local
     Partnership level.

     e.   Completed sales
          ---------------

                                    Arrowhead
                                    ---------

          On  November  17,  2004,  the  Partnership's   interest  in  Arrowhead
     Apartments Associates (Arrowhead) was sold. Gross cash proceeds received by
     the  Partnership  totaled   $1,156,495.   The  sale  resulted  in  gain  on
     disposition  of  investment  in  partnerships  of  $698,210  for  financial
     statement  purposes  and in  total  gain of  approximately  $6,082,297  for
     federal  tax  purposes  in  2004.  In  accordance  with  the  terms  of the
     Partnership  Agreement,  in December 2004 the Managing  General Partner was
     paid a disposition fee of $432,824  related to the sale. The fee was netted
     against the related gain on disposition of investment in partnerships.

                                    Moorings
                                    --------

          On  November  17,  2004,  the   Partnership's   interest  in  Moorings
     Apartments  Associates (Moorings) was sold. Gross cash proceeds received by
     the Partnership totaled $366,943.  The sale resulted in loss on disposition
     of investment in partnerships of $120,694 for financial  statement purposes
     and in total gain of  approximately  $6,216,291 for federal tax purposes in
     2004.  In  accordance  with the  terms  of the  Partnership  Agreement,  in
     December 2004 the Managing  General  Partner was paid a disposition  fee of
     $462,417 related to the sale.

                                     III-19

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                Country Place I
                                ---------------

          On December 29, 2004, the Partnership's  interest in Blackburn Limited
     Partnership (Country Place I) was sold. Gross cash proceeds received by the
     Partnership in 2004 totaled $6,821,935;  in addition, at December 31, 2004,
     the Partnership  accrued  $504,604 for cash proceeds to be received in 2005
     upon the  release  of  escrow  reserves;  the  purchaser  has one year from
     closing  to file for  monetary  damages  as a result  of any  breach of the
     representations  and  warranties  made by the seller.  The sale resulted in
     gain on  disposition  of  investment  in  partnerships  of  $6,565,858  for
     financial statement purposes and in total gain of approximately $11,060,421
     for  federal  tax  purposes in 2004.  In  accordance  with the terms of the
     Partnership  agreement,  in January 2005 the Managing  General  Partner was
     paid a disposition fee of $743,366 related to the sale. The fee was accrued
     and netted  against  the  related  gain on  disposition  of  investment  in
     partnerships at December 31, 2004.

                                Country Place II
                                ----------------

          On December 29, 2004, the  Partnership's  interest in Second Blackburn
     Limited  Partnership  (Country  Place II) was  sold.  Gross  cash  proceeds
     received by the  Partnership in 2004 totaled  $4,438,748;  in addition,  at
     December 31, 2004, the Partnership accrued $328,275 for cash proceeds to be
     received in 2005 upon the release of escrow reserves; the purchaser has one
     year from closing to file for monetary damages as a result of any breach of
     representations  and  warranties  made by the seller.  The sale resulted in
     gain on  disposition  of  investment  in  partnerships  of  $4,288,096  for
     financial statement purposes and in total gain of approximately  $6,846,454
     for  federal  tax  purposes in 2004.  In  accordance  with the terms of the
     Partnership  agreement,  in January 2005 the Managing  General  Partner was
     paid a disposition fee of $467,042 related to the sale. The fee was accrued
     and netted  against  the  related  gain on  disposition  of  investment  in
     partnerships at December 31, 2004.

     f.   Assets held for sale
          --------------------

                                   Chevy Chase
                                   -----------

          In December,  2004, a contract for the sale of the property related to
     Chevy Chase was signed. Due to the possible sale of the property related to
     the Partnership's investment in Chevy Chase, the Partnership's basis in the
     Local Partnership, along with net unamortized acquisition fees and property
     purchase costs, which totaled $992,626,  was reclassified to investments in
     partnerships  held for sale in the  accompanying  balance sheet at December
     31, 2004. There is no assurance that a sale of the property will occur.

                                 Mercy Terrace
                                 -------------

          A contract  is pending for the sale of the  Partnership's  interest in
     Mercy Terrace  Associates (Mercy Terrace).  Due to the possible sale of the
     Partnership's  interest in Mercy Terrace,  the  Partnership's  basis in the
     Local  Partnership,  which totaled $0, was  reclassified  to investments in
     partnerships  held for sale in the  accompanying  balance sheet at December
     31, 2004. There is no assurance that a sale of the  Partnership's  interest
     in Mercy Terrace will occur.

                                     III-20

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                Four Winds West, Golden Acres, Orangewood Plaza,
                ------------------------------------------------
                         Posada Vallarta, and Troy Manor
                         -------------------------------

          In accordance with its approved Plan of Liquidation  and  Dissolution,
     the Partnership is actively marketing its remaining five investments:

          1)   Four Winds West Company, Ltd. (Four Winds West)
          2)   Chowchilla Elderly Associates, Ltd. (Golden Acres)
          3)   Orangewood Plaza Limited Partnership (Orangewood Plaza)
          4)   Posada Associates Limited Partnership (Posada Vallarta)
          5)   Troy Apartments Ltd. (Troy Manor)

     Therefore,  the  Partnership  has  reclassified  these five  investments to
     investment in partnerships held for sale in the accompanying  balance sheet
     at December 31, 2004, as follows.

                                              Net unamortized amount
                                 Investment   of acquisition fees and
         Investment                basis      property purchase costs    Total
         ----------              ----------   -----------------------   -------

         1) Four Winds West       $     0             $12,567           $12,567
         2) Golden Acres                0                   0                 0
         3) Orangewood Plaza            0                   0                 0
         4) Posada Vallarta             0                   0                 0
         5) Troy Manor                  0                   0                 0
                                  -------             -------           -------

                                  $     0             $12,567           $12,567
                                  =======             =======           =======


          There  is no  assurance  that  the  sale of any or all of  these  five
     investments will occur.

     g.   Summarized financial information
          --------------------------------

          Combined balance sheets and combined  statements of operations for the
     eight  Local  Partnerships  in which  the  Partnership  is  invested  as of
     December 31, 2004, follow. The information is presented  separately for two
     Local Partnerships which have investment basis (equity method), and for six
     Local  Partnerships  for which  the  Partnership's  carrying  value is zero
     (equity method suspended).


                                     III-21

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued


                                              COMBINED BALANCE SHEETS
                                                 December 31, 2004

<TABLE>
<CAPTION>
                                                              Equity
                                                              Method           Suspended            Total
                                                            ----------        ------------       ------------
          <S>                                               <C>               <C>                <C>

          Number of Local Partnerships                           2                6                   8
                                                                 =                =                   =

          Rental property, at cost, net of
            accumulated depreciation of
            $7,365,876, $23,336,263, and
            $30,702,139, respectively                       $3,898,447        $ 16,049,002       $ 19,947,449
          Land                                                 740,251           1,177,183          1,917,434
          Other assets                                       1,191,834           4,629,560          5,821,394
                                                            ----------        ------------       ------------

              Total assets                                  $5,830,532        $ 21,855,745       $ 27,686,277
                                                            ==========        ============       ============


          Mortgage notes payable                            $4,202,198        $ 26,586,095       $ 30,788,293
          Other liabilities                                    368,247          11,954,623         12,322,870
          Due to general partners                                   --           4,442,399          4,442,399
                                                            ----------        ------------       ------------

              Total liabilities                              4,570,445          42,983,117         47,553,562

          Partners' deficit                                  1,260,087         (21,127,372)       (19,867,285)
                                                            ----------        ------------       ------------

              Total liabilities
                and partners' deficit                       $5,830,532        $ 21,855,745       $ 27,686,277
                                                            ==========        ============       ============
</TABLE>
                                     III-22

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued


                                         COMBINED STATEMENTS OF OPERATIONS
                                       For the year ended December 31, 2004

<TABLE>
<CAPTION>
                                                               Equity
                                                               Method          Suspended            Total
                                                            -----------       -----------        -----------
          <S>                                               <C>               <C>                <C>
          Number of Local Partnerships                           2                10 (1)              12
                                                                 =                ==                  ==

          Revenue:
            Rental                                          $ 2,214,325       $13,390,545        $15,604,870
            Other                                                49,800           451,875            501,675
                                                            -----------       -----------        -----------

              Total revenue                                   2,264,125        13,842,420         16,106,545
                                                            -----------       -----------        -----------

          Expenses:
            Operating                                         1,609,767         8,388,053          9,997,820
            Interest                                            (41,783)        3,899,907          3,858,124
            Depreciation and  amortization                      356,929         2,235,698          2,592,627
                                                            -----------       -----------        -----------

              Total expenses                                  1,924,913        14,523,658         16,448,571
                                                            -----------       -----------        -----------

          Net income (loss)                                 $   339,212       $  (681,238)       $  (342,026)
                                                            ===========       ===========        ===========

          Cash distributions                                $   240,559       $   924,641        $ 1,165,200
                                                            ===========       ===========        ===========

          Cash distributions recorded as reduction
            of investments in partnerships                  $   240,559       $        --        $   240,559
                                                            ===========       ===========        ===========

          Cash distributions recorded as income             $        --       $   906,005        $   906,005

          Partnership's share of
            Local Partnership net income                        339,858                --            339,858

          Miscellaneous                                                           (25,333)           (25,333)
                                                            -----------       -----------        -----------

          Share of income from partnerships                 $   339,858       $   880,672        $ 1,220,530
                                                            ===========       ===========        ===========
</TABLE>


          (1)  Includes information for Arrowhead and Moorings,  which were sold
               in November  2004,  and for Country Place I and Country Place II,
               which were sold in December 2004.


                                     III-23

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

          Combined balance sheets and combined  statements of operations for the
     12 Local  Partnerships in which the Partnership was invested as of December
     31, 2003, follow.  The information is presented  separately for three Local
     Partnerships  which have  investment  basis (equity  method),  and for nine
     Local  Partnerships  for which  the  Partnership's  carrying  value is zero
     (equity method suspended).


                                              COMBINED BALANCE SHEETS
                                                 December 31, 2003

<TABLE>
<CAPTION>
                                                               Equity
                                                               Method          Suspended            Total
                                                            ------------      ------------       ------------
          <S>                                               <C>               <C>                <C>
          Number of Local Partnerships                           3                9                   12
                                                                 =                =                   ==

          Rental property, at cost, net of
            accumulated depreciation of
            $12,139,216, $41,805,129, and
            $53,944,345, respectively                       $  6,281,238      $ 22,899,727       $ 29,180,965
          Land                                                 1,236,015         2,808,822          4,044,837
          Other assets                                         2,387,694         6,445,883          8,833,577
                                                            ------------      ------------       ------------

              Total assets                                  $  9,904,947      $ 32,154,432       $ 42,059,379
                                                            ============      ============       ============


          Mortgage notes payable                            $ 11,308,683      $ 45,513,757       $ 56,822,440
          Other liabilities                                      629,325        12,453,329         13,082,654
          Due to general partners                                     --         4,441,014          4,441,014
                                                            ------------      ------------       ------------

              Total liabilities                               11,938,008        62,408,100         74,346,108

          Partners' deficit                                   (2,033,061)      (30,253,668)       (32,286,729)
                                                            ------------      ------------       ------------

              Total liabilities
                and partners' deficit                       $  9,904,947      $ 32,154,432       $ 42,059,379
                                                            ============      ============       ============
</TABLE>

                                                      III-24

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued


                                         COMBINED STATEMENTS OF OPERATIONS
                                       For the year ended December 31, 2003
<TABLE>
<CAPTION>
                                                               Equity
                                                               Method          Suspended            Total
                                                            -----------       -----------        -----------
          <S>                                               <C>               <C>                <C>
          Number of Local Partnerships                           3                9                   12
                                                                 =                =                   ==

          Revenue:
            Rental                                          $ 4,382,362       $11,527,472       $15,909,834
            Other                                               149,104           339,291           488,395
                                                            -----------       -----------       -----------

              Total revenue                                   4,531,466        11,866,763         16,398,229
                                                            -----------       -----------        -----------

          Expenses:
            Operating                                         2,783,870         6,883,458          9,667,328
            Interest                                            529,363         4,101,218          4,630,581
            Depreciation and  amortization                      628,340         1,984,695          2,613,035
                                                            -----------       -----------        -----------

              Total expenses                                  3,941,573        12,969,371         16,910,944
                                                            -----------       -----------        -----------

          Net income (loss)                                 $   589,893       $(1,102,608)       $  (512,715)
                                                            ===========       ===========        ===========

          Cash distributions                                $   600,742       $   599,652        $ 1,200,394
                                                            ===========       ===========        ===========

          Cash distributions recorded as reduction
            of investments in partnerships                  $   600,742       $   256,066        $   856,808
                                                            ===========       ===========        ===========

          Cash distributions recorded as income             $        --       $   343,586        $   343,586

          Partnership's share of
            Local Partnership net income                        587,629           251,786 (1)        839,415

          Impairment loss (See Note 2.c.)                            --           (94,889)           (94,889)

          Miscellaneous                                           1,043                --              1,043
                                                            -----------       -----------        -----------

          Share of income from partnerships                 $   588,672       $   500,483        $ 1,089,155
                                                            ===========       ===========        ===========

</TABLE>

          (1)  Represents Partnership's share of income from a Local Partnership
               for which the  Partnership's  carrying  value is zero,  but which
               does not have unallowable losses.


          All of the cash distributions recorded as income are included in share
     of  income  from  partnerships  on the  statements  of  operations  for the
     respective  years,  and are  recorded as cash  receipts  on the  respective
     balance sheets.  Cash distributions  recorded as a reduction of the related
     investment are recorded as cash receipts on the respective  balance sheets,
     and  are  recorded  as a  reduction  of  investments  in  and  advances  to
     partnerships, also on the respective balance sheets.

     g.   Reconciliation of the Local Partnerships' financial statement net loss
          ----------------------------------------------------------------------
            to taxable income
            -----------------

          For federal income tax purposes,  the Local  Partnerships  report on a
     basis whereby: (i) certain revenue and the related assets are recorded when
     received rather than when earned; (ii) certain costs are expensed when paid
     or  incurred  rather  than  capitalized  and  amortized  over the period of
     benefit;  and (iii) a shorter life is used to compute  depreciation  on the
     property as permitted by Internal Revenue Service (IRS) Regulations.  These
     returns are subject to examination and,  therefore,  possible adjustment by
     the IRS.

                                     III-25

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

          A reconciliation of the Local  Partnerships'  financial  statement net
     loss reflected above to taxable income follows.

                                                       For the years ended
                                                           December 31,
                                                     -------------------------
                                                        2004           2003
                                                     ----------     ----------

          Financial statement net loss               $ (342,026)    $ (512,715)

          Differences between financial statement
            and tax depreciation, amortization,
            and miscellaneous differences             2,174,895      1,319,346
                                                     ----------     ----------

          Taxable income                             $1,832,869     $  806,631
                                                     ==========     ==========



3.   RELATED PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement,  the Partnership
paid the  Managing  General  Partner a fee for services in  connection  with the
review, selection,  evaluation,  negotiation and acquisition of the interests in
the Local  Partnerships.  The fee amounted to $1,000,000,  which is equal to two
percent  of  the  Additional  Limited  Partners'  capital  contributions  to the
Partnership.  The  acquisition fee was capitalized and is being amortized over a
30-year period using the straight-line method.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to reimburse the Managing  General  Partner for its direct expenses
in connection  with managing the  Partnership.  For the years ended December 31,
2004 and 2003, the Partnership paid $280,971 and $232,964,  respectively, to the
Managing General partner as direct  reimbursement of expenses incurred on behalf
of the  Partnership.  Such  expenses are included in general and  administrative
expenses in the accompanying statements of operations.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to pay the Managing General Partner an annual incentive  management
fee  (Management  Fee) after all other expenses of the Partnership are paid. The
amount of the  Management  Fee shall not exceed  0.25% of  invested  assets,  as
defined  in  the   Partnership   Agreement,   and  shall  be  payable  from  the
Partnership's  cash available for  distribution,  as defined in the  Partnership
Agreement, as of the end of each calendar year, as follows:

     (i)  First,  on  a  monthly  basis  as  an  operating  expense  before  any
          distributions  to limited partners in the amount computed as described
          in the Partnership  Agreement,  provided that such annual amount shall
          not be greater than $250,000; and

     (ii) Second,  after  distributions to the limited partners in the amount of
          one percent of the gross proceeds of the offering, the balance of such
          0.25% of invested assets.

For each of the years ended December 31, 2004 and 2003, the Partnership paid the
Managing General Partner a Management Fee of $249,996.

     Pursuant to approval of the Partnership's Consent Solicitation Statement on
March 22, 2004, the Managing General Partner is eligible to receive a fee of not
more than five percent of the sale price of an investment in a Local Partnership
or the  property  it owns,  payable  upon the sale of an  investment  in a Local
Partnership or the property it owns, to the extent the Managing  General Partner
markets and sells a property  instead of a real estate broker or unrelated Local
General  Partner.  The  disposition  fee on sales of  partnership  interests (as
opposed to sales of real  property) is  calculated  as up to five percent of the
imputed sale price, which is the amount the Local  Partnership's  property would
have to be sold for to produce the same  distribution  to the  investors  as the
sale of the partnership  interests.  In accordance with the terms of the amended
Partnership  Agreement,  in December 2004 the Managing  General Partner was paid
disposition  fees of $895,241  related to the sales of Arrowhead  and  Moorings,
which were netted  against the related  gain on  disposition  of  investment  in
partnerships at December 31, 2004. In January 2005, the Managing General Partner
was paid  disposition  fees in the amount of $1,210,408  related to the sales of
Country Place I and II in December  2004,  which were accrued and netted against
the related gain on  disposition of investment in  partnerships  at December 31,
2004.  The  Liquidation  Plan  provides  for a  Partnership  Liquidation  Fee in
addition to the one discussed above, as explained in Note 4 below.

                                     III-26

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


4.   PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS

     All profits and losses prior to the first date on which Additional  Limited
Partners were admitted were allocated  98.49% to the Initial Limited Partner and
1.51% to the General Partners. Upon admission of the Special Limited Partner and
the Additional Limited Partners, the interest of the Initial Limited Partner was
reduced to 0.49%. Pursuant to the Consent Solicitation  Statement approved March
22, 2004, the net proceeds  resulting from the liquidation of the Partnership or
the Partnership's  share of the net proceeds from any sale or refinancing of the
Local  Partnerships or their rental properties which are not reinvested shall be
distributed and applied as follows:

     (i)  to the payment of debts and liabilities of the Partnership  (including
          all expenses of the  Partnership  incident to the sale or refinancing)
          other than loans or other debts and  liabilities of the Partnership to
          any partner or any affiliate; such debts and liabilities,  in the case
          of a  non-liquidating  distribution,  to be only those  which are then
          required  to be paid  or,  in the  judgment  of the  Managing  General
          Partner, required to be provided for;
     (ii) to the  establishment  of any  reserves  which  the  Managing  General
          Partner  deems  reasonably  necessary  for  contingent,  unmatured  or
          unforeseen  liabilities or obligations of the  Partnership  (including
          the Partnership Liquidation Fee);
     (iii)to each  partner  in an amount  equal to the  positive  balance in his
          capital  account as of the date of the sale or  refinancing,  adjusted
          for operations and  distributions to that date, but before  allocation
          of any profits for tax purposes realized from such sale or refinancing
          and  allocated   pursuant  to  Section   4.03(d)  of  the  Partnership
          Agreement;
     (iv) to the Limited  Partners (A) an aggregate amount of proceeds from sale
          or  refinancing  and all prior  sales or  refinancings  equal to their
          capital contributions,  without reduction for prior cash distributions
          other than prior distributions of sale and refinancing proceeds,  plus
          (B) an  additional  amount  equal to a cumulative  non-compounded  six
          percent return on each limited partner's capital contribution, reduced
          by (1) an amount equal to 50% of the losses for tax purposes allocated
          to such limited partner and (2) distributions of net cash flow to each
          limited  partner,  such  return,  losses for tax purposes and net cash
          flow  distributions  commencing on the first day of the month in which
          the capital contribution was made;

                                     III-27

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


4.   PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS - Continued

     (v)  to the repayment of any unrepaid loans theretofore made by any partner
          or any affiliate to the Partnership for Partnership obligations and to
          the  payment  of any  unpaid  amounts  owing to the  General  Partners
          pursuant to the Partnership Agreement;
     (vi) to the General Partners in the amount of their capital contributions;
     (vii)thereafter,  for  services  to the  Partnership,  to  General  Partner
          Martin C. Schwartzberg (or his designee),  whether or not he is then a
          General Partner,  0.333% of the gross proceeds resulting from (A) such
          sale (if the proceeds are from a sale rather than a  refinancing)  and
          (B) any prior  sales from  which such fee was not paid to the  General
          Partner or his designee; and
    (viii)the  remainder,  12% to the General  Partners (or their  assignees),
          three  percent to the Special  Limited  Partner and 85% to the Initial
          and Additional Limited Partners (or their assignees).

     Notwithstanding  and in addition to the  foregoing,  the  Managing  General
Partner  may  receive a fee (not to exceed  five  percent of the sales  price of
Apartment  Complexes) from the Partnership or the Local Partnership for services
provided by the Managing  General  Partner  and/or its  Affiliates in connection
with the marketing  and sale of Apartment  Complexes.  Such fee (a  "Disposition
Fee"),  which  shall be payable  pursuant to Section  4.02(a)(i),  shall only be
payable  upon the sale of an  Apartment  Complex or a sale of the  Partnership's
interest in the Local  Partnership (a sale in either of such formats is referred
to in this Section  4.02(a) as a "sale of an Apartment  Complex"),  and shall be
subject to the following restrictions: (i) all property disposition fees and any
other commissions  payable upon the sale of any Apartment Complex,  inclusive of
any fees to the General Partners and/or their  Affiliates,  shall not exceed the
lesser of the competitive rate paid to third parties for similar services or six
percent  of the  sales  price  of the  applicable  Apartment  Complex,  (ii) the
Managing General Partner and/or its Affiliates must provide substantial services
in connection  with the marketing and sales effort (as determined by the General
Partners),  and (iii) Dockser and Willoughby shall waive their respective shares
of the one percent fee payable under Section 4.02(a)(vii) above.

     Notwithstanding  any other  provision of this Agreement to the contrary and
in  addition  to the  foregoing,  the  Managing  General  Partner  may receive a
Partnership  Liquidation  Fee of  $500,000  from the  Partnership  for  services
provided by the Managing  General  Partner  and/or its  Affiliates in connection
with the sales of the Apartment Complexes or the Partnership's  interests in the
Local  Partnerships.  Such fee,  which  shall be  payable  pursuant  to  Section
4.02(a)(i),  shall  only be  payable if all of the  Apartment  Complexes  or the
Partnership's  interest in the applicable  Local  Partnership  have been sold or
otherwise disposed of or the Partnership's  interest therein has been terminated
on or before March 22, 2007.

     Fees payable to certain general  partners (or their  designees) under (vii)
above,  together  with  all  other  property  disposition  fees  and  any  other
commissions or fees payable upon the sale of apartment properties,  shall not in
the aggregate  exceed the lesser of the  competitive  rate or six percent of the
sale price of the apartment properties.

     There can be no assurance that the Liquidation  will be completed  pursuant
to the Plan of Liquidation and Dissolution.

                                     III-28

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


4.   PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS - Continued

     In accordance with the terms of the Partnership Agreement as amended by the
approved  Plan of  Liquidation  and  Dissolution,  in December 2004 the Managing
General Partner was paid  disposition  fees of $895,241  related to the sales of
Arrowhead  and  Moorings,   which  were  netted  against  the  related  gain  on
disposition of investment in partnerships at December 31, 2004. In January 2005,
the  Managing  General  Partner  was  paid  disposition  fees in the  amount  of
$1,210,408  related to the sales of  Country  Place I and II in  December  2004,
which were  accrued  and netted  against  the  related  gain on  disposition  of
investment in partnerships at December 31, 2004.

     Pursuant to the Partnership Agreement, all cash available for distribution,
as defined, shall be distributed,  not less frequently than annually, 97% to the
Additional  Limited  Partners,  1% to the Special Limited Partner,  0.49% to the
Initial Limited  Partner and 1.51% to the General  Partners after payment of the
Management  Fee (see Note 3), as  specified  in the  Partnership  Agreement.  On
January 31, 2005, the Partnership  made a cash  distribution of $9,582,720 ($192
per  Unit) to  Additional  Limited  Partners  who were  holders  of record as of
December 31, 2004.  The  distribution  consisted of proceeds  received  from the
sales of the Partnership's interests in Arrowhead, Moorings, Country Place I and
Country Place II. On November 12, 2003, the Partnership made a cash distribution
of $1,347,570  ($27 per Unit) to Limited  Partners who were holders of record as
of November 1, 2003, and a cash distribution of $41,677 to General Partners. The
distributions   were  from  cash  resources   accumulated  from  operations  and
distributions from Local Partnerships.

     As defined in the Partnership Agreement, after the payment of distributions
described in the previous  paragraph,  after the  establishment  of any reserves
deemed  necessary  by the  Managing  General  Partner  and after  payment of the
Management Fee, the Partnership had no remaining cash available for distribution
for the years ended  December 31, 2004 and 2003.  The Managing  General  Partner
currently  intends to retain all of the  Partnership's  remaining  undistributed
cash for operating cash reserves pending further distributions under its Plan of
Liquidation and Dissolution.


5.   RECONCILIATION  OF THE  PARTNERSHIP'S  FINANCIAL  STATEMENT  NET  INCOME TO
       TAXABLE INCOME

     For  federal  income  tax  purposes,  the  Partnership  reports  on a basis
whereby:  (i) certain expenses are amortized rather than expensed when incurred;
(ii) certain costs are  amortized  over a shorter  period for tax  purposes,  as
permitted by IRS  Regulations,  and (iii)  certain  costs are  amortized  over a
longer period for tax purposes.  The Partnership  records its share of income or
losses from its  investments  in limited  partnerships  for  federal  income tax
purposes as reported on the Local Partnerships'  federal income tax returns (see
Note 2.g.),  including  losses in excess of related  investment  amounts.  These
returns are subject to examination and,  therefore,  possible  adjustment by the
IRS.

                                     III-29

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


5.   RECONCILIATION  OF THE  PARTNERSHIP'S  FINANCIAL  STATEMENT  NET  INCOME TO
       TAXABLE INCOME - Continued

     A reconciliation  of the  Partnership's  financial  statement net income to
taxable income follows.

<TABLE>
<CAPTION>

                                                                           For the years ended
                                                                               December 31,
                                                                       -----------------------------
                                                                          2004              2003
                                                                       -----------       -----------
<S>                                                                    <C>               <C>
Financial statement net income                                         $11,824,832       $  987,612

Adjustments:
  Differences between financial statement net income
    and taxable income related to the Partnership's equity
    in the Local Partnerships' income or losses                          1,342,418          406,922

  Costs amortized over a shorter period for income tax purposes             11,891           24,550

  Effect of amortization of discount on purchase money notes
    for financial statement purposes                                            --         (243,833)

  Differences between financial statement gain (loss)
    and tax gain (loss) from the sale or transfer of properties         18,778,675         (307,931)
                                                                       -----------       ----------

Taxable income                                                         $31,957,816       $  867,320
                                                                       ===========       ==========
</TABLE>

                                      # # #

                                     III-30

<PAGE>


                                EXHIBIT No. 99 b.

Reports of other auditors relating to the audits of the financial  statements of
Local Partnerships in which Capital Realty Investors-II  Limited Partnership has
invested.






<PAGE>