UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 ______________
 
 FORM
10-Q
 
 ______________
 (Mark
One)
 
 x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For
the quarterly period ended September 30, 2008
 
 OR
 
 [  ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 
 Commission
File Number 0-24652
 
 FREEDOM
TAX CREDIT PLUS L.P.
 (Exact
name of registrant as specified in its charter)
 
 
 
 Delaware
            
            13-3533987(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)625
      Madison Avenue, New York, New York
            
            10022(Address
      of principal executive offices)
            
            (Zip
      Code)
 
 
 Registrant’s
telephone number, including area code (212) 317-5700
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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  xNo  [  ]
 
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
 
 
 Large
      accelerated filer [  ]
            
            Accelerated
      filer  [  ]Non-accelerated
      filer [  ]  (Do not check if a smaller reporting
      company)
            
            Smaller
      reporting company  x
 
 
 Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes  [  ]  No  x
 
 
 
 
 PART I –
FINANCIAL INFORMATION
 
 Item 1.
Financial Statements
 
 FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 
 
 September
      30,
              2008
            
            
            March
      31,
              2008(Unaudited)
            
            
            (Audited)ASSETSOperating
      assetsProperty
      and equipment - (at cost, net of accumulated depreciationof
      $3,433,937 and $3,918,503, respectively)
            
            $
            3,818,389
            
            
            $
            4,802,660Cash
      and cash equivalents
            
            
            3,134,677
            
            
            
            3,548,031Cash
      held in escrow
            
            
            567,599
            
            
            
            603,486Deferred
      costs (net of accumulated amortization of $124,689 and
              $120,950,
      respectively)
            
            
            184,420
            
            
            
            188,159Due
      from local general partners and affiliates (Note 2)
            
            
            284,282
            
            
            
            284,282Other
      assets
            
            
            271,602
            
            
            
            49,990Total
      operating assets
            
            
            8,260,969
            
            
            
            9,476,608Assets
      related to discontinued operations (Note 6)Property
      and equipment held for sale (net of accumulated depreciation of$1,206,138
      and $1,195,775, respectively)
            
            
            1,201,260
            
            
            
            1,211,462Other
      assets related to discontinued operations
            
            
            278,020
            
            
            
            282,965Total
      assets related to discontinued operations
            
            
            1,479,280
            
            
            
            1,494,427Total
      assets
            
            $
            9,740,249
            
            
            $
            10,971,035LIABILITIES
      AND PARTNERS’ CAPITAL (DEFICIT)Operating
      liabilitiesMortgage
      notes payable
            
            $
            3,380,054
            
            
            $
            4,507,006Accounts
      payable and other liabilities
            
            
            202,061
            
            
            
            204,024Due
      to local general partners and affiliates
            
            
            18,069
            
            
            
            19,081Due
      to general partners and affiliates (Note 2)
            
            
            2,165,311
            
            
            
            2,166,168Total
      operating liabilities
            
            
            5,765,495
            
            
            
            6,896,279Liabilities
      related to discontinued operations (Note 6)Mortgage
      notes payable
            
            
            1,600,016
            
            
            
            1,610,199Liabilities
      related to discontinued operations including minority
    interest
            
            
            300,762
            
            
            
            297,989Total
      liabilities related to discontinued operations
            
            
            1,900,778
            
            
            
            1,908,188Total
      liabilities
            
            
            7,666,273
            
            
            
            8,804,467Minority
      interests
            
            
            (238,200
            )
            
            
            (201,531
            )Commitments
      and contingencies (Note 7)Partners’
      capital (deficit):Limited
      partners – 72,896 BACs issued and outstanding
            
            
            (2,114,976
            )
            
            
            (2,059,612
            )General
      partners
            
            
            4,427,152
            
            
            
            4,427,711Total
      partners’ capital (deficit)
            
            
            2,312,176
            
            
            
            2,368,099Total
      liabilities and partners’ capital (deficit)
            
            $
            9,740,249
            
            
            $
            10,971,035The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
   - 2
-
  FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 
 
 
 Three
      Months Ended
              September
      30,
            
            
            Six
      Months Ended
              September
      30,2008
            
            
            2007*
            
            
            2008
            
            
            2007*Operations:RevenuesRental
      income
            
            $
            419,674
            
            
            $
            416,782
            
            
            $
            854,163
            
            
            $
            831,420Other
            
            
            21,430
            
            
            
            91,436
            
            
            
            52,211
            
            
            
            167,966Total
      revenues
            
            
            441,104
            
            
            
            508,218
            
            
            
            906,374
            
            
            
            999,386ExpensesGeneral
      and administrative
            
            
            180,911
            
            
            
            180,946
            
            
            
            300,911
            
            
            
            344,948General
      and administrative-related parties (Note 2)
            
            
            139,436
            
            
            
            120,914
            
            
            
            223,164
            
            
            
            193,201Repairs
      and maintenance
            
            
            108,794
            
            
            
            128,991
            
            
            
            187,298
            
            
            
            207,939Operating
      and other
            
            
            43,377
            
            
            
            40,911
            
            
            
            87,411
            
            
            
            77,524Real
      estate taxes
            
            
            26,147
            
            
            
            23,647
            
            
            
            52,923
            
            
            
            51,794Insurance
            
            
            19,671
            
            
            
            21,469
            
            
            
            40,892
            
            
            
            44,556Interest
            
            
            75,492
            
            
            
            83,126
            
            
            
            153,127
            
            
            
            160,006Depreciation
      and amortization
            
            
            49,061
            
            
            
            53,861
            
            
            
            94,124
            
            
            
            99,856Total
      expenses
            
            
            642,889
            
            
            
            653,865
            
            
            
            1,139,850
            
            
            
            1,179,824Loss
      before minority interest and discontinued operations
            
            
            (201,785
            )
            
            
            (145,647
            )
            
            
            (233,476
            )
            
            
            (180,438
            )Minority
      interest in loss (income) of subsidiaries fromoperations
            
            
            56
            
            
            
            684
            
            
            
            (863
            )
            
            
            (208
            )Loss
      from continuing operations
            
            
            (201,729
            )
            
            
            (144,963
            )
            
            
            (234,339
            )
            
            
            (180,646
            )Discontinued
      operations:Income
      (loss) from discontinued operations (includingminority
      interest and (loss) gain on sale of properties)(Note
      6)
            
            
            22,964
            
            
            
            (359,002
            )
            
            
            178,416
            
            
            
            (431,391
            )Net
      loss
            
            $
            (178,765
            )
            
            $
            (503,965
            )
            
            $
            (55,923
            )
            
            $
            (612,037
            )Loss
      from continuing operations – limited partners
            
            $
            (199,711
            )
            
            $
            (143,513
            )
            
            $
            (231,996
            )
            
            $
            (178,840
            )Income
      (loss) from discontinued operations (including
              minority
      interest and (loss) gain on sale of properties) –
              limited
      partners
            
            
            22,734
            
            
            
            (355,412
            )
            
            
            176,632
            
            
            
            (427,077
            )Net
      loss – limited partners
            
            $
            (176,977
            )
            
            $
            (498,925
            )
            
            $
            (55,364
            )
            
            $
            (605,917
            )Number
      of BACs outstanding
            
            
            72,896
            
            
            
            72,896
            
            
            
            72,896
            
            
            
            72,896Loss
      from continuing operations per weighted average BAC
            
            $
            (2.74
            )
            
            $
            (1.97
            )
            
            $
            (3.18
            )
            
            $
            (2.45
            )Income
      (loss) from discontinued operations per weighted average
    BAC
            
            
            0.31
            
            
            
            (4.87
            )
            
            
            2.42
            
            
            
            (5.86
            )Net
      loss per weighted average BAC
            
            $
            (2.43
            )
            
            $
            (6.84
            )
            
            $
            (0.76
            )
            
            $
            (8.31
            )* Reclassified
      for comparative purposes.The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
   - 3
-
  FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENT OF CHANGES
 IN
PARTNERS’ CAPITAL (DEFICIT)
 (Unaudited)
 
 
 
 
 Total
            
            
            Limited
              Partners
            
            
            General
              PartnersPartners’
      capital (deficit) – April 1, 2008
            
            $
            2,368,099
            
            
            $
            (2,059,612
            )
            
            $
            4,427,711Net
      loss
            
            
            (55,923
            )
            
            
            (55,364
            )
            
            
            (559
            )Partners’
      capital (deficit) – September 30, 2008
            
            $
            2,312,176
            
            
            $
            (2,114,976
            )
            
            $
            4,427,152The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
 
  - 4
-
  FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 
 
 Six
      Months Ended
              September
      30,2008
            
            
            2007Cash
      flows from operating activities:Net
      loss
            
            $
            (55,923
            )
            
            $
            (612,037
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:(Gain)
      loss on sale of properties
            
            
            (134,575
            )
            
            
            172,895Depreciation
      and amortization
            
            
            134,009
            
            
            
            749,225Minority
      interest in loss of subsidiaries
            
            
            (67,551
            )
            
            
            (95,836
            )Increase
      in cash held in escrow
            
            
            (172,533
            )
            
            
            (169,280
            )Decrease
      (increase) in other assets
            
            
            16,947
            
            
            
            (181,568
            )Decrease
      in accounts payable and other liabilities
            
            
            (217,146
            )
            
            
            (85,897
            )Decrease
      in due to general partners and affiliates
            
            
            (857
            )
            
            
            (100,250
            )Decrease
      in due to local general partners and affiliates
            
            
            0
            
            
            
            (17,768
            )Net
      cash used in operating activities
            
            
            (497,629
            )
            
            
            (340,516
            )Cash
      flows from investing activities:Proceeds
      from sale of investments
            
            
            134,575
            
            
            
            121,767Costs
      paid relating to sale of properties
            
            
            0
            
            
            
            (11,850
            )Acquisition
      of property and equipment
            
            
            0
            
            
            
            (174,415
            )Net
      cash provided by (used in)  investing activities
            
            
            134,575
            
            
            
            (64,498
            )Cash
      flows from financing activities:Repayments
      of mortgage notes
            
            
            (35,515
            )
            
            
            (114,765
            )Decrease
      in capitalization of consolidated subsidiaries attributable to minority
      interest
            
            
            0
            
            
            
            (4,317
            )Net
      cash used in financing activities
            
            
            (35,515
            )
            
            
            (119,082
            )Net
      decrease in cash and cash equivalents
            
            
            (398,569
            )
            
            
            (524,096
            )Cash
      and cash equivalents at beginning of period
            
            
            3,584,111
            
            
            
            5,901,561Cash
      and cash equivalents at end of period*
            
            $
            3,185,542
            
            
            $
            5,377,465Supplemental
      disclosure of cash flow information:Cash
      paid during period for interest
            
            $
            257,438
            
            
            $
            915,384Summarized
      below are the components of the gain (loss)  on sale of
      properties:Proceeds
      from sale of investment – net
            
            $
            (134,575
            )
            
            $
            (109,917
            )Decrease
      in property and equipment, net of accumulated depreciation
            
            
            864,203
            
            
            
            3,169,189Decrease
      in cash held in escrow
            
            
            213,121
            
            
            
            519,906Decrease
      in rents receivable
            
            
            5,384
            
            
            
            207,054Decrease
      in other assets
            
            
            2,773
            
            
            
            2,440Decrease
      in mortgage notes payable
            
            
            (1,101,620
            )
            
            
            (2,384,322
            )(Decrease)
      increase in accounts payable and other liabilities
            
            
            (13,780
            )
            
            
            (320,782
            )Decrease
      in due to local general partners and affiliate
            
            
            (1,012
            )
            
            
            (998,721
            )Decrease
      in deferred costs
            
            
            0
            
            
            
            34,305Increase
      (decrease) in capitalization of consolidated subsidiaries attributable to
      minority interest
            
            
            30,931
            
            
            
            53,743See
      Note 6 for cash flows from discontinued operations.*Cash
      and cash equivalents, end of period, includes cash and cash equivalents
      from discontinued operations of $50,865 and $166,488,
      respectively.The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
   - 5
-
  FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)
 
 
 NOTE 1 –
General
 
 The
condensed consolidated financial statements include the accounts of Freedom Tax
Credit Plus L.P. (“the Partnership”) and its subsidiary partnerships
(“subsidiaries”, “subsidiary partnerships” or “Local Partnerships”) in which the
Partnership is a limited partner. Through the rights of the Partnership and/or
an affiliate of Related Freedom Associates L.P., a Delaware limited partnership
and Freedom GP Inc., a Delaware corporation (each a “General Partner” and
collectively, the “General Partners”), which affiliate has a contractual
obligation to act on behalf of the Partnership to remove the general partner of
the subsidiary partnership (each a “Local General Partner”), and to approve
certain major operating and financial decisions, the Partnership has a
controlling financial interest in the Local Partnerships.  As of
September 30, 2008, the Partnership’s limited partnership interest in
twenty-five Local Partnerships and the property and the related assets and
liabilities of fourteen Local Partnerships have been sold (see Note
4).  In addition, as of September 30, 2008 the Partnership has entered
into an agreement to sell its limited partnership interest in one of the
remaining three Local Partnerships (see Note 5).
 
 For
financial reporting purposes, the Partnership’s second fiscal quarter ends on
September 30 in order to allow adequate time for the subsidiaries’ financial
statements to be prepared and consolidated.  The second quarter for
all subsidiaries ends June 30.  Accounts of the subsidiaries have been
adjusted for intercompany transactions from July 1 through September
30.
 
 All
intercompany accounts and transactions have been eliminated in
consolidation.
 
 Increases
(decreases) in the capitalization of consolidated subsidiaries attributable to
minority interest arise from cash contributions from and cash distributions to
the minority interest partners.
 
 Losses
attributable to minority interests aggregated approximately $39,000 and $0 and
$68,000 and $96,000 for the three and six months ended September 30, 2008 and
2007, respectively, which include approximately $39,000 and $0 and $68,000 and
$91,000, respectively, related to discontinued operations.  The
Partnership’s investment in each subsidiary is generally equal to the respective
subsidiary’s partners’ equity less minority interest capital, if
any.
 
 The books
and records of the Partnership are maintained on the accrual basis of accounting
in accordance with accounting principles generally accepted in the United States
of America. In the opinion of the General Partners of the Partnership, the
accompanying unaudited condensed consolidated financial statements contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the condensed consolidated financial position of the Partnership
as of September 30, 2008, its results of operations for the three and six months
ended September 30, 2008 and 2007 and its cash flows for the six months ended
September 30, 2008 and 2007.  However, the operating results and cash
flows for the six months ended September 30, 2008 may not be indicative of the
results for the entire year.
 
 Certain
information and note disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been omitted or condensed.  These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Partnership’s Annual Report on Form 10-K for the year ended March 31,
2008.
 
 Recent Accounting
Pronouncements
 
 In
October 2008, the Financial Accounting Standards Board (“FASB”) issued FSP FAS
157-3, Determining the Fair
Value of a Financial Asset When the Market for That Asset Is Not Active,which addresses the application of Statement of Financial Accounting
Standards (“SFAS”) No.157 for illiquid financial instruments.  FSP FAS
157-3 clarifies that approaches to determining fair value other than the market
approach may be appropriate when the market for a financial asset is not
active.  We do not expect the adoption of FSP FAS 157-3 to have a
material effect on our condensed consolidated financial statements.
   - 6
-
 FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)
 NOTE 2 –
Related Party Transactions
 
 The costs
incurred to related parties from operations for the three and six months ended
September 30, 2008 and 2007 were as follows:
  Three
      Months Ended
                September
      30,
              
              
              Six
      Months Ended
                September
      30,2008
              
              
              2007*
              
              
              2008
              
              
              2007*Partnership
      management fees (a)
              
              $
              43,319
              
              
              $
              47,125
              
              
              $
              61,569
              
              
              $
              52,089Expense
      reimbursement (b)
              
              
              62,081
              
              
              
              40,683
              
              
              
              91,974
              
              
              
              74,776Local
      administrative fee (c)
              
              
              625
              
              
              
              625
              
              
              
              1,250
              
              
              
              1,250Total
      general and administrative-General Partners
              
              
              106,025
              
              
              
              88,433
              
              
              
              154,793
              
              
              
              128,115Property
      management fees incurred to affiliates of thesubsidiary
      partnerships’ general partners (d)
              
              
              33,411
              
              
              
              32,481
              
              
              
              68,371
              
              
              
              65,086Total
      general and administrative-related parties
              
              $
              139,436
              
              
              $
              120,914
              
              
              $
              223,164
              
              
              $
              193,201* 
      Reclassified for comparative purposes.
 The costs
incurred to related parties from discontinued operations for the three and six
months ended September 30, 2008 and 2007 were as follows:
 
 Three
      Months Ended
              September
      30,
            
            
            Six
      Months Ended
              September
      30,2008
            
            
            2007*
            
            
            2008
            
            
            2007*Local
      administrative fee (c)
            
            $
            250
            
            
            $
            9,672
            
            
            $
            500
            
            
            $
            19,343Total
      general and administrative-General Partners
            
            
            250
            
            
            
            9,672
            
            
            
            500
            
            
            
            19,343Property
      management fees incurred to affiliates ofthe
      Local General Partners (d)
            
            
            4,200
            
            
            
            67,693
            
            
            
            11,495
            
            
            
            136,374Total
      general and administrative-related parties
            
            $
            4,450
            
            
            $
            77,365
            
            
            $
            11,995
            
            
            $
            155,717* 
      Reclassified for comparative purposes.
 
 
 (a)  The
General Partners are entitled to receive a partnership management fee, after
payment of all Partnership expenses, which together with the annual local
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership’s Amended and Restated Agreement and
Certificate of Limited Partnership (the “Partnership Agreement”)), for
administering the affairs of the Partnership. Subject to the foregoing
limitation, the partnership management fee will be determined by the General
Partners in their sole discretion based upon their review of the Partnership’s
investments.  Unpaid Partnership management fees for any year will be
accrued without interest and will be payable from working capital reserves or to
the extent of available funds after the Partnership has made distributions to
the limited partners and Beneficial Assignment Certificates (“BACs”) holders of
sale or refinancing proceeds equal to their original capital contributions plus
a 10% priority return thereon (to the extent not theretofore paid out of cash
flow). Partnership management fees owed to the General Partners amounting to
approximately $2,114,000 and $2,090,000 were accrued and unpaid as of September
30, 2008 and March 31, 2008, respectively.  Without the General
Partners’ continued accrual without payment, the Partnership will not be in a
position to meet its obligations.  The General Partners have continued
allowing the accrual without payment of these amounts, but are under no
obligation to continue to do so.
 
 (b)  The
Partnership reimburses the General Partners and their affiliates for actual
Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership’s behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships’ performance.
 
 (c)  Freedom
SLP L.P., a special limited partner of the subsidiary partnerships, is entitled
to receive an annual local administrative fee of up to $2,500 per year from each
subsidiary partnership.
 
 (d)  Property
management fees incurred by subsidiary partnerships amounted to $37,611 and
$108,982 and $79,866 and $218,821 for the three and six months ended September
30, 2008 and 2007, respectively.  Of these fees, $37,611 and $100,174
and $79,866 and $201,460 were incurred to affiliates of the subsidiary
partnerships, which include $4,200 and $67,693 and $11,495 and $136,374,
respectively, of fees relating to discontinued operations.
 
 - 7
-
 FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)
 
 September
      30,
              2008
            
            
            March
      31, 2008Operating
      advances
            
            $
            284,282
            
            
            $
            284,282
 
 
 NOTE 3 –
Fair Value Measurements
 
 In the
first quarter of 2008, we adopted SFAS No. 157, “Fair Value Measurements”,for
financial assets and liabilities.We elected the
deferral option available for one year for non-financial assets and
liabilities.  This standard defines fair value, provides guidance for
measuring fair value and requires certain disclosures.  This standard
does not require any new fair value measurements, but discusses valuation
techniques, such as the market approach (comparable market prices), the income
approach (present value of future income or cash flow), and the cost approach
(cost to replace the service capacity of an asset or replacement
cost).  The statement provides for a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into
three broad levels.  The following is a brief description of those
three levels:
 
 Level
      1:
            Observable
      inputs such as quoted prices (unadjusted) in active markets for identical
      assets or liabilities.
 
 Level
      2:
            Inputs
      other than quoted prices that are observable for the asset or liability,
      either directly or indirectly.  These include quoted prices for
      similar assets or liabilities in active markets and quoted prices for
      identical or similar assets or liabilities in markets that are not
      active.
 
 Level
      3:
            Unobservable
      inputs that reflect our own
assumptions.
 
 As
permitted, we chose not to elect the fair value option as prescribed by FASB
SFAS No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities” – Including an
Amendment of FASB Statement No. 115, for our financial assets and liabilities
that had not been previously carried at fair value.  Therefore, we did
not elect to fair value any additional items under SFAS No. 159.
 
 The
estimated fair value of financial instruments has been determined using
available market information or other appropriate valuation
methodologies.  However, considerable judgment is required in
interpreting market data to develop estimates of fair
value.  Consequently, the estimates are not necessarily indicative of
the amounts that could be realized or would be paid in a current market
exchange.  At September 30, 2008, the carrying amount of the
Partnership’s mortgage notes payable approximated fair value as their
contractual interest rates approximated market yields for similar debt
instruments.
 
 The
Partnership’s financial assets and liabilities subject to recurring fair value
measurements and the necessary disclosures are as follows:
 
 At
      September 30, 2008
            
            Fair
      Value Measurements at
              September
      30, 2008 using
              Fair
      Value HierarchyCost
            
            Fair
      Value
            
            Level
      1
            
            Level
      2
            
            Level
      3LIABILITIES:Mortgage
      notes
            
            $
            4,980,070
            
            
            $
            4,980,070
            
            
            $
            0
            
            
            $
            0
            
            
            $
            4,980,070
 
 
 The
financial liabilities measured at fair value using Level 3 inputs at September
30, 2008 were previously reported as using Level 1 inputs.
 
 
 NOTE 4 –
Sale of Properties
 
 The
Partnership is currently in the process of disposing of all three of its
remaining investments.  As of September 30, 2008, the Partnership’s
limited partnership interest in twenty-five Local Partnerships and the property
and the related assets and liabilities of fourteen Local Partnerships have been
sold.  In addition, as of September 30, 2008, the Partnership has
entered into an agreement to sell its limited partnership interest in one of its
remaining three Local Partnerships (see Note 5).  There can be no
assurance as to when the Partnership will dispose of its remaining three
investments or the amount of proceeds which may be received.  However,
based on the historical operating results of the Local Partnerships and the
current economic conditions, including changes in tax laws, it is unlikely that
the proceeds from such sales received by the Partnership will be sufficient to
return to the limited partners their original investments.  All gains
and losses on sales are included in discontinued operations.
 
 On August
8, 2008, the Partnership’s limited partnership interest in Warsaw Elderly
Housing, Ltd. (“Warsaw”) was sold to an affiliate of the Local General Partner
for a sale price of $10,000.  The Partnership received proceeds of
$10,000.  Because Warsaw was sold to a related party of the Local
Partnership, the sale resulted in a non-cash contribution to the Local
Partnership from the Local General Partner of approximately $1,000 at the date
of sale.  Such contribution flows through minority interest as a
result of the write-off of the basis in the property of approximately $9,000 and
the $10,000 cash received from the sale.
 
 - 8
-
 FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)
 
 On July
26, 2006, the property and the related assets and liabilities of Washington
Brooklyn Limited Partnership (“Washington”) were sold to an unaffiliated third
party purchaser for a sales price of approximately $160,000 and the assumption
of the related mortgage liabilities and certain litigation which was resolved in
2006.  After the repayment of other liabilities and closing costs of
approximately $25,000, the Partnership received $134,575 on May 8,
2008.  During the quarter ended June 30, 2006, in accordance with
Statement of Financial Accounting Standards No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Asset” (“SFAS No. 144”), the Partnership
deemed the building impaired and wrote it down to its fair value which resulted
in a loss on impairment of $400,000.  The sale resulted in a loss of
approximately $384,000 resulting from the write-off of the partners’ basis in
the property of approximately $384,000 at the date of the sale which was
recognized during the year ended March 31, 2007.  Adjustments to the
loss of approximately $5,000 and $135,000 in gain were recorded during the
quarters ended June 30, 2007 and September 30, 2008, resulting in overall loss
of approximately $244,000.  The sale also resulted in a non-cash
contribution to the Local Partnership from an affiliate of the Local General
Partner of approximately $30,000 as a result of the write-off of payables owed
by Local Partnership.  The sale resulted in the liquidation of
Washington.
 
 On
September 11, 2007, the Partnership’s limited partnership interest in Magnolia
Mews Limited Partnership (“Magnolia Mews”) was sold to the Local General Partner
for a sales price of $82,500.  The Partnership received proceeds of
$82,500 from this sale.  Because Magnolia Mews was sold to a related
party of the Local Partnership, the sale resulted in a non-cash distribution
from the Local Partnership to the Local General Partner of approximately
$153,000 at the date of the sale.  A downward adjustment to the
non-cash distribution of $27,000 was recorded during the quarter ended March 31,
2008, resulting in an overall non-cash distribution of $126,000.  Such
distribution flows through minority interest as a result of the write-off of the
partners’ basis in the property of approximately $208,000 and the $82,500 cash
received from the sale.
 
 On May 3,
2007, the Partnership’s limited partnership interest in 220 Cooper Street
Limited Partnership (“Cooper Street”) was sold to the Local General Partner for
a sales price of $50,000.  The Partnership received net proceeds of
approximately $12,000 from this sale.  Because Cooper Street was sold
to a related party of the Local Partnership, the sale resulted in a non-cash
contribution to the Local Partnership from the Local General Partner of
approximately $173,000 which was recognized during the quarter ended June 30,
2007.  An adjustment to the non-cash contribution of approximately
$33,000 and a downward adjustment to the non-cash contribution of approximately
$16,000 was recorded during the quarters ended September 30, 2007 and March 31,
2008, respectively, resulting in an overall non-cash contribution of
approximately $190,000.  Such contribution flows through minority
interest as a result of the write-off of the partners’ deficit basis in the
property of approximately $178,000 and the $12,000 cash received from the
sale.
 
 
 NOTE 5 –
Assets Held for Sale
 
 On
December 31, 2007 the Partnership entered into an assignment and assumption
agreement to sell its limited partnership interest in Pine Shadow, Ltd (“Pine
Shadow”) to an affiliate of the Local General Partners for a sales price of
$1,000.  The sales documents have been executed and the initial
deposit funds are being held in escrow.  The closing is expected to
occur by the end of 2008.  No assurance can be given that the sale
will actually occur.  As of June 30, 2008, Pine Shadow had property
and equipment, at cost, of approximately $2,404,000, accumulated depreciation of
approximately $1,192,000 and mortgage debt of approximately
$1,600,000.
 
 
 NOTE 6 –
Discontinued Operations
 
 The
following table summarizes the financial position of the Local Partnerships that
are classified as discontinued operations because the respective Local
Partnerships were sold or under contract to be sold and, therefore, classified
as assets held for sale.  Victoria Manor and Ogontz Hall, which were
sold during the year ended March 31, 2008, Warsaw, which was sold during the six
months ended September 30, 2008 and Pine Shadow, which was classified as an
asset held for sale as of September 30, 2008, were all classified as
discontinued operations on the accompanying condensed consolidated balance
sheets.  Victoria Manor, which was sold during the year ended March
31, 2008 and Pine Shadow, which was classified as an asset held for sale as of
March 31, 2008, were all classified as discontinued operations on the
accompanying balance sheets.
 
 - 9
-
 FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)
 
 September
      30,
              2008
            
            
            March
      31,
              2008AssetsProperty
      and equipment, net of accumulateddepreciation
      of $1,206,138 and $1,195,775, respectively
            
            $
            1,201,260
            
            
            $
            1,211,462Cash
      and cash equivalents
            
            
            50,865
            
            
            
            36,080Cash
      held in escrow
            
            
            204,835
            
            
            
            209,536Other
      assets
            
            
            22,320
            
            
            
            37,349Total
      assets
            
            $
            1,479,280
            
            
            $
            1,494,427LiabilitiesMortgage
      notes payable
            
            $
            1,600,016
            
            
            $
            1,610,199Accounts
      payable and other liabilities
            
            
            112,935
            
            
            
            110,212Due
      to local general partners and affiliates
            
            
            32,239
            
            
            
            32,239Due
      to general partners and affiliates
            
            
            1,000
            
            
            
            1,000Minority
      interest
            
            
            154,588
            
            
            
            154,538Total
      liabilities
            
            $
            1,900,778
            
            
            $
            1,908,188
 
 
 The
following table summarizes the results of operations of the Local Partnerships
that are classified as discontinued operations.  Ogontz Hall, which
was sold during the year ended March 31, 2008, Warsaw, which was sold during the
six months ended September 30, 2008, and Pine Shadow, which was classified as an
asset held for sale as of September 30, 2008, were all classified as
discontinued operations on the accompanying condensed consolidated statements of
operations.  Magnolia Mews and  Cooper Street, which were
sold during the six months ended September 30, 2007, Magnolia Mews, Victoria
Manor, Vendome, Pecan Creek, Wilson Street, Brittany, Brookwood, Elmwood, Heflin
Hills, Hidden Valley, New August, Shadowood, West Hill Square and Windsor, which
were sold during the year ended March 31, 2008, and Ogontz Hall, Warsaw and Pine
Shadow, in order to present comparable results for the three and six months
ended September 30, 2008, were all classified as discontinued operations on the
accompanying condensed consolidated statements of operations.
 
 - 10
-
 FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)
 
 Three
      Months Ended
              September
      30,
            
            
            Six
      Months Ended
              September
      30,2008
            
            
            2007*
            
            
            2008
            
            
            2007*RevenuesRental
      income
            
            $
            53,613
            
            
            $
            1,076,542
            
            
            $
            133,037
            
            
            $
            2,011,035Other
            
            
            66,032
            
            
            
            132,314
            
            
            
            162,118
            
            
            
            334,229(Loss)
      gain on sale of property
            
            
            0
            
            
            
            (197,159
            )
            
            
            134,575
            
            
            
            (172,895
            )Total
      revenues
            
            
            119,645
            
            
            
            1,011,697
            
            
            
            429,730
            
            
            
            2,172,369ExpensesGeneral
      and administrative
            
            
            6,545
            
            
            
            223,836
            
            
            
            32,483
            
            
            
            410,205General
      and administrative-related parties (Note 2)
            
            
            4,450
            
            
            
            77,365
            
            
            
            11,995
            
            
            
            155,717Repairs
      and maintenance
            
            
            13,613
            
            
            
            222,266
            
            
            
            31,288
            
            
            
            446,501Operating
      and other
            
            
            2,569
            
            
            
            117,501
            
            
            
            9,965
            
            
            
            270,156Real
      estate taxes
            
            
            11,091
            
            
            
            56,126
            
            
            
            22,379
            
            
            
            114,772Insurance
            
            
            17,500
            
            
            
            70,574
            
            
            
            27,239
            
            
            
            132,797Interest
            
            
            70,905
            
            
            
            226,404
            
            
            
            144,494
            
            
            
            520,287Depreciation
      and amortization
            
            
            8,861
            
            
            
            316,116
            
            
            
            39,885
            
            
            
            649,369Total
      expenses
            
            
            135,534
            
            
            
            1,310,188
            
            
            
            319,728
            
            
            
            2,699,804(Loss)
      income before minority interest
            
            
            (15,889
            )
            
            
            (298,491
            )
            
            
            110,002
            
            
            
            (527,435
            )Minority
      interest in loss (income)  of subsidiaries from discontinuedoperations
            
            
            38,853
            
            
            
            (60,511
            )
            
            
            68,414
            
            
            
            96,044Net
      income (loss) from discontinued operations
            
            $
            22,964
            
            
            $
            (359,002
            )
            
            $
            178,416
            
            
            $
            (431,391
            )Net
      income (loss)  – limited partners from discontinued
      operations
            
            $
            22,734
            
            
            $
            (355,412
            )
            
            $
            176,632
            
            
            $
            (427,077
            )Number
      of BACs outstanding
            
            
            72,896
            
            
            
            72,896
            
            
            
            72,896
            
            
            
            72,896Net
      income (loss) from discontinued operations per weighted average
      BAC
            
            $
            0.31
            
            
            $
            (4.87
            )
            
            $
            2.42
            
            
            $
            (5.86
            )
 
 
 Cash
Flows from Discontinued Operations:
 
 Six
      Months Ended
              September
      30,2008
            
            
            2007*Net
      cash provided by (used in) discontinued operating
    activities
            
            $
            32,827
            
            
            $
            (68,329
            )Net
      cash used in discontinued investing activities
            
            $
            (134,251)
            
            
            $
            (48,626
            )Net
      cash provided by (used in) discontinued financing
    activities
            
            $
            43,981
            
            
            $
            (154,100
            )
 
 *  Reclassified
for comparative purposes.
 
 
 NOTE 7 –
Commitments and Contingencies
 
 Pine Shadow, Ltd. (“Pine
Shadow”)
 During
2005, Pine Shadow suffered damages from flooding due to Hurricane
Katrina.  However, in 2006, Pine Shadow entered into an agreement with
Rural Housing Services (“RHS”) in which Pine Shadow is to receive funding to
replace all damages to the property.  The funds to be received will be
a Second Soft Loan in the amount of $4,384,000 with an annual interest rate of
1%.  Payments on the loan will be deferred for a 20 year
period.  In accordance with SFAS No. 144, the Partnership has
determined that there is no impairment and the carrying amounts of the assets
are recoverable, therefore, no adjustments are required.  As of the
filing date of this report, the funds have not yet been received.  As
of December 31, 2007, the Partnership has entered into an agreement to sell its
limited partnership interest in Pine Shadow (see Note 5).
   - 11
-
 FREEDOM
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)
 
 Other
 
 The
Partnership is subject to risks incident to potential losses arising from the
management and ownership of improved real estate. The Partnership can also be
affected by poor economic conditions generally, and due to the fact that the
Partnership is in the final stages of liquidating its portfolio, the portfolio
is no longer geographically diverse.  The current market conditions
could affect the value of the Partnership’s portfolio.  There are also
substantial risks associated with owning properties receiving government
assistance, for example the possibility that Congress may not appropriate funds
to enable the U.S. Department of Housing and Urban Development (“HUD”) to make
rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owners’ equity
contribution.  As of September 30, 2008, there was one Local
Partnership subsidized by HUD.  The Partnership cannot sell or
substantially liquidate its investments in subsidiary partnerships during the
period that the subsidy agreements are in existence without HUD’s approval.
Furthermore there may not be market demand for apartments at full market rents
when the rental assistance contract expires.
 
 Except as
described above, management is not aware of any trends or events, commitments or
uncertainties, which have not otherwise been disclosed, that will or are likely
to impact liquidity in a material way.  Management believes the only
impact would be from laws that have not yet been adopted.
 
 - 12
-
 
 Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations
 
 Liquidity and Capital
Resources
 
 The
Partnership’s capital was originally invested in forty-two Local
Partnerships.  As of September 30, 2008, the Partnership’s limited
partnership interest in twenty-five Local Partnerships and the property and the
related assets and liabilities of fourteen Local Partnerships have been sold
(see Note 4).  In addition, as of September 30, 2008, the Partnership
has entered into an agreement to sell its limited partnership interest in one of
its remaining three Local Partnerships (see Note 5).  There can be no
assurance as to when the Partnership will dispose of its remaining three
investments.
 
 Short-Term
 
 The
Partnership’s primary sources of funds included:  (i) working capital
reserves, exclusive of Local Partnerships’ working capital; (ii) interest earned
on the working capital reserves; (iii) cash distributions from operations of the
Local Partnerships; and (iv) sales proceeds and distributions.  Such
funds, although minimal (other than sales proceeds and sales distributions), are
available to meet the obligations of the Partnership.  The Partnership
does not anticipate providing cash distributions to BACs holders in
circumstances other than refinancing or sales.  During the six months
ended September 30, 2008 and 2007, distributions from operations of the Local
Partnerships amounted to approximately $2,000 and $67,000, respectively, which
have been eliminated in consolidation.  Additionally, during the six
months ended September 30, 2008 and 2007, the Partnership received approximately
$145,000 and $121,000, respectively, of proceeds and distributions from the sale
of investments.
 
 For the
six months ended September 30, 2008, cash and cash equivalents of the
Partnership and its consolidated Local Partnerships decreased approximately
$399,000 due to net cash used in operating activities of approximately $498,000
and repayments of mortgage notes of approximately $36,000.  Such
outflows exceeded proceeds from sale of investments of approximately
$135,000.  Included in the adjustments to reconcile the net loss to
net cash used in operating activities is depreciation and amortization of
approximately $134,000 and gain on sale of properties of approximately
$135,000.
 
 Total
expenses for the three and six months ended September 30, 2008 and 2007,
excluding depreciation and amortization, interest and general and
administrative–related parties, totaled $378,900 and $395,964 and $669,435 and
$726,761, respectively.
 
 As of
September 30, 2008 and March 31, 2008, accounts payable and other liabilities
totaled $202,061 and $204,024, respectively, which are comprised of the
following amounts:
 
 September
      30,
              2008
            
            
            March
      31,
              2008Accounts
      payable
            
            $
            115,815
            
            
            $
            141,746Accrued
      interest payable
            
            
            49,710
            
            
            
            19,710Security
      deposits payable
            
            
            36,536
            
            
            
            42,568Total
      accounts payable and other liabilities
            
            $
            202,061
            
            
            $
            204,024
 
 
 Accounts
payable are short term liabilities which are expected to be paid from operating
cash flows, working capital balances at the Local Partnership level, Local
General Partner advances and, in certain circumstances, advances from the
Partnership. Because the provisions of the secondary loans defer the payment of
accrued interest of the respective Local Partnerships, the Partnership believes
it (and the applicable Local Partnerships) has sufficient liquidity and ability
to generate cash and to meet existing and known or reasonably likely future cash
requirements over both the short and long term.
 
 Accrued
interest payable represents the accrued interest on all mortgage loans, which
include primary and secondary loans. Certain secondary loans have provisions
such that interest is accrued but not payable until a future
date.  The Partnership anticipates the payment of accrued interest on
the secondary loans (which make up the majority of the accrued interest payable
amount and which have been accumulating since the Partnership’s investment in
the respective Local Partnership) will be made from future refinancings or sales
proceeds of the respective Local Partnerships. In addition, each Local
Partnership’s mortgage notes are collateralized by the land and buildings of the
respective Local Partnership, and are without further recourse to the
Partnership.
 
 Security
deposits payable are offset by cash held in security deposits, which are
included in “Cash held in escrow” on the financial statements.
 
 A working
capital reserve of approximately $2,993,000, exclusive of Local Partnerships’
working capital, remained unused at September 30, 2008.  It is used to
pay operating expenses of the Partnership, including partnership management fees
payable to the General Partners and advances to Local Partnerships if
warranted.
 
 Long-Term
 
 Partnership
management fees and expense reimbursements owed to the General Partners
amounting to approximately $2,154,000 and $2,126,000 were accrued and unpaid as
of September 30, 2008 and March 31, 2008, respectively. Without the General
Partners’ continued accrual without payment, the Partnership will not be in a
position to meet its obligations.  The General Partners have continued
allowing the accrual without payment of these amounts, but are under no
obligation to continue to do so.
 
 For a
discussion of contingencies affecting certain Local Partnerships, see Note 7 to
the condensed consolidated financial statements. Since the maximum loss the
Partnership would be liable for is its net investment in the respective Local
Partnerships, the resolution of the existing con­tingencies is not
anticipated to impact future results of operations, liquidity or financial
condition in a material way.
 
 - 13
-
  The Local
Partnerships are impacted by inflation in several ways.  Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing under which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs, such as fuel, utilities, and labor.  Since revenues
from the sales of assets are driven by market conditions, inflation has little
impact.
 
 Management
is not aware of any trends or events, commitments or uncertainties, which have
not otherwise been disclosed, that will, or are likely to impact liquidity in a
material way. Management believes the only impact would be from laws that have
not yet been adopted. The portfolio is diversified by the location of the
properties around the United States so that if one area of the country is
experiencing downturns in the economy, the remaining properties in the
Partnership’s portfolio may not be affected.  However, the geographic
diversification of the portfolio may not protect against a general downturn in
the national economy.   The current market conditions could
affect the value of the Partnership’s portfolio.
 
 The
Partnership fully invested the proceeds of its offering in forty-two local
partnerships, all of which have been held through the end of their respective
Compliance Periods.  As of December 31, 2002, all the Local
Partnerships completed their tax credit periods and the Partnership had met its
primary objective of generating Tax Credits for qualified BACs
holders.  Each Local Partnership complied with the Tax Credit
requirements until the end of the Compliance Period and, therefore, did not
suffer a recapture of the Tax Credits.  The Compliance Periods with
respect to the Properties have all ended as of December 31, 2007.
 
 Off-Balance Sheet
Arrangements
 The
Partnership has no off-balance sheet arrangements.
 
 Tabular disclosure of
Contractual Obligations
 The
Partnership disclosed in Item 7 of the Partnership’s Annual Report on Form 10-K
for the year ended March 31, 2008, the Partnership’s commitments to make future
payments under its debt agreements and other contractual
obligations.  There are no material changes to such disclosure or
amounts as of September 30, 2008.
 
 Fair Value
Measurements
 
 In the
first quarter of 2008, we adopted SFAS No. 157, “Fair Value Measurements”,for
financial assets and liabilities.We elected the
deferral option available for one year for non-financial assets and
liabilities.  This standard defines fair value, provides guidance for
measuring fair value and requires certain disclosures.  This standard
does not require any new fair value measurements, but discusses valuation
techniques, such as the market approach (comparable market prices), the income
approach (present value of future income or cash flow), and the cost approach
(cost to replace the service capacity of an asset or replacement
cost).  The statement provides for a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into
three broad levels.  The following is a brief description of those
three levels:
 
 Level
      1:
            Observable
      inputs such as quoted prices (unadjusted) in active markets for identical
      assets or liabilities.
 
 Level
      2:
            Inputs
      other than quoted prices that are observable for the asset or liability,
      either directly or indirectly.  These include quoted prices for
      similar assets or liabilities in active markets and quoted prices for
      identical or similar assets or liabilities in markets that are not
      active.
 
 Level
      3:
            Unobservable
      inputs that reflect our own
assumptions.
 
 As
permitted, we chose not to elect the fair value option as prescribed by FASB
SFAS No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities” – Including an
Amendment of FASB Statement No. 115, for our financial assets and liabilities
that had not been previously carried at fair value.  Therefore, we did
not elect to fair value any additional items under SFAS No. 159.
 
 The
estimated fair value of financial instruments has been determined using
available market information or other appropriate valuation
methodologies.  However, considerable judgment is required in
interpreting market data to develop estimates of fair
value.  Consequently, the estimates are not necessarily indicative of
the amounts that could be realized or would be paid in a current market
exchange. At September 30, 2008, the carrying amount of the Partnership’s
mortgage notes payable approximated fair value as their contractual interest
rates approximated market yields for similar debt instruments.
 
 The
Partnership’s financial assets and liabilities subject to recurring fair value
measurements and the necessary disclosures are as follows:
 
 At
      September 30, 2008
            
            Fair
      Value Measurements at
              September
      30, 2008 using
              Fair
      Value HierarchyCost
            
            Fair
      Value
            
            Level
      1
            
            Level
      2
            
            Level
      3LIABILITIES:Mortgage
      notes
            
            $
            4,980,070
            
            
            $
            4,980,070
            
            
            $
            0
            
            
            $
            0
            
            
            $
            4,980,070
 
 
 The
financial liabilities measured at fair value using Level 3 inputs at September
30, 2008 were previously reported as using Level 1 inputs.
 
 Discontinued
Operations
 
 The
Partnership is currently in the process of disposing of its
investments.  The disposals meet the criteria established for
recognition as a discontinued operation under SFAS No. 144.  SFAS No.
144 specifically requires that such amounts must differentiate a component of a
business comprised of operations and cash flows that can be clearly
distinguished operationally and for financial reporting purposes, from the rest
of the entity.  See Note 4 to the condensed consolidated financial
statements for a discussion of the sale of properties.  As of
September 30, 2008, there was one asset held for sale.  See Note 5 for
a discussion of assets held for sale.
 
 - 14
-
  Critical Accounting Policies
and Estimates
 
 In
preparing the condensed consolidated financial statements, management has made
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Set forth below is a summary of the accounting policies
that management believes are critical to the preparation of the condensed
consolidated financial statements. The summary should be read in conjunction
with the more complete discussion of the Partnership accounting policies
included in Item 8, Note 2 to the consolidated financial statements in the
Annual Report on Form 10-K for the year ended March 31, 2008.
 
 Property and
Equipment
 
 Property
and equipment to be held and used are carried at cost which includes the
purchase price, acquisition fees and expenses, and any other costs incurred in
acquiring the Properties. The cost of property and equipment is depreciated over
their estimated useful lives using accelerated and straight-line methods.
Expenditures for repairs and maintenance are charged to expense as incurred;
major renewals and betterments are capitalized. At the time property and
equipment are retired or otherwise disposed of, the cost and accumulated
depreciation are eliminated from the assets and accumulated depreciation
accounts and the profit or loss on such disposition is reflected in
earnings.  The Partnership complies with SFAS No. 144.  A
loss on impairment of assets is recorded when management estimates amounts
recoverable through future operations and sale of the property on a discounted
basis are below depreciated cost.  At that time, property investments
themselves are reduced to estimated fair value (generally using discounted cash
flows).
 
 In
accordance with SFAS No. 144, the results of discontinued operations are
reported as a separate component of income before extraordinary items on the
condensed consolidated statements of operations.  Discontinued
operations include the results of operations and any gain or loss recognized for
Local Partnerships that have been disposed of or are held for sale.  A
gain or loss recognized on the disposal is disclosed in the notes to the
condensed consolidated financial statements.  Adjustments to amounts
previously reported in operations that are directly related to the disposal of a
Local Partnership are reclassified in the current period as discontinued
operations for comparability purposes.  Assets and liabilities of a
Local Partnership that are classified as held for sale are presented separately
in the asset and liability sections, respectively, of the condensed consolidated
balance sheets.
 
 During
the six months ended September 30, 2008, the Partnership has not recorded any
loss on impairment of assets or reduction to estimated fair
value.  Through September 30, 2008, the Partnership has recorded
approximately $5,726,000 as a loss on impairment of assets or reduction to
estimated fair value.
 
 At the
time management commits to a plan to dispose of the assets, the said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated.
 
 Revenue
Recognition
 
 Rental
income is earned primarily under standard residential operating leases and is
typically due the first day of each month, but can vary by property due to the
terms of the tenant leases. Rental income is recognized when earned and as rents
become due and charged to tenants’ accounts receivable if not received by the
due date.   Rental payments received in advance of the due date
are deferred until earned. Rental subsidies are recognized as rental income
during the month in which they are earned.
 
 Other
revenues are recorded when earned and consist of the following
items:  Interest income earned on cash and cash equivalent balances
and cash held in escrow balances, income from forfeited security deposits, late
charges, laundry and vending income, and other rental related
items.
 
 Results of
Operations
 
 Three and six months ended
September 30, 2008 as compared to the same periods in 2007
 
 The
results of operations for the three and six months ended September 30, 2008 and
2007, as discussed below, continued to be in the form of rental income with
corresponding expenses divided among operations, depreciation and mortgage
interest.  This discussion excludes the results of its discontinued
operations (see Item 1, Note 6).
 
 Rental
income increased approximately 1% and 3% for the three and six months ended
September 30, 2008 as compared to the corresponding periods in 2007, primarily
due to an increase in rental rates at one Local Partnership and an increase in
occupancy at a second Local Partnership.
 
 Other
income decreased approximately $70,000 and $116,000 for the three and six months
ended September 30, 2008 as compared to the corresponding periods in
2007.  This fluctuation pertained to a decrease in interest income
resulting from the different amounts of cash available for investment due to the
receipt of sales proceeds as well as the length of time such cash was invested
at the Partnership level.
 
 Total
expenses, excluding general and administrative, general and
administrative-related parties and repairs and maintenance, remained fairly
consistent with a decrease of approximately 4% and 1% for the three and six
months ended September 30, 2008 as compared to the corresponding periods in
2007.
 
 General
and administrative expenses decreased approximately $44,000 for the six months
ended September 30, 2008 as compared to the corresponding period in 2007,
primarily due to a decrease in legal fees relating to the sale of properties, a
decrease in audit fees relating to additional audit procedures in the prior year
and a decrease in printing costs at the Partnership level.
  - 15
-
 
 General
and administrative-related parties expenses increased approximately $19,000 and
$30,000 for the three and six months ended September 30, 2008 as compared to the
corresponding periods in 2007, primarily due to an increase in Partnership
management fees resulting from lower offsets of administrative fees received
from Local Partnerships and an increase in expense reimbursement due to the
change in an allocation method used in current year at the Partnership
level.
 
 Repairs
and maintenance expenses decreased approximately $20,000 and $21,000 for the
three and six months ended September 30, 2008 as compared to the corresponding
periods in 2007, primarily due to a decrease in paving and parking repairs,
landscaping, and fence and railing installation at one Local
Partnership.
 
 Item
3.  Quantitative and Qualitative Disclosures about Market
Risk
 
 The
Partnership has mortgage notes that are payable in aggregate monthly
installments including principal and interest at rates varying from 8.25% to
8.75% per annum.  The Partnership does not believe there is a material
risk associated with the various interest rates associated with the mortgage
notes as the majority of the Local Partnership mortgage notes have fixed
rates.  The Partnership disclosed in Item 8, Note 3 to the
consolidated financial statements in the Partnership’s Annual Report on Form
10-K for the year ended March 31, 2008, as well as in Item 2, the fair value of
the mortgage notes payable.  The Partnership does not have any other
market sensitive instruments.  There are no material changes to such
disclosure or amounts as of September 30, 2008.
 
 The
Partnership does not have any other market risk sensitive
instruments.
 
 Item
4(T).   Controls and Procedures
 
 (a)Evaluation of Disclosure
Controls and Procedures.The Chief Executive Officer and Chief
Financial Officer of Related Freedom Associates L.P. and Freedom G.P. Inc., the
general partners of the Partnership, have evaluated the effectiveness of the
Partnership’s disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (“Exchange Act”)) as of the end of the period covered by this
report.  Based on such evaluation, such officers have concluded that,
as of the end of such period, the Partnership’s disclosure controls and
procedures are effective.
 
 (b)  Management’s Annual
Report on Internal Control over Financial Reporting.Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f).  In evaluating the Partnership’s
internal control over financial reporting, management has adopted the framework
in Internal Control-Integrated Framework issued by the Committee of Sponsoring
organizations of the Treadway Commission (the “COSO
Framework”).  Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer of
the General Partner, the Partnership conducted an evaluation of the
effectiveness of its internal control over financial reporting as of March 31,
2008.  The Partnership’s internal control over financial reporting is
a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
reporting purposes in accordance with generally accepted accounting
principles.  Internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.  However, because of
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 Based on
management’s evaluation under the COSO Framework, it has concluded that the
Partnership’s internal control over financial reporting, was, as of March 31,
2008, (1) effective at the Partnership level, in that they provide reasonable
assurance that information required to be disclosed by the Partnership in the
reports it files or submits under the Securities Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms and (2) ineffective at the subsidiary level due to certain
control deficiencies noted in the audit reports for such
subsidiaries.  Management is continuing to cause the Local General
Partner’s to remedy such deficiencies; however, the General Partner does not
have control over the internal controls at the subsidiary
level.  Management believes they have sufficient controls at the
Partnership level to mitigate these deficiencies, and such deficiencies do not
have a material impact on the consolidated financial statements.
 
 The
Partnership’s Annual Report on Form 10-K did not include an attestation report
of the Partnership’s registered public accounting firm regarding internal
control over financial reporting. The Partnership’s internal control over
financial reporting was not subject to attestation by the Partnership’s
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Partnership to provide only this
report.
 
 (c)  Changes in Internal Controls over Financial
Reporting.Except as noted in (b) above, during the period
ended September 30, 2008, there were no changes in the Partnership’s internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Partnership’s internal control over
financial reporting.
  
 - 16
-
 
 PART
II.  OTHER INFORMATION
 
 
 Item
      1.
            Legal
      Proceedings – NoneItem
      1A.
            Risk
      Factors – No changesItem
      2.
            Unregistered
      Sales of Equity and Use of Proceeds – NoneItem
      3.
            Defaults
      Upon Senior Securities – NoneItem
      4.
            Submission
      of Matters to a Vote of Security Holders – NoneItem
      5.
            Other
      Information – NoneItem
      6.
            Exhibits(3A)
            The
      Partnership's Amended and Restated Agreement of Limited Partnership,
      incorporated herein as an exhibit by reference to Exhibit A to the
      Partnership's Prospectus, dated February 9, 1990, as supplemented by
      supplements thereto dated December 7, 1990, May 10, 1991, July 10, 1991
      and July 23, 1991 (as so supplemented, the "Prospectus"), filed with the
      Securities and Exchange Commission on July 30, 1992, as part of
      Post-Effective Amendment No. 6 to the Partnership's registration statement
      on Form S-11, File No. 33-30859 ("Post-Effective Amendment No.
      6")(3B)
            The
      Partnership's Certificate of Limited Partnership, as filed with Secretary
      of State of the State of Delaware on August 28, 1989, incorporated herein
      as an exhibit by reference to Exhibit (3C) to the Partnership's
      registration statement on Form S-11, File No. 33-30859, as filed with the
      Securities and Exchange Commission on September 1, 1989 (the "Initial
      S-11")(10A)
            Form
      of Subscription Agreement, incorporated herein as an exhibit by reference
      to Exhibit B to the Prospectus as filed as part of Post-Effective
      Amendment No. 6(10B)
            Form
      of Purchase and Sale Agreement pertaining to the Partnership's acquisition
      of Local Partnership Interests, incorporated herein as an exhibit by
      reference to Exhibit (10C) to the Initial S-11(10C)
            Form
      of Amended and Restated Agreement of Limited Partnership of Local
      Partnerships, incorporated herein as an exhibit by reference to Exhibit
      (10D) to Pre-Effective Amendment No. 1 to the Partnership’s registration
      statement on Form S-11, File No. 33-30859, as filed with the Securities
      and Exchange Commission on December 21, 1989(10D)
            to
      Pre-Effective Amendment No. 1 to the Partnership's registration statement
      on Form S-11, File No. 33-30859, as filed with the Securities and Exchange
      Commission on December 21, 1989(31.1)
            Certification
      Pursuant to Rule 13a-14(a) or Rule 15d-14(a)(31.2)
            Certification
      Pursuant to Rule 13a-14(a) or Rule 15d-14(a)(32.1)
            Certification
      Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Title 18
      of the United States Code (18 U.S.C.
1350)
 
 
 - 17
-
 
  
 SIGNATURES
 
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 
 FREEDOM
TAX CREDIT PLUS L.P.
 
 
 By:
            RELATED
      FREEDOM ASSOCIATES L.P.a
      General PartnerBy:
            RELATED
      FREEDOM ASSOCIATES INC.,its
      General PartnerDate:
            November 12, 2008By:
            /s/ Robert L. LevyRobert
      L. LevyChief
      Financial Officer, Principal Accounting Officer and
              DirectorDate:
            November 12, 2008By:
            /s/ Andrew J. WeilAndrew
      J. WeilPresident,
      Chief Executive OfficerBy:
            FREEDOM
      GP INC.a
      General PartnerDate:
            November 12, 2008By:
            /s/ Robert L. LevyRobert
      L. LevyChief
      Financial Officer, Principal Accounting Officer and
    DirectorDate:
            November 12, 2008By:
            /s/ Andrew J. WeilAndrew
      J. WeilPresident,
      Chief Executive Officer
 
 
 - 18
-