Exhibit 10.1

               THIRD MODIFICATOIN TO THE ADDITIONAL LOAN AGREEMENT

    Extension of and Third Modification to the Additional Loan Agreement and
                              Additional Loan Note

This Extension of and Third Modification to the Additional Loan Agreement and
Additional Loan Note dated as of September 1, 2002 is entered into among George
Krupp, an individual, Douglas Krupp, an individual and Krupp GP, Inc., a
Massachusetts corporation (collectively, the "Borrowers") and Krupp Government
Income Trust, a Massachusetts business trust (the "Holder").

Whereas, the Borrowers and the Holder have entered into the Additional Loan
Agreement (the "Agreement") dated December 28, 1990, the Additional Loan Note
(the "Note") dated December 28, 1990, the Modification Agreement dated May 1997
and the Extension of and Second Modification to the Additional Loan Agreement
and Additional Loan Note dated July 1, 2002 (the "Second Modification");

Whereas, in accordance with the terms of the Agreement, the Note, the
Modification Agreement and the Second Modification, unless extended, the terms
of the Agreement, the Note, the Modification Agreement and the Second
Modification expire on September 5, 2002;

Whereas, the Borrowers and the Holder have mutually agreed to extend the terms
of the Agreement, the Note, the Modification Agreement and the Second
Modification;

Now, therefore, for and in consideration of the foregoing recitals, the mutual
covenants hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

      1.    Amendments. The Agreement, the Note, the Modification Agreement and
            the Second Modification are amended as follows:

            (a)   Section A of the Note is amended to read in its entirety as
                  follows:

                  A.    Unless otherwise accelerated as provided herein or in
                        the Additional Loan Agreement, the outstanding principal
                        balance shall be payable on December 31, 2002.

      2.    Conditions Precedent. Notwithstanding any contrary provision, this
            document is not effective unless and until the Holder receives
            counterparts of this document executed by each party named on the
            signature page or pages of this document.

      3.    Ratifications. To induce the Holder to enter into this document, the
            Borrowers (a) ratify and confirm all provisions of the Agreement,
            the Note, the Modification Agreement and the Second Modification as
            amended by this document, (b) ratify and confirm that all
            guaranties, assurances, and Liens (as defined in the Agreement, the
            Note, the Modification Agreement and the Second Modification)
            granted, conveyed, or assigned to the Holder under the Agreement,
            the Note, the Modification Agreement and the Second Modification (as
            they have been renewed, extended, and amended) are not released,
            reduced, or otherwise adversely affected by this document and
            continue to guarantee, assure, and secure full payment and
            performance of the present and future indebtedness arising
            hereunder, and (c) agree to perform those acts and duly authorize,
            execute, acknowledge, deliver, file, and record those additional
            documents as the Holder may request in order to create, perfect,
            preserve, and protect those guaranties, assurances, and Liens.

      4.    Representations. To induce the Holder to enter into this document,
            the Borrowers represent and warrant to the holder that as of the
            date of this document (a) the Borrowers have all requisite authority
            and power to execute, deliver and perform their respective
            obligations under this document, which execution, delivery, and
            performance have been duly authorized by all necessary corporate
            action in the case of the corporate Borrower, require no action by
            or filing with any governmental authority, do not violate any of the
            corporate Borrower's organizational documents or violate any law
            applicable to any of the Borrowers or any material agreement to
            which they or their assets are bound, (b) upon execution and
            delivery by all parties to it, this document will constitute the
            Borrowers' legal and binding obligation, enforceable against each of
            them in accordance with this document's terms except as that
            enforceability may be limited by debtor relief laws and general
            principles of equity, (c) all other representations and warranties
            in the Agreement, the Note, the Modification Agreement and the
            Second Modification are true and correct in all material respects
            except to the extent that any of them speak to a different specific
            date, and (d) no Default or Event of Default exists.

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      5.    Miscellaneous. Except as specifically amended and modified in this
            document, the Agreement, the Note, the Modification Agreement and
            the Second Modification are unchanged and continue in full force and
            effect.

      The parties hereto have caused this Extension of and Third Modification to
the Additional Loan Agreement and Additional Loan Note to be duly executed as of
the date first written above.

Krupp GP, Inc., a Massachusetts corporation     Krupp Government Income Trust,
                                                A Massachusetts business trust

BY: /s/ David C. Quade                          By: Berkshire Mortgage Advisors
    ---------------------------
Its: Executive Vice President                   Limited Partnership, its Advisor

                                                By: BRF Corporation, its general
     /s/ Douglas Krupp                              partner
-------------------------------
Douglas Krupp, an individual
                                                By: /s/ Ronald F. Halpern
                                                   -----------------------------
                                                   Name: Ronald F. Halpern
                                                   Title:  President
    /s/ George Krupp
-------------------------------
George Krupp, an individual