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, 2002

                                        OR

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

      For the transition period from                         to
                                     -----------------------    ----------------

                      Commission file number          0-19244

                           Krupp Government Income Trust

         Massachusetts                                    04-3089272
(State or other jurisdiction of                (IRS employer identification no.)
incorporation or organization)

One Beacon Street, Boston, Massachusetts                     02108
(Address of principal executive offices)                   (Zip Code)

                                 (617) 523-0066
              (Registrant's telephone number, including area code)

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  |X|   No   |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act).

Yes  |_|   No   |X|

<PAGE>

                          Part I.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. When used in this Form 10-Q, the words "believes," "anticipates,"
"expects," "plans," "intends," "estimates," "continue," "may" or "will" (or the
negative of such words) and similar expressions are intended to identify
forward-looking statements. Such statements are subject to a number of risks and
uncertainties, including but not limited to the following: federal, state or
local regulations; adverse changes in general economic or local conditions;
prepayments of mortgages; failure of borrowers to pay participation interests
due to poor operating results of properties underlying the mortgages; uninsured
losses and potential conflicts of interest between the Trust and its Affiliates,
including the Trustees. The Company's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended December
31, 2001, contain additional information concerning such risk factors. Actual
results in the future could differ materially from those described in any
forward-looking statements as a result of the risk factors set forth above, and
the risk factors described in the Annual Report."


                                      -2-
<PAGE>

                          KRUPP GOVERNMENT INCOME TRUST

                                 BALANCE SHEETS

                                    --------

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                             September 30,    December 31,
                                                                                                  2002             2001
                                                                                             ------------     ------------
<S>                                                                                           <C>             <C>
Participating Insured Mortgage Investments:
    ("PIMIs") (Note 2)
    Insured Mortgages                                                                         $32,313,359     $ 50,811,558
    Additional Loans, net of impairment provision of $1,698,811                                 3,871,180        3,871,180
Participating Insured Mortgages ("PIMs") (Note 2)                                              16,981,429       46,416,493
Mortgage-Backed Securities ("MBS") (Note 3)                                                     6,642,922       14,971,348
                                                                                              -----------     ------------

            Total mortgage investments                                                         59,808,890      116,070,579

Cash and cash equivalents                                                                       3,097,467       13,154,231
Interest receivable and other assets                                                              381,919          756,832
Prepaid acquisition fees and expenses, net
 of accumulated amortization of $3,272,246
 and $6,249,229, respectively                                                                     102,715          541,044
Prepaid participation servicing fees, net of
 accumulated amortization of $665,155 and
 $1,999,913, respectively                                                                          81,155          263,455
                                                                                              -----------     ------------

            Total assets                                                                      $63,472,146     $130,786,141
                                                                                              ===========     ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Deferred income on Additional Loans                                                           $ 2,095,882     $  2,336,154
Other liabilities                                                                                  19,676           20,485
                                                                                              -----------     ------------

            Total liabilities                                                                   2,115,558        2,356,639
                                                                                              -----------     ------------

Shareholders' equity (Note 4)
      Common stock, no par value; 17,510,000
      Shares authorized; 15,053,135 Shares issued and outstanding                              60,917,163      127,850,874

      Accumulated comprehensive income                                                            439,425          578,628
                                                                                              -----------     ------------

            Total Shareholders' equity                                                         61,356,588      128,429,502
                                                                                              -----------     ------------

            Total liabilities and Shareholders' equity                                        $63,472,146     $130,786,141
                                                                                              ===========     ============
</TABLE>



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


                                      -3-
<PAGE>

                           KRUPP GOVERNMENT INCOME TRUST

                   STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                                     --------

<TABLE>
<CAPTION>
                                               For the Three Months            For the Nine Months
                                                Ended September 30,            Ended September 30,
                                            -------------------------     ----------------------------
                                                2002          2001            2002             2001
                                            ----------     ----------     -----------      -----------
<S>                                         <C>            <C>            <C>              <C>
Revenues:
  Interest income - PIMs and PIMIs:
      Basic interest                        $  955,937     $1,913,349     $ 3,576,455      $ 6,032,783
      Additional Loan interest (Note 5)         80,090        320,218         240,272          692,095
      Participation interest (Note 5)               --      3,431,594       1,964,251        3,683,444
  Interest income - MBS                        380,510        308,148       1,124,224          951,691
  Interest income - cash and
    cash equivalents                            44,047         86,153         134,616          226,332
                                            ----------     ----------     -----------      -----------

          Total revenues                     1,460,584      6,059,462       7,039,818       11,586,345
                                            ----------     ----------     -----------      -----------

Expenses:
  Asset management fee to an affiliate         119,057        229,205         446,682          722,874
  Expense reimbursements to affiliates          55,377         65,532         147,565          177,572
  Amortization of prepaid
   fees and expenses                            95,679        257,433         620,629          772,301
  General and administrative                   133,780        146,756         353,073          367,496
                                            ----------     ----------     -----------      -----------

          Total expenses                       403,893        698,926       1,567,949        2,040,243
                                            ----------     ----------     -----------      -----------

Net income                                   1,056,691      5,360,536       5,471,869        9,546,102

Other comprehensive income:

    Net change in unrealized
      gain on MBS                               43,027        136,497        (139,203)         207,222
                                            ----------     ----------     -----------      -----------

Total comprehensive income                  $1,099,718     $5,497,033     $ 5,332,666      $ 9,753,324
                                            ==========     ==========     ===========      ===========

Basic earnings per Share                    $      .07     $      .35     $       .36      $       .63
                                            ==========     ==========     ===========      ===========


Weighted average Shares outstanding         15,053,135                    15,053,135
                                            ==========                    ==========
</TABLE>

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


                                      -4-
<PAGE>

                          KRUPP GOVERNMENT INCOME TRUST

                            STATEMENTS OF CASH FLOWS

                                    --------

<TABLE>
<CAPTION>
                                                                            For the Nine Months
                                                                             Ended September 30,
                                                                      --------------------------------
                                                                           2002               2001
                                                                      -------------      ------------
<S>                                                                    <C>               <C>
Operating activities:
  Net income                                                           $  5,471,869      $  9,546,102
  Adjustments to reconcile net income to
   net cash provided by operating activities:
     Amortization of (discounts) and premiums                              (174,940)              438
     Amortization of prepaid fees and expenses                              620,629           772,301
     Changes in assets and liabilities:
       Decrease in interest receivable and other assets                     374,913           308,046
       Decrease in deferred income on Additional Loans                     (240,272)         (441,847)
       Increase (decrease) in other liabilities                                (809)          298,769
                                                                       ------------      ------------

               Net cash provided by operating activities                  6,051,390        10,483,809
                                                                       ------------      ------------

Investing activities:
   Principal collections on MBS                                           8,364,163         1,237,910
   Principal collections on PIMs and Insured Mortgages                   47,933,263         9,210,587
   Principal collections on Additional Loans                                     --         1,924,649
                                                                       ------------      ------------

               Net cash provided by investing activities                 56,297,426        12,373,146
                                                                       ------------      ------------

Financing activity:
   Dividends                                                            (72,405,580)      (21,676,515)
                                                                       ------------      ------------

Net increase (decrease) in cash and cash equivalents                    (10,056,764)        1,180,440

Cash and cash equivalents, beginning of period                           13,154,231         5,359,041
                                                                       ------------      ------------

Cash and cash equivalents, end of period                               $  3,097,467      $  6,539,481
                                                                       ============      ============

Non cash activities:
  Increase (decrease) in fair value of MBS                             $   (139,203)     $    207,222
                                                                       ============      ============
</TABLE>

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


                                      -5-
<PAGE>

                          KRUPP GOVERNMENT INCOME TRUST

                          NOTES TO FINANCIAL STATEMENTS

                                   ----------

1.  Accounting Policies

    Certain information and footnote disclosures normally included in financial
    statements prepared in accordance with accounting principles generally
    accepted in the United States of America have been condensed or omitted in
    this report on Form 10-Q pursuant to the Rules and Regulations of the
    Securities and Exchange Commission. However, in the opinion of Berkshire
    Mortgage Advisors Limited Partnership (the "Advisor"), which is the advisor
    to Krupp Government Income Trust (the "Trust"), the disclosures contained in
    this report are adequate to make the information presented not misleading.
    See Notes to Financial Statements in the Trust's Form 10-K for the year
    ended December 31, 2001 for additional information relevant to significant
    accounting policies followed by the Trust.

    In the opinion of the Advisor of the Trust, the accompanying unaudited
    financial statements reflect all adjustments (consisting of only normal
    recurring accruals) necessary to present fairly the Trust's financial
    position as of September 30, 2002, the results of operations for the three
    and nine months ended September 30, 2002 and 2001 and its cash flows for the
    nine months ended September 30, 2002 and 2001.

    The results of operations for the three and nine months ended September 30,
    2002 are not necessarily indicative of the results which may be expected for
    the full year. See Management's Discussion and Analysis of Financial
    Condition and Results of Operations included in this report.

2.  PIMs and PIMIs

    At September 30, 2002, the Trust's PIMs and PIMIs, including Additional
    Loans, had a fair value of $56,429,635 and gross unrealized gains of
    $3,263,667. Fair value assumes that the insured first mortgage and the GNMA
    MBS backed by an insured first mortgage could be sold at prices equal to the
    amounts being realized by MBS with similar interest rates. Fair value
    includes the current carrying value of the Additional Loans. Fair value does
    not include any value for the participation features. The PIMs and PIMIs
    have maturities ranging from 2002 to 2034. At September 30, 2002, there are
    no insured mortgage loans within the Trust's portfolio that are delinquent
    of principal or interest.

    Lifestyle and Mountain View have been adversely affected by their
    competitive rental housing markets. Based on the Advisor's analysis of
    market conditions and property operations, the Trust maintains a valuation
    allowance of $1,032,272 for Mountain View and $666,539 for Lifestyles.

    On July 25, 2002, the Trust received $13,676,641 representing the principal
    proceeds on the first mortgage loan from the Lincoln Green Apartments PIM.
    On June 28, 2002, the Trust received a prepayment of the Lincoln Green
    Apartments Subordinated Promissory Note. The Trust received $725,000 of
    Shared Appreciation Interest and $278,785 of Shared Income Interest and
    Minimum Additional Interest On August 28, 2002, the Trust paid a special
    dividend of $0.99 per share from the proceeds of the Lincoln Green
    Apartments PIM prepayment.

    On May 15, 2002, the Trust received $8,884,123 representing the principal
    proceeds on the first mortgage loan from the River View Apartments PIM. In
    addition, the Trust received a prepayment premium of $88,841 from the
    payoff. On June 4, 2002, the Trust paid a special dividend of $0.61 per
    share from the proceeds of the River View Apartments PIM prepayment.

    On January 3, 2002, the Trust received $18,330,825 representing the
    principal proceeds on the first mortgage loan from the Red Run PIMI. On
    December 31, 2001 the Trust received a prepayment of the Red Run Additional
    Loan and Subordinated Promissory Note. The Trust received $2,900,000 of
    Additional Loan Principal, $238,369 of Shared Appreciation Interest,
    $3,506,952 of Preferred Interest and $67,667 of Base Interest on the
    Additional Loan. On January 16, 2002, the Trust paid a special dividend of
    $1.68 per share from the proceeds of the Red Run PIMI prepayment.

    On January 2, 2002, the Trust received a prepayment of the Waterford
    Apartments Subordinate Promissory Note. The Trust received $379,725 of
    Minimum Additional Interest and $425,643 of Shared Appreciation Interest. On
    January 17, 2002, the Trust received $6,625,742 representing the principal
    proceeds on the first mortgage loan. In addition, the Trust received a
    prepayment premium of $66,257 from the payoff. On March 1, 2002, the Trust
    paid a special dividend of $0.51 per share from the proceeds of the
    Waterford Apartments PIM prepayment.

                                    Continued


                                      -6-
<PAGE>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                    --------

3.  MBS

    At September 30, 2002, the Trust's MBS portfolio had an amortized cost of
    $6,203,497 and unrealized gains of $439,425. The portfolio has maturities
    ranging from 2008 to 2032.

    On August 27, 2002, the Trust received $4,856,759 representing the principal
    proceeds on the first mortgage loan from the Rosemont Apartments MBS. In
    addition, the Trust received a prepayment premium of $194,270 from this
    payoff. On September 12, 2002, the Trust paid a special dividend of $0.34
    per share from the proceeds of the Rosemont Apartments MBS prepayment.

    On May 15, 2002, the Trust received $2,487,447 representing the principal
    proceeds on the first mortgage loan from the Parkwest Apartments MBS. In
    addition, the Trust received a prepayment premium of $49,749 from this
    payoff. On June 19, 2002, the Trust paid a special dividend of $0.17 per
    share from the proceeds of the Parkwest Apartments MBS prepayment.

4.  Changes in Shareholders' Equity

    A summary of changes in shareholders' equity for the nine months ended
    September 30, 2002 is as follows:

<TABLE>
<CAPTION>
                                          Total                        Accumulated
                                         Common          Retained     Comprehensive     Shareholders'
                                          Stock          Earnings        Income            Equity
                                     -------------      ----------     -----------      -------------
<S>                                  <C>                <C>            <C>              <C>
Balance at December 31, 2001         $ 127,850,874      $       --     $   578,628      $ 128,429,502

Net income                                      --       5,471,869              --          5,471,869

Dividends                              (66,933,711)     (5,471,869)             --        (72,405,580)

Change in unrealized gain on MBS                --              --        (139,203)          (139,203)
                                     -------------      ----------     -----------      -------------

Balance at September 30, 2002        $  60,917,163      $       --     $   439,425      $  61,356,588
                                     =============      ==========     ===========      =============
</TABLE>

5.  Related Party Transactions

    The Trust received $69,129 of Additional Loan Interest during the three
    months ended September 30, 2001 from an affiliate of the Advisor. The Trust
    also received participation interest of $3,380,383 from an affiliate of the
    Advisor during the three months ended September 30, 2001.

    The Trust received $155,738 of Additional Loan Interest during the nine
    months ended September 30, 2001 from an affiliate of the Advisor. The Trust
    also received participation interest of $3,431,133 from an affiliate of the
    Advisor during the nine months ended September 30, 2001.


                                      -7-
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
financial statements and accompanying notes contained in the Trust's 2001 Annual
Report on Form 10-K and in this Form 10-Q.

Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this quarterly report on
Form 10-Q constitute "forward-looking statements" within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the Trust's actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements. These factors include,
among other things, federal, state or local regulations; adverse changes in
general economic or local conditions; the inability of the borrower to meet
financial obligations on additional loans; prepayments of mortgages; failure of
borrowers to pay participation interests due to poor operating results at
properties underlying the mortgages; uninsured losses and potential conflicts of
interest between the Trust and its Affiliates, including the Advisor.

Liquidity and Capital Resources

At September 30, 2002, the Trust had liquidity consisting of cash and cash
equivalents, of approximately $3.1 million as well as the cash inflows provided
by PIMs, PIMIs, MBS and cash and cash equivalents. The Trust may also receive
additional cash flow from the participation features of its PIMs and PIMIs. The
Trust anticipates that these sources will be adequate to provide the Trust with
sufficient liquidity to meet its obligations, including providing dividends to
its investors.

The most significant demand on the Trust's liquidity are quarterly dividends
paid to investors of approximately $2.6 million and special dividends. Funds for
dividends come from interest income received on PIMs, PIMIs, MBS and cash and
cash equivalents net of operating expenses, the principal collections received
on PIMs, PIMIs and MBS and cash reserves. The portion of dividends funded from
principal collections and cash reserves reduces the capital resources of the
Trust. As the capital resources of the Trust decrease, the total cash flows to
the Trust will also decrease which may result in periodic adjustments to the
dividends paid to the investors.

The Advisor periodically reviews the dividend rate to determine whether an
adjustment is necessary based on projected future cash flows. The current
dividend rate is $.17 per Share per quarter. The Trustees, based on the
Advisor's recommendations, generally set a dividend rate that provides for level
quarterly dividends. To the extent quarterly dividends do not fully utilize the
cash available for distribution and cash balances increase, the Advisor may
adjust the dividend rate or distribute such funds through a special dividend.
The Advisor made a recommendation to the Trustees at the November Board Meeting
to reduce the dividend rate from $0.17 per share to $0.06 per share effective
with the February 2003 dividend. The Trustees approved the recommendation to
reduce the dividend rate.

In addition to providing guaranteed or insured monthly principal and interest
payments from the insured first mortgage or GNMA MBS backed by an insured first
mortgage portion of a PIM or PIMI, the Trust's investments in PIMs and PIMIs
also may provide additional income through the interest on the Additional Loan
portion of the PIMIs as well as participation interest based on operating cash
flow and an increase in the value realized upon the sale or refinance of the
underlying properties. However, these payments and collection of the Additional
Loan principal are neither guaranteed nor insured and depend upon the successful
operations of the underlying properties.

On August 27, 2002, the Trust received $4,856,759 representing the principal
proceeds on the first mortgage loan from the Rosemont Apartments MBS. In
addition, the Trust received a prepayment premium of $194,270 from this payoff.
On September 12, 2002, the Trust paid a special dividend of $0.34 per share from
the proceeds of the Rosemont Apartments MBS prepayment.

On July 25, 2002, the Trust received $13,676,641 representing the principal
proceeds on the first mortgage loan from the Lincoln Green Apartments PIM. On
June 28, 2002, the Trust received a prepayment of the Lincoln Green Apartments
Subordinated Promissory Note. The Trust received $725,000 of Shared Appreciation
Interest and $278,785 of Shared Income Interest and Minimum Additional Interest.
On August 28, 2002, the Trust paid a special dividend of $0.99 per share from
the proceeds of the Lincoln Green Apartments PIM prepayment

On May 15, 2002, the Trust received $8,884,123 representing the principal
proceeds on the first mortgage loan from the River View Apartments PIM. In
addition, the Trust received a prepayment premium of $88,841 from the payoff. On
June 4, 2002, the Trust paid a special dividend of $0.61 per share from the
proceeds of the River View Apartments PIM prepayment.

On May 15, 2002, the Trust received $2,487,447 representing the principal
proceeds on the first mortgage loan from the


                                      -8-
<PAGE>

Parkwest Apartments MBS. In addition, the Trust received a prepayment premium of
$49,749 from this payoff. On June 19, 2002, the Trust paid a special dividend of
$0.17 per share from the proceeds of the Parkwest Apartments MBS prepayment.

On January 3, 2002, the Trust received $18,330,825 representing the principal
proceeds on the first mortgage loan from the Red Run PIMI. On December 31, 2001
the Trust received a prepayment of the Red Run Additional Loan and Subordinated
Promissory Note. The Trust received $2,900,000 of Additional Loan Principal,
$238,369 of Shared Appreciation Interest, $3,506,952 of Preferred Interest and
$67,667 of Base Interest on the Additional Loan. On January 16, 2002, the Trust
paid a special dividend of $1.68 per share from the proceeds of the Red Run PIMI
prepayment.

On January 2, 2002, the Trust received a prepayment of the Waterford Apartments
Subordinate Promissory Note. The Trust received $379,725 of Minimum Additional
Interest and $425,643 of Shared Appreciation Interest. On January 17, 2002, the
Trust received $6,625,742 representing the principal proceeds on the first
mortgage loan. In addition, the Trust received a prepayment premium of $66,257
from the payoff. On March 1, 2002, the Trust paid a special dividend of $0.51
per share from the proceeds of the Waterford Apartments PIM prepayment.

The three remaining PIMI investments all operate under workout agreements with
the Trust. Those agreements have modified the borrowers' obligations to make
Additional Loan interest payments, regardless of whether the property generated
sufficient revenues to do so, to an obligation to pay Additional Loan interest
only if the property generates Surplus Cash, as defined by HUD. For the period
ending December 31, 2001, Mountain View did not generate any Surplus Cash.
Consequently, the Trust will not receive any Additional Loan interest from the
Mountain View PIMI during 2002. For the period ending January 31, 2002,
Lifestyles did generate approximately $60,000 of Surplus Cash. The borrower
asked and the Trust agreed to permit the use of all Surplus Cash to fund various
capital projects at the property. For the period ending December 31, 2001,
Windward Lakes did generate approximately $215,000 of Surplus Cash. The borrower
asked and the Trust agreed to permit the use of all Surplus Cash to fund a
portion of a major roof replacement project at the property. Consequently, the
Trust will not receive any Additional Loan interest from the Windward Lakes PIMI
during 2002. Beginning in 2002, the Trust has amortized and recognized
Additional Loan income previously deferred with respect to Windward Lakes since
the property generated Surplus Cash during 2001.

Windward Lakes' operating results deteriorated during 1995 and 1996, and in
early 1997 the independent Trustees approved a workout with the borrower of the
Windward Lakes PIMI, an affiliate of the Advisor of the Trust. In the workout,
the Trust agreed to reduce the effective basic interest rate on the insured
first mortgage by 2% per annum for 1997 and 1% per annum for 1998, 1999 and
2000. The borrower made an equity contribution of $133,036 to the property and
agreed to cap the annual management fee paid to an affiliate at 3% of revenues.
The Trust's participation in current operations is 50% of any Surplus Cash as
determined under HUD guidelines, and the Additional Loan interest is payable out
of its share of Surplus Cash. Any unpaid Additional Loan interest accrues at
7.5% per annum. When the property is sold or refinanced, the Trust will receive
50% of any net proceeds remaining after repayment of the insured mortgage, the
Additional Loan, the interest rate relief, accrued and unpaid Additional Loan
interest and the Borrower's equity up to the point that the Trust has received a
cumulative, non-compounded 10% preferred return on its investment in the PIMI.
The Additional Loan was scheduled to mature in July of 2002. However, the
Advisor granted two extensions with the most recent extension providing for a
maturity date on the Additional Loan of December 31, 2002. These extensions gave
the Borrower additional time to submit a more comprehensive proposal regarding a
longer term extension of the maturity date. The Advisor reviewed this proposal
(described below), submitted its recommendation to the Board of Trustees at the
Trustees meeting on November 7, 2002 and the Board accepted the proposal.

The proposal is for the Trust to agree to extend the maturity date of the
Additional Loan to December 31, 2003. In return, the borrower agrees to either
of the following by December 31, 2002: (i) paying a fee of 2% of the amount of
the Additional Loan ($2,471,294) plus the amount of the interest rebate from the
first workout (approximately $684,000); or (ii) modify the Participating
Appreciation Interest provision under the Subordinated Promissory Note. Under
the second option, an appraisal of the property will take place prior to
December 31, 2002 to determine the floor value for the Participating
Appreciation Interest provision if the property is refinanced. If the property
is sold to an unrelated third party prior to July 1, 2003, the floor will
continue to be the value of the property upon sale. Under either scenario, the
call provision in the Subordinated Promissory Note will be reduced from 12
months to 6 months.

In May 1998, the borrower on the Lifestyles PIMI defaulted on its debt service
payment on the insured first mortgage. Subsequently, the Trust agreed to a new
workout that runs through 2007. Under its terms, the Trust agreed to reduce the
effective interest rate on the insured first mortgage by 1.75% retroactively for
1998 to clear the default, by 1.75% for 1999, and by 1.5% each year thereafter
until 2007. An affiliate of the Advisor refunds approximately .25% per annum to
the Trust related to the interest reduction. The borrower made a $550,000 equity
contribution, which was escrowed, for the exclusive purpose of correcting
deferred maintenance and making capital improvements to the property. The escrow
has been used up for paint, building repairs, parking lot repairs, a new fitness
facility, clubhouse remodeling and landscaping. Any Surplus Cash that is
generated by property operations will be split evenly between the Trust and the
borrower. When


                                      -9-
<PAGE>

the property is sold or refinanced, the first $1,100,000 of any proceeds
remaining after the insured mortgage is paid off will be split 50% / 50% between
the Trust and the borrower; the next $1,690,220 of proceeds will be split 75% to
the Trust and 25% to the borrower; and any remaining proceeds will be split 50%
/ 50%. The borrower's new equity and the reduction in the effective interest
rate on the insured first mortgage provided funds for repairs and improvements.
As a result of the performance of the property, the Trust had initially
established a valuation allowance of $1,130,346 on the Additional Loan in 1998.
During 2001, the Trust received a payment of $118,968 which was recorded as a
reduction in the principal balance of the Additional Loan and related impairment
provision. Based on improved market conditions and property operations, the
Trust further reduced the impairment provision by $344,839 in the fourth quarter
of 2001.

During 2002, operating results at Lifestyles have deteriorated as occupancy and
rental rate income have dropped. Physical occupancy through the end of the third
quarter of 2002 has been in the mid 80% range, but free rent concessions have
dropped the economic occupancy to the 80% range. The Tampa economy has been
stuck in recession. There has been significant job loss in the area, which has
affected some residents who lived at the property. Occupancy also has suffered
on account of an active single-family housing market. A construction boom in new
homes, the highest level since the late 1980's, coupled with low interest rates
has created opportunities for renters to become homeowners as the incremental
cost has dropped. The physical condition of the property has suffered as well as
wood stairways and balcony railings have deteriorated. The borrower has
undertaken the project of replacing all of the balcony railings by advancing
funds to cover the cost. Replacement of the exterior staircases and how to fund
the cost, a much larger undertaking, is still under consideration by the
borrower. As a result of the factors described above, the Trust maintains a
valuation allowance of $666,539.

Mountain View is similar to Lifestyles with respect to competitive market
conditions. In June 1999, the Trust approved a second workout that runs through
2004. Under its terms, the Trust agreed to reduce the effective interest rate on
the insured first mortgage by 1.25% retroactively for 1999 and each year
thereafter until 2004, and to change the participation terms. The workout
eliminated the preferred return feature, forgave $288,580 of previous accruals
of Additional Loan interest related to the first workout, and changed the
Trust's participation in Surplus Cash generated by the property. The Trust will
receive 75% of the first $130,667 of Surplus Cash and 50% of any remaining
Surplus Cash on an annual basis to pay Additional Loan interest. Unpaid
Additional Loan interest related to the second workout will accrue and be
payable if there are sufficient proceeds from a sale or refinancing of the
property. In addition, the borrower repaid $153,600 of the Additional Loan and
funded approximately $54,000 to a reserve for property improvements.

During 2002, operating results at Mountain View have deteriorated. Both a fire
at the property in early 2001 and soft market conditions has affected occupancy
and rental rate income. A building with 20 three-bedroom apartments was out of
service for 18 months as a result of a fire. All construction work was completed
in mid-2002, with insurance proceeds covering the total cost of the restoration.
A portion of the lost rent was covered by insurance as well. Occupancy in the
remaining units has been affected by local economic conditions. Layoffs and
business reorganizations at various nearby facilities have resulted in some lost
occupancy at Mountain View: one of the most common reasons residents cite for
leaving the property is for a job transfer. The other major reason is for a home
purchase. These factors have made the rental market much more competitive for
apartments owners, and the use of concessions to attract potential renters has
increased throughout the market. Consequently, rental income is down this year.
At the same time, both insurance costs and real estate taxes have increased
dramatically, further deteriorating operating results. As a result of the
factors described above, the Trust maintains a valuation allowance of
$1,032,272.

Each of the above restructurings were to interest rate levels that were at the
then prevailing rate for similar instruments.

During the third quarter, the borrower on the Mill Pond I PIM notified the
Advisor of its intention to refinance the property. This transaction would
require a payoff of the Insured Mortgage as well as all amounts that would be
due to the Trust under the PIM loan documents. An independent appraisal firm has
been contracted to appraise the property's value to determine whether there has
been a sufficient increase in value for the Trust to earn any participation
interest Currently, the borrower's expectation is that the transaction will
occur late in the fourth quarter.

Whether the operating performance at any of the properties mentioned above
provide sufficient cash flow from operations to pay either the Additional Loan
principal and interest or participation interest will depend on factors over
which the Trust has little or no control over.

There are contractual restrictions on the repayment of the PIMs and PIMIs.
During the first five years of the investment, borrowers were prohibited from
repayment. During the second five years, the PIM borrowers can prepay the
insured first mortgage by paying the greater of a prepayment premium or the
participation due at the time of the prepayment. Similarly, the PIMI borrowers
can prepay the insured first mortgage and the Additional Loan by satisfying the
Preferred Return obligation. The participation features and Additional Loans are
neither insured nor guaranteed. If the prepayment of the PIM or PIMI results
from the foreclosure on the underlying property or an insurance claim, the Trust
would probably not receive any participation income or any amounts due under the
Additional Loan.


                                      -10-
<PAGE>

The Trust has the option to call certain PIMs and all the PIMIs by accelerating
their maturity if the loans are not prepaid by the tenth year after permanent
funding. If the call feature is exercised then the insurance feature of the loan
would be canceled. Therefore, the Advisor will determine the merits of
exercising the call option for each PIM and PIMI as economic conditions warrant.
Such factors as the condition of the asset, local market conditions, the
interest rate environment and available financing will have an impact on these
decisions.

Critical Accounting Policies

The Trust's critical accounting policies relate primarily to revenue recognition
related to the participation features of the Trust's PIM and PIMI investments as
well as the recognition of deferred interest income on the Additional Loans. The
Trust's policies are as follows:

Basic interest is recognized based on the stated rate of the Department of
Housing and Urban Development ("HUD") Insured Mortgage loan (less the servicer's
fee) or the coupon rate of the Government National Mortgage Association ("GNMA")
MBS. The Trust recognizes interest related to the participation features when
the amount becomes fixed and the transaction that gives rise to such amount is
consummated. Consummation of a transaction could be the sale or refinancing of
the underlying real estate, which results in a cash payment to the Trust, or a
cash payment made to the Trust from Surplus Cash relative to the participation
feature.

The Trust defers the recognition of Additional Loan interest payments as income
to the extent these interest payments were from escrows established with the
proceeds of the Additional Loan. When the properties underlying the PIMI's
generate sufficient cash flow to make the required Additional Loan interest
payments and the Additional Loan value is deemed collectible, the Trust
recognizes income as earned and commences amortization of the deferred interest
amounts into income over the remaining estimated term of the Additional Loan.
During periods where mortgage loans are impaired the Trust suspends amortizing
deferred interest.

Results of Operations

Net income of the Trust decreased for the three months ended September 30, 2002
when compared to the same period in 2001 due primarily to decreases in basic
interest income on PIMs and PIMIs, additional loan interest and participation
income. These were partially offset by an increase in interest income on MBS and
decreases in asset management fees and amortization expense. Basic interest
income on PIMs and PIMIs decreased due to the payoffs of the Lincoln Green
Apartments, Waterford Apartments and River View Apartments PIMs in 2002 and the
Red Run PIMIs in January 2002. Additional loan interest decreased due to the
payoff of the Red Run PIMIs net of the recognition of deferred revenue from the
Windward Lakes PIMI beginning in 2002. Participation income was greater in 2001
due to the Season's PIMI payoff in July of 2001. Interest income on MBS
increased due to the accelerated recognition of the Rosemont Apartments MBS
purchase discount as income upon the prepayment of the MBS and receipt of a
prepayment premium in August 2002. Asset management fees decreased due to the
decline in the Trust's asset base as a result of principal collections and
prepayments. Amortization expense decreased due to the full recognition of
prepaid fees and expenses associated with the Lincoln Green Apartments PIM,
River View Apartments PIM, Waterford Apartments PIM and Red Run PIMI payoffs and
the full recognition of prepaid fees and expenses associated with the Lifestyles
PIMI.

Net income of the Trust decreased for the nine months ended September 30, 2002
when compared to the same period in 2001 due primarily to decreases in basic
interest income on PIMs and PIMIs, additional loan interest and participation
income. These were partially offset by a decrease in asset management fees.
Basic interest income on PIMs and PIMIs decreased due to the payoffs of the
Lincoln Green Apartments, River View Apartments and Waterford Apartments PIMs in
2002 and the Red Run and Season's PIMIs in January 2002 and July 2001,
respectively. Additional loan interest decreased due to the payoffs of the Red
Run and Season's PIMIs net of the recognition of deferred revenue from the
Windward Lakes PIMI beginning in 2002. Participation income decreased due to the
collections from the Lincoln Green Apartments, River View Apartments and
Waterford Apartments payoffs in 2002 were less than the collections from the
Season's PIMI payoff in 2001. Asset management fees decreased due to the decline
in the Trust's asset base as a result of principal collections and prepayments.


                                      -11-
<PAGE>

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Assessment of Credit Risk

The Trust's investments in insured mortgages and MBS are guaranteed and/or
insured by Fannie Mae, the Federal Home Loan Mortgage Corporation ("FHLMC"),
GNMA or HUD and therefore the certainty of their cash flows and the risk of
material loss of the amounts invested depends on the creditworthiness of these
entities.

Fannie Mae is a federally chartered private corporation that guarantees
obligations originated under its programs. FHLMC is a federally chartered
corporation that guarantees obligations originated under its programs. These
obligations are not guaranteed by the U.S. Government or the Federal Home Loan
Bank Board. However, Fannie Mae and FHLMC are two of the largest corporations in
the United States with significant experience in mortgage securitizations. In
addition, their MBS instruments carry the highest credit rating given to
financial instruments. GNMA guarantees the full and timely payment of principal
and basic interest on the securities it issues, which represents interest in
pooled mortgages insured by HUD. Obligations insured by HUD, an agency of the
U.S. Government, are backed by the full faith and credit of the U.S. Government.

Collection of the principal and interest of the Additional Loans and interest on
the participation features have similar risks as those associated with higher
risk debt instruments, including: reliance on the owner's operating skills,
ability to maintain occupancy levels, control operating expenses, ability to
maintain the properties and obtain adequate insurance coverage. Operations also
may be effected by adverse changes in general economic conditions, adverse local
conditions, and changes in governmental regulations, real estate zoning laws, or
tax laws, and other circumstances over which the Trust may have little or no
control.

The Trust included in cash and cash equivalents approximately $2.8 million of
Agency paper, which is issued by Government Sponsored Enterprises with a credit
rating equal to the top rating category of a nationally recognized statistical
rating organization.

Interest Rate Risk

The Trust's primary market risk exposure is to interest rate risk, which can be
defined as the exposure of the Trust's net income, comprehensive income or
financial condition to adverse movements in interest rates. At September 30,
2002, the Trust's PIMs, PIMIs and MBS comprise the majority of the Trust's
assets. As such, decreases in interest rates may accelerate the prepayment of
the Trust's investments. The Trust does not utilize any derivatives or other
instruments to manage this risk as the Trust plans to hold all of its PIM and
PIMI investments to expected maturity while it is expected that substantially
all of the MBS will prepay over the same time period thereby mitigating any
potential interest rate risk to the disposition value for any remaining MBS.

The Trust monitors prepayments and considers prepayment trends, as well as
dividend requirements of the Trust, when setting regular dividend policy. For
MBS, the fund forecasts prepayments based on trends in similar securities as
reported by statistical reporting entities such as Bloomberg. For PIMs and
PIMIs, the Trust incorporates prepayment assumptions into planning as individual
properties notify the Trust of the intent to prepay or as they are scheduled to
mature.

Item 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Within the 90 days prior to the date of this Quarterly Report on Form 10-Q, the
Chairman of the Board and Chief Accounting Officer carried out an evaluation of
the effectiveness of the design and operation of the Trust's disclosure controls
and procedures. Based upon that evaluation, the Chairman of the Board and the
Chief Accounting Officer concluded that the Trust's disclosure controls and
procedures were effective as of the date of their evaluation in timely alerting
them to material information relating to the Trust required to be included in
this Quarterly Report on Form 10-Q.

(b) Changes in Internal Controls

There were no significant changes in the Trust's internal controls or in other
factors that could significantly affect such internal controls subsequent to the
date of the evaluation described in paragraph (a) above.


                                      -12-
<PAGE>

                          KRUPP GOVERNMENT INCOME TRUST

                           PART II - OTHER INFORMATION

                                   -----------


Item 1.   Legal Proceedings

          None

Item 2.   Changes in Securities

          None

Item 3.   Defaults upon Senior Securities

          None

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

          None

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          (a) Exhibits

          (10.1)    Extension of and Third Modification to the Additional Loan
                    Agreement and Additional Loan Note, dated September 1, 2002,
                    between 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").

          (99.1)    Chairman of the Board Certification pursuant to 18 U.S.C.
                    Section 1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.

          (99.2)    Chief Accounting Officer Certification pursuant to 18 U.S.C.
                    Section 1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.

          (b) Reports on Form 8-K

              None


                                      -13-
<PAGE>

                                    SIGNATURE

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

                                      Krupp Government Income Trust
                                             (Registrant)


                                 BY:  /s/ Robert A. Barrows
                                      ------------------------------------------
                                      Robert A. Barrows
                                      Treasurer and Chief Accounting Officer
                                      of Krupp Government Income Trust

DATE: November 11, 2002


                                      -14-
<PAGE>

Certifications

I, Douglas Krupp, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Krupp Government Income
   Trust;

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

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

4. The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

            a)    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b)    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c)    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
   most recent evaluation, to the registrant's auditors and the audit committee
   of registrant's board of directors (or persons performing the equivalent
   function):

            a)    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
   quarterly report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.

Date: November 11, 2002



                                /s/ Douglas Krupp
                           --------------------------
                                  Douglas Krupp
                              Chairman of the Board


                                      -15-
<PAGE>

Certifications

I, Robert A. Barrows, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Krupp Government Income
   Trust;

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

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

4. The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

            a.    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b.    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c.    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
   most recent evaluation, to the registrant's auditors and the audit committee
   of registrant's board of directors (or persons performing the equivalent
   function):

            a.    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b.    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
   quarterly report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.

Date: November 11, 2002



                              /s/ Robert A. Barrows
                          -----------------------------
                                Robert A. Barrows
                            Chief Accounting Officer


                                      -16-