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 March 31, 2003

                                       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                                4-3089272
(State or other jurisdiction of                                 (IRS employer
 incorporation or organization)                              identification no.)

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 in Exchange Act Rule 12b-2).

Yes |_| No |X|


                                      -1-
<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, 2002, 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

<TABLE>
<CAPTION>

                                              ASSETS
                                                                         March 31,     December 31,
                                                                            2003           2002
                                                                        ------------   ------------
Participating Insured Mortgage Investments
 ("PIMIs") (Note 2)
<S>                                                                     <C>            <C>
   Insured Mortgages                                                    $ 22,449,659   $ 32,255,154
   Additional Loans, net of impairment provision
      of $1,032,272                                                        2,839,022      4,537,719
Participating Insured Mortgages ("PIMs")(Note 2)                           9,500,670     16,949,637
Mortgage-Backed Securities and insured mortgage loan ("MBS") (Note 3)      6,082,966      6,313,121
                                                                        ------------   ------------

            Total mortgage investments                                    40,872,317     60,055,631

Cash and cash equivalents                                                 22,076,991      1,986,243
Interest receivable and other assets                                         271,562        370,542
Prepaid acquisition fees and expenses, net
 of accumulated amortization of $755,856
 and $738,546 respectively                                                    28,850         46,160
Prepaid participation servicing fees, net of
 accumulated amortization of $250,664 and
 $683,812, respectively                                                       10,898         62,497
                                                                        ------------   ------------

            Total assets                                                $ 63,260,618   $ 62,521,073
                                                                        ============   ============

                                LIABILITIES AND SHAREHOLDERS' EQUITY

Deferred income on Additional Loans                                     $    847,928   $  1,351,768
Other liabilities                                                             43,429         48,938
                                                                        ------------   ------------

            Total liabilities                                                891,357      1,400,706
                                                                        ------------   ------------

Shareholders' equity (Note 4):
   Common stock, no par value; 17,510,000
   Shares authorized; 15,053,135 Shares issued and outstanding            60,668,605     60,668,605

   Retained earnings                                                       1,218,841             --

   Accumulated comprehensive income                                          481,815        451,762
                                                                        ------------   ------------

            Total Shareholders' equity                                    62,369,261     61,120,367
                                                                        ------------   ------------

            Total liabilities and Shareholders' equity                  $ 63,260,618   $ 62,521,073
                                                                        ============   ============
</TABLE>

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


                                      -3-
<PAGE>

                          KRUPP GOVERNMENT INCOME TRUST

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                                                    For the Three Months
                                                       Ended March 31,
                                                  -------------------------
                                                      2003          2002
                                                  -----------   -----------
Revenues:
    Interest income - PIMs and PIMIs:
        Basic interest                            $   756,553   $ 1,372,488
        Additional loan interest (Note 2)             503,840        80,091
        Participation interest (Note 2)             1,074,811       871,625
    Interest income - MBS                             112,548       291,986
    Interest income - cash and cash equivalents        49,397        55,620
                                                  -----------   -----------

           Total revenues                           2,497,149     2,671,810
                                                  -----------   -----------

Expenses:
    Asset management fee to an affiliate               90,903       170,484
    Expense reimbursements to affiliates               97,677        36,811
    Amortization of prepaid fees and expenses          68,909       275,983
    General and administrative                        117,630       101,719
                                                  -----------   -----------

           Total expenses                             375,119       584,997
                                                  -----------   -----------

Net income                                          2,122,030     2,086,813

Other comprehensive income:
      Net change in unrealized gain on MBS             30,053        17,439
                                                  -----------   -----------

Total comprehensive income                        $ 2,152,083   $ 2,104,252
                                                  ===========   ===========

Basic earnings per Share                          $       .14   $       .14
                                                  ===========   ===========

Weighted average Shares outstanding                15,053,135    15,053,135
                                                  ===========   ===========

                     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 Three Months
                                                                   Ended March 31,
                                                             ----------------------------
                                                                 2003            2002
                                                             ------------    ------------
<S>                                                          <C>             <C>
Operating activities:
    Net income                                               $  2,122,030    $  2,086,813
    Adjustments to reconcile net income to
    net cash provided by operating activities:
       Amortization of discounts                                     (170)           (788)
       Amortization of prepaid fees and expenses                   68,909         275,983
       Changes in assets and liabilities:
         Decrease in interest receivable and other assets          98,980         180,302
         Decrease in deferred income on Additional Loans         (503,840)        (80,091)
         Increase (decrease) in other liabilities                  (5,509)         31,246
                                                             ------------    ------------

                 Net cash provided by operating activities      1,780,400       2,493,465
                                                             ------------    ------------

Investing activities:
    Principal collections on MBS                                  260,378         373,475
    Principal collections on PIMs and Insured Mortgages        17,254,462      25,124,108
    Principal collections on Additional Loans                   1,698,697              --
                                                             ------------    ------------

                 Net cash provided by investing activities     19,213,537      25,497,583
                                                             ------------    ------------

Financing activity:
    Dividends                                                    (903,189)    (35,525,398)
                                                             ------------    ------------

Net increase (decrease) in cash and cash equivalents           20,090,748      (7,534,350)

Cash and cash equivalents, beginning of period                  1,986,243      13,154,231
                                                             ------------    ------------

Cash and cash equivalents, end of period                     $ 22,076,991    $  5,619,881
                                                             ============    ============

Non cash activities:
       Increase in unrealized gain on MBS                    $     30,053    $     17,439
                                                             ============    ============
</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, 2002 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 March 31, 2003, the results of operations and its cash
      flows for the three months ended March 31, 2003 and 2002.

      The results of operations for the three months ended March 31, 2003 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 March 31, 2003, the Trust's PIMs and PIMIs, had a fair value of
      $36,596,587 including gross unrealized gains of $1,439,508. Fair value of
      the insured first mortgage and the GNMA MBS backed by an insured first
      mortgage are based on MBS with similar interest rates or on expected
      payoff proceeds. Fair value includes the estimated collection value of the
      Additional Loans. Fair value does not include any value for the
      participation features. The PIMs and PIMIs have maturities ranging from
      2003 to 2034. At March 31, 2003, there are no PIMs or PIMIs within the
      Trust's portfolio that are delinquent of principal or interest.

      Mountain View has been adversely affected by the competitive rental
      housing market. Based on the Advisor's analysis of market conditions and
      property operations and their effect on the property's value, the Trust
      maintains a valuation allowance of $1,032,272 for Mountain View.

      On March 27, 2003, the Trust received a prepayment of the Rivergreens
      Apartments Subordinated Promissory Note. The Trust received $547,978 of
      Shared Appreciation Interest and $383,297 of Minimum Additional Interest.
      On April 10, 2003, the Trust received $9,500,670 representing the
      principal proceeds on the first mortgage. On May 9, 2003, the Trust paid a
      special dividend of $0.70 per share from the proceeds of the Rivergreens
      Apartments PIM prepayment.

      On March 12, 2003, the Trust sold the Lifestyles Ginnie Mae MBS at par of
      $9,746,038 to the borrower of the Lifestyles PIMI. Concurrently, the
      borrower paid off the full amount due on the Additional Loan of
      $1,817,665. In addition, the Trust recognized $343,659 of Additional Loan
      interest previously recorded as deferred income on the Additional Loan. On
      May 7, 2003, the Trust paid a special dividend of $0.77 per share from the
      proceeds of the Lifestyles Apartments PIMI.

      On January 21, 2003, the Trust received a prepayment of the Mill Ponds I
      PIM of $7,430,727 representing the principal proceeds on the first
      mortgage. The underlying property value did not increase sufficiently to
      meet the criteria for the Trust to earn any participating interest. On May
      5, 2003, the Trust paid a special dividend of $0.50 per share from the
      proceeds of the Mill Ponds I PIM.

                                    Continued


                                       -6-
<PAGE>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

3.    MBS

      At March 31, 2003, the Trust's MBS portfolio had an amortized cost of
      $5,601,151 and unrealized gains of $481,815. The portfolio has maturities
      ranging from 2008 to 2032.

4.    Changes in Shareholders' Equity

      A summary of changes in shareholders' equity for the three months ended
      March 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                       Total                         Accumulated
                                      Common         Retained       Comprehensive   Shareholders'
                                       Stock         Earnings          Income          Equity
                                   -------------   -------------    -------------   -------------
<S>                                <C>             <C>              <C>             <C>
Balance at December 31, 2002       $  60,668,605   $          --    $     451,762   $  61,120,367

Net income                                    --       2,122,030               --       2,122,030

Dividends                                     --        (903,189)              --        (903,189)

Change in unrealized gain on MBS              --              --           30,053          30,053
                                   -------------   -------------    -------------   -------------

Balance at March 31, 2003          $  60,668,605   $   1,218,841    $     481,815   $  62,369,261
                                   =============   =============    =============   =============
</TABLE>


                                      -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 2002 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 March 31, 2003, the Trust had liquidity consisting of cash and cash
equivalents of approximately $22.1 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. As described more fully below, the Advisor has declared special
dividends related to the Mill Ponds I and Lifestyles payoffs that will result in
the distribution of $19.1 million of this cash in the form of a special dividend
in the second quarter of 2003.

The most significant demands on the Trust's liquidity are quarterly dividends
paid to investors of approximately $900,000 and special dividends. Funds for
dividends come from interest income received on PIMs, PIMIs, MBS and cash and
cash equivalents, net of operating expenses, and the principal collections
received on PIMs, PIMIs and MBS. 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 $0.06 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 will make a recommendation to the Trustees at the May board meeting
to reduce the dividend rate from $0.06 per share to $0.02 per share effective as
of the August 2003 dividend.

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, collection of the Additional Loan principal and
interest and interest from the participation feature are neither guaranteed nor
insured and depend upon the successful operations of the underlying properties.

On March 27, 2003, the Trust received a prepayment of the Rivergreens Apartments
Subordinate Promissory Note. The Trust received $547,978 of Shared Appreciation
Interest and $383,297 of Minimum Additional Interest. On April 10, 2003, the
Trust received $9,500,670 representing the principal proceeds on the first
mortgage. On May 9, 2003, the Trust paid a special dividend of $0.70 per share
from the proceeds of the Rivergreens Apartments PIM prepayment.

On March 12, 2003, the Trust sold the Lifestyles Ginnie Mae MBS at par of
$9,746,038 to the borrower of the Lifestyles PIMI. Concurrently, the borrower
paid off the full amount due on the Additional Loan of $1,817,665. In addition,
the


                                      -8-
<PAGE>

Trust recognized $343,659 of Additional Loan interest previously recorded as
deferred income on the Additional Loan. On May 7, 2003, the Trust paid a special
dividend of $0.77 per share from the proceeds of the Lifestyles Apartments PIMI.

On January 21, 2003, the Trust received a prepayment of the Mill Ponds I PIM of
$7,430,727 representing the principal proceeds on the first mortgage. The
underlying property value did not increase sufficiently to meet the criteria for
the Trust to earn any participating interest. On May 5, 2003, the Trust paid a
special dividend of $0.50 per share from the proceeds of the Mill Ponds I PIM.

The two remaining PIMI investments operate under workout agreements with the
Trust. The Mountain View and Windward Lakes agreements have modified the
borrowers' obligations to make Additional Loan interest payments, regardless of
whether the property generates sufficient revenues to do so, to an obligation to
pay Additional Loan interest only if the property generates Surplus Cash, as
defined by HUD. The Trust did not receive any Additional Loan interest or
Surplus Cash payments from either of its PIMIs during the first quarter of 2003.
For the underlying property's fiscal year ending December 31, 2002, Windward
Lakes did not generate any Surplus Cash. For the underlying property's fiscal
year ending December 31, 2002, Mountain View did not generate any Surplus Cash.

The Trust's participation in current operations at Windward Lakes 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 or
the PIMI is repaid, 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 Windward Lakes Additional Loan was scheduled to mature in July of 2002.
However, the Advisor agreed to extend the maturity date of the Additional Loan
to December 31, 2003. In return, the borrower agreed to modify the Participating
Appreciation Interest provision under the Subordinated Promissory Note. Under
this agreement, the property was appraised to determine the floor value for the
Participating Appreciation Interest provision if the property is not sold prior
to July 1, 2003. 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.
If the property is neither sold nor refinanced but repaid by the borrower prior
to July 31, 2003, the floor will be $19,000,000, which was determined by the
appraisal completed as of December 31, 2002. In all other situations the
Participating Appreciation Interest will be based on the greater of the floor
value or the value determined at the time of sale, refinance or payoff. Under
either scenario, the call provision in the Subordinated Promissory Note would be
reduced from 12 months to 6 months. The borrower has notified the Trust that it
intends to payoff the Windward Lakes PIMI during the second quarter of 2003. If
this payoff happens, the Trust will receive all of its accrued interest from the
workout agreement that expired at the end of 2000 plus some participating
interest.

Mountain View has experienced problems due 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 and its application
towards Additional Loan interest. 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 the fire. All construction work was
completed in mid-2002, with insurance proceeds covering the total cost of the
restoration and a portion of the rental income. Occupancy in the remaining units
has been affected by local economic conditions. 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 was down in 2002. At the same time, both insurance
costs and real estate taxes have


                                      -9-
<PAGE>

increased dramatically, further deteriorating operating results. As a result of
the factors described above, the Trust maintains a valuation allowance of
$1,032,272.

Under each of the restructurings described above, management determined that the
new interest rate levels of the loan were at or above the then prevailing rate
for similar instruments and therefore did not meet the criteria for a troubled
debt restructuring. Accordingly, these restructuring and new rates were
accounted for prospectively and not as a troubled debt restructuring.

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 income will depend on factors that the
Trust has little or no control over. Should the properties be unable to generate
sufficient cash flow to pay the Additional Loan interest, it would reduce the
Trust's distributable cash flow and could affect the value of the Additional
Loan collateral.

There are contractual restrictions on the repayment of the PIMIs. During the
first five years of the investment, borrowers are prohibited from repayment.
During the second five years, the PIMI borrowers can prepay the insured first
mortgage and the Additional Loan by satisfying any contractual obligations. The
participation features and Additional Loans are neither insured nor guaranteed.
If the prepayment of the 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.

The Trust has the option to call 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 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 to revenue recognition related
to the Trust's remaining PIM and PIMI investments, impaired mortgage loans,
amortization of Prepaid Fees and Expenses and the carrying value of its MBS. The
Trust's policies are as follows:

The Trust accounts for its MBS portion of a PIM or PIMI investment in accordance
with the Financial Accounting Standards Board's Statement 115, "Accounting for
Certain Investments in Debt and Equity Securities" ("FAS 115"), under the
classification of held to maturity as these investments have a participation
feature. As a result, the Trust would not sell or otherwise dispose of the MBS.
Accordingly, the Trust has both the intention and ability to hold these
investments to expected maturity. The Trust carries these MBS at amortized cost.
The insured mortgage portion of the FHA PIM or FHA PIMI is carried at amortized
cost. The Trust holds these mortgages at amortized cost since they are fully
insured by FHA. The Additional Loans are carried at amortized cost unless the
Advisor of the Trust believes there is an impairment in value, in which case a
valuation allowance is established in accordance with FAS 114 "Accounting by
Creditors for Impairment of a Loan" and FAS 118 "Accounting by Creditors for
Impairment of a Loan- Income Recognition and Disclosures". The Trust, in
accordance with FAS 115, classifies its MBS portfolio as available-for-sale. The
Trust classifies its MBS portfolio as available-for-sale as a portion of the MBS
portfolio may remain after all of the PIMs and PIMIs payoff and that it will be
necessary to then sell the remaining MBS portfolio at that time in order to
close out the Trust. In addition, other situations such as liquidity needs could
arise which would necessitate the sale of a portion of the MBS portfolio. As
such, the Trust carries its MBS at fair market value and reflects any unrealized
gains (losses) as a separate component of Shareholders' Equity. The Trust
amortizes purchase premiums or discounts over the life of the underlying
mortgages using the effective interest method.

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
finalized, cash is received and all contingencies are resolved. This 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


                                      -10-
<PAGE>

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.

The Trust also fully reserves the portion of any Additional Loan interest
payment satisfied through the issuance of an operating loan and any associated
interest due on such operating loan. The Trust will recognize the income related
to the operating loan when the borrower repays amounts due under the operating
loan.

Impaired loans are those Additional Loans which the Advisor believes that the
collection of all amounts due in accordance with the contractual terms of the
loan agreement are not likely. Impaired loans are measured based on the fair
value of the underlying collateral net of estimated selling costs. The Trust
measures impairment on these loans quarterly. Interest received on the impaired
loans is applied against the loan principal.

Prepaid fees and expenses represent prepaid acquisition fees and expenses and
prepaid participation servicing fees paid for the acquisition and servicing of
PIMs and PIMIs. The Trust amortizes prepaid acquisition fees and expenses using
a method that approximates the effective interest method over a period of ten to
twelve years, which represents the estimated life of the underlying mortgage.
The Trust amortizes prepaid participation servicing fees using a method that
approximates the effective interest method over a ten year period beginning at
final endorsement of the loan if a HUD-insured mortgage loan or a GNMA MBS. Upon
the repayment of a PIM or PIMI any unamortized acquisition fees and expenses and
unamortized participation servicing fees related to such loan are expensed.

Results of Operations

Net income of the Trust increased for the first quarter 2003 as compared to the
same period in 2002 due primarily to increases in participation income,
additional loan interest and decreases in asset management fees and amortization
expense. This increase is partially offset by an increase in expense
reimbursements to affiliates and decreases in basic interest income on PIMs and
PIMIs and interest income on MBS. Participation interest increased due to the
collections of participation interest from the Rivergreens PIM and Lifestyles
PIMI payoffs in 2003 being greater than the participation interest collected
from the Waterford PIM payoff in 2002. Additional loan interest increased due to
the recognition of deferred income from the Lifestyles Apartment PIMI payoff
during the first quarter of 2003 and an increase in the amount of deferred
income recognized on the Windward Lakes PIMI. Asset management fees decreased
due to principal collections and prepayments. Amortization expense decrease due
primarily to the Riverview, Waterford and Lincoln Green PIM payoffs in 2002 and
the full amortization of prepaid fees and expenses for the Lifestyles and
Windward Lakes PIMIs in 2002.

Expense reimbursements to an affiliate increased due to a change in the
estimated cost of 2002 activity that was paid in the first quarter of 2003.
Basic interest income on PIMs and PIMIs decreased due to the payoffs of the Mill
Ponds I PIM in the first quarter of 2003 and the payoffs of the Lincoln Green
Apartments, River View Apartments and Waterford Apartments PIMs in 2002.
Interest income on MBS decreased due to the payoffs of the Rosemont Apartments
MBS in August 2002 and the Parkwest Apartments MBS payoff in May of 2002.

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 and 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 and FHLMC are federally chartered private 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.


                                      -11-
<PAGE>

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 $20.9 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 March 31, 2003,
the Trust's remaining PIM, PIMIs and MBS comprise the majority of the Trust's
assets. 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 PIM 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.

(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

            (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/ Alan Reese
                                       ----------------------------------------
                                       Alan Reese
                                       Treasurer and Chief Accounting Officer
                                       of Krupp Government Income Trust

Date: April 28, 2003


                                      -14-
<PAGE>

Certifications

I, Douglas Krupp, certify that:

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

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: April 28, 2003

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


                                      -15-
<PAGE>

Certifications

I, Alan Reese, certify that:

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

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: April 28, 2003

                                              /s/ Alan Reese
                                        --------------------------------
                                                  Alan Reese
                                           Chief Accounting Officer


                                      -16-