UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



Form 10-QSB



(Mark One)

[X]

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



For the quarterly period ended September 30, 2006





[ ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For the transition period from __________ to __________



Commission file number 0-10884





SHELTER PROPERTIES IV

(Exact name of small business issuer as specified in its charter)







South Carolina

57-0721760

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)



55 Beattie Place, P.O. Box 1089

Greenville, South Carolina  29602

(Address of principal executive offices)



(864) 239-1000

(Issuer's telephone number)





Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X  No ___



Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of Exchange Act).   Yes    No _X_













PART I  FINANCIAL INFORMATION







ITEM 1.

FINANCIAL STATEMENTS







SHELTER PROPERTIES IV

CONSOLIDATED BALANCE SHEET

(Unaudited)

(in thousands, except unit data)



September 30, 2006



|                                               |          |         
|---------------------------------------------- | -------- | --------
|Assets                                         |          |         
|Cash and cash equivalents                      |          | $    169
|Receivables and deposits                       |          | 422     
|Other assets                                   |          | 1,104   
|Investment property:                           |          |         
|Land                                           | $  1,883 |         
|Buildings and related personal property        | 65,527   |         
|                                               | 67,410   |         
|Less accumulated depreciation                  | (33,150) | 34,260  
|                                               |          | $35,955 
|                                               |          |         
|Liabilities and Partners' Capital (Deficiency) |          |         
|Liabilities                                    |          |         
|Accounts payable                               |          | $  1,121
|Tenant security deposit liabilities            |          | 182     
|Accrued property taxes                         |          | 610     
|Other liabilities                              |          | 368     
|Due to affiliates                              |          | 964     
|Mortgage note payable (Note E)                 |          | 40,000  
|                                               |          |         
|Partners' Capital (Deficiency)                 |          |         
|General partners                               | $    134 |         
|Limited partners (49,995 units issued and      |          |         
|outstanding)                                   | (7,424)  | (7,290) 
|                                               |          | $35,955 





See Accompanying Notes to Consolidated Financial Statements

















SHELTER PROPERTIES IV

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per unit data)



|                                |                    |                   |         |           
|------------------------------- | ------------------ | ----------------- | ------- | ----------
|                                | Three Months Ended | Nine Months Ended
|                                | September 30,      | September 30,    
|                                | 2006               | 2005              | 2006    | 2005      
|                                |                    | (Restated)        |         | (Restated)
|Revenues:                       |                    |                   |         |           
|Rental income                   | $ 1,686            | $ 1,546           | $ 4,428 | $ 4,855   
|Other income                    | 170                | 153               | 492     | 432       
|Total revenues                  | 1,856              | 1,699             | 4,920   | 5,287     
|Expenses:                       |                    |                   |         |           
|Operating                       | 1,057              | 887               | 3,009   | 2,409     
|General and administrative      | 62                 | 68                | 213     | 220       
|Depreciation                    | 1,283              | 428               | 3,162   | 1,323     
|Interest                        | 503                | 359               | 1,377   | 856       
|Property taxes                  | 176                | 124               | 493     | 381       
|Loss on early extinguishment of |                    |                   |         |           
|debt (Note G)                   | --                 | 304               | --      | 304       
|Total expenses                  | 3,081              | 2,170             | 8,254   | 5,493     
|Loss from continuing operations | (1,225)            | (471)             | (3,334) | (206)     
|(Loss) income from discontinued |                    |                   |         |           
|operations                      | (8)                | (25)              | (1,643) | 19        
|Gain on sale of discontinued    |                    |                   |         |           
|operations                      | --                 | --                | 9,319   | --        
|                                |                    |                   |         |           
|Net (loss) income               | $(1,233)           | $(496)            | $4,342  | $(187)    
|Net (loss) income allocated to  |                    |                   |         |           
|general partners                | $   (13)           | $    (5)          | $    43 | $    (2)  
|Net (loss) income allocated to  |                    |                   |         |           
|limited partners                | (1,220)            | (491)             | 4,299   | (185)     
|                                |                    |                   |         |           
|                                | $(1,233)           | $(496)            | $4,342  | $(187)    
|Net (loss) income per limited   |                    |                   |         |           
|partnership unit:               |                    |                   |         |           
|Loss from continuing operations | (24.25)            | (9.32)            | (66.02) | (4.08)    
|(Loss) income from discontinued |                    |                   |         |           
|operations                      | (0.15)             | (0.50)            | (32.53) | 0.38      
|Gain on sale of discontinued    |                    |                   |         |           
|operations                      | --                 | --                | 184.54  | --        
|                                | (24.40)            | (9.82)            | 85.99   | (3.70)    
|Distributions per limited       |                    |                   |         |           
|partnership unit                | $--                | $--               | $--     | $2.96     



















See Accompanying Notes to Consolidated Financial Statements





















SHELTER PROPERTIES IV

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)

(Unaudited)

(in thousands, except unit data)







|                               |             |          |            |          
|------------------------------ | ----------- | -------- | ---------- | ---------
|                               | Limited     |          |            |          
|                               | Partnership | General  | Limited    |          
|                               | Units       | Partners | Partners   | Total    
|                               |             |          |            |          
|Original capital contributions | 50,000      | $2       | $50,000    | $50,002  
|                               |             |          |            |          
|Partners' capital (deficiency) |             |          |            |          
|at December 31, 2005           | 49,995      | $   91   | $ (11,723) | $(11,632)
|                               |             |          |            |          
|Net income for the nine months |             |          |            |          
|ended September 30, 2006       | --          | 43       | 4,299      | 4,342    
|                               |             |          |            |          
|Partners' capital (deficiency) |             |          |            |          
|at September 30, 2006          | 49,995      | $134     | $(7,424)   | $(7,290) 



See Accompanying Notes to Consolidated Financial Statements

















SHELTER PROPERTIES IV

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)



|                                                       |                   |         
|------------------------------------------------------ | ----------------- | --------
|                                                       | Nine Months Ended
|                                                       | September 30,    
|                                                       | 2006              | 2005    
|Cash flows from operating activities:                  |                   |         
|Net income (loss)                                      | $ 4,342           | $  (187)
|Adjustments to reconcile net income (loss) to net cash |                   |         
|provided by operating activities:                      |                   |         
|Depreciation                                           | 3,252             | 1,729   
|Bad debt expense                                       | 49                | 140     
|Casualty loss                                          | --                | 1       
|Loss on early extinguishment of debt                   | 1,601             | 304     
|Amortization of loan costs                             | 95                | 111     
|Gain on sale of discontinued operations                | (9,319)           | --      
|Change in accounts:                                    |                   |         
|Receivables and deposits                               | (105)             | 12      
|Other assets                                           | (173)             | 7       
|Accounts payable                                       | (23)              | 340     
|Tenant security deposit liabilities                    | 63                | (35)    
|Accrued property taxes                                 | 565               | 624     
|Other liabilities                                      | (58)              | 92      
|Due to affiliates                                      | 8                 | --      
|Net cash provided by operating activities              | 297               | 3,138   
|Cash flows from investing activities:                  |                   |         
|Property improvements and replacements                 | (11,928)          | (6,237) 
|Net withdrawals from restricted escrows                | --                | 230     
|Net proceeds from sale of property                     | 12,629            | --      
|Net cash provided by (used in) investing               |                   |         
|activities                                             | 701               | (6,007) 
|Cash flows from financing activities:                  |                   |         
|Proceeds from mortgage note payable                    | --                | 40,000  
|Repayment of mortgage note payable                     | (7,634)           | (24,083)
|Debt extinguishment costs                              | --                | (23)    
|Distributions to partners                              | --                | (150)   
|Payments on mortgage notes payable                     | (62)              | (552)   
|Advances from affiliates                               | 956               | 2,413   
|Repayment of advances from affiliates                  | --                | (2,413) 
|Loan costs paid                                        | --                | (848)   
|Net cash (used in) provided by financing               |                   |         
|activities                                             | (6,740)           | 14,344  
|Net (decrease) increase in cash and cash equivalents   | (5,742)           | 11,475  
|Cash and cash equivalents at beginning of period       | 5,911             | 505     
|Cash and cash equivalents at end of period             | $169              | $11,980 
|Supplemental disclosure of cash flow information:      |                   |         
|Cash paid for interest                                 | $1,638            | $1,024  
|Supplemental disclosure of non-cash activity:          |                   |         
|Property improvements and replacements in accounts     |                   |         
|payable                                                | $996              | $192    



Included in property improvements and replacements for the nine months ended September 30, 2006 and 2005 are approximately $2,215,000 and $29,000, respectively, of property improvements and replacements, which were included in accounts payable at December 31, 2005 and 2004.

















See Accompanying Notes to Consolidated Financial Statements















SHELTER PROPERTIES IV

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



Note A - Basis of Presentation



The accompanying unaudited consolidated financial statements of Shelter Properties IV (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Shelter Realty IV Corporation (the "Corporate General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2006, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2006. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005. The Corporate General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust.



In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the accompanying consolidated statements of operations have been restated as of January 1, 2005 to reflect the operations of Quail Run Apartments as (loss) income from discontinued operations due to its sale on March 31, 2006 (see Note E).



Note B - Reconciliation of Cash Flows



As required by the Partnership Agreement, the following is a reconciliation of "net cash (used in) provided by operating activities" in the accompanying consolidated statements of cash flows to "net cash used in operations", as defined in the Partnership Agreement. However, "net cash from operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity.



|                                          |                   |         
|----------------------------------------- | ----------------- | --------
|                                          | Nine Months Ended
|                                          | September 30,    
|                                          | 2006              | 2005    
|                                          | (in thousands)   
|                                          |                   |         
|Net cash provided by operating activities | $    297          | $ 3,138 
|Payments on mortgage notes payable        | (62)              | (552)   
|Property improvements and replacements    | (11,928)          | (6,237) 
|Change in restricted escrows, net         | --                | 230     
|Changes in reserves for net operating     |                   |         
|liabilities                               | (326)             | (1,180) 
|Net cash used in operations               | $(12,019)         | $(4,601)



















Distributions made from reserves no longer considered necessary by the Corporate General Partner are considered to be additional net cash from operations for allocation purposes.



Note C - Transactions with Affiliated Parties



The Partnership has no employees and depends on the Corporate General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.



Affiliates of the Corporate General Partner receive 5% of gross receipts from both of the Partnership's properties as compensation for providing property management services. During the nine months ended September 30, 2006 and 2005, the Partnership paid to such affiliates approximately $264,000 and $366,000, respectively, which is included in operating expense and (loss) income from discontinued operations.



An affiliate of the Corporate General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $168,000 and $332,000 for the nine months ended September 30, 2006 and 2005, respectively, which is included in general and administrative expenses, investment property and gain on sale of discontinued operations.  The portion of these reimbursements included in investment property and gain on sale of discontinued operations for the nine months ended September 30, 2006 and 2005 are fees related to construction management services provided by an affiliate of the Corporate General Partner of approximately $20,000 and $158,000, respectively.



Pursuant to the Partnership Agreement, the Corporate General Partner is entitled to a commission of up to 1% for its assistance in the sale of its properties.  Payment of such commission is subordinate to the limited partners receiving a cumulative 7% return on their investment and their original capital contribution.  In connection with the sale of Countrywood Village during 2000, the Partnership accrued a fee of approximately $178,000. At September 30, 2006, the limited partners had not received their return.  During the nine months ended September 30, 2006, the Corporate General Partner determined that the limited partners would not receive both their original capital contribution and applicable cumulative return with a future property sale, financing or refinancing.  Therefore, the Corporate General Partner reversed the real estate commission previously accrued associated with the sale of Countrywood Village, which is included in gain on sale of discontinued operations for the nine months ended September 30, 2006.



Pursuant to the Partnership Agreement and in connection with the refinance of Baymeadows Apartments in August 2005, the Corporate General Partner was paid a refinance fee of 1% of the new mortgage amount or $400,000 for its assistance in arranging the new loan.   There were no such fees paid during the nine months ended September 30, 2006.



Pursuant to the Partnership Agreement, during the nine months ended September 30, 2006 and 2005, an affiliate of the Corporate General Partner advanced the Partnership approximately $956,000 and $2,413,000 to fund the redevelopment at Baymeadows Apartments (see Note F) and to pay 2005 mortgage refinance fees at Baymeadows Apartments. Interest is charged at the prime rate plus 2% (10.25% at September 30, 2006) and interest expense was approximately $9,000 and $27,000 for the nine months ended September 30, 2006 and 2005, respectively. The Partnership repaid approximately $2,440,000 of advances and associated interest during the nine months ended September 30, 2005 from the proceeds from the refinance of Baymeadows Apartments (see Note G). There were no such payments during the nine months ended September 30, 2006.  At September 30, 2006 the total advances and accrued interest due to the Corporate General Partner was approximately $964,000 and is included in due to affiliates on the accompanying consolidated balance sheet.  Subsequent to September 30, 2006, an affiliate of the Corporate General Partner advance approximately $400,000 to the Partnership to fund the redevelopment at Baymeadows Apartments.



The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Corporate General Partner.  During the nine months ended September 30, 2006 and 2005, the Partnership was charged by AIMCO and its affiliates approximately $305,000 and $166,000, respectively, for hazard insurance coverage and fees associated with policy claims administration.



Note D - Casualty



In September 2004, Baymeadows Apartments experienced damage from Hurricanes Frances and Jeanne. During 2004, the Partnership recognized a casualty loss of approximately $6,000 and during the nine months ended September 30, 2005, the Partnership recognized an additional casualty loss of approximately $1,000 as a result of the write-off of undepreciated damaged assets.  This loss is included in operating expense on the accompanying consolidated statements of operations.  In addition to the damages, the Partnership incurred clean up costs of approximately $46,000 during the nine months ended September 30, 2005 for Hurricanes Frances and Jeanne, which were not covered by insurance proceeds, and these costs are included in operating expenses on the accompanying consolidated statements of operations.



Note E  Sale of Discontinued Operations



On March 31, 2006, the Partnership sold Quail Run Apartments to a third party, for net proceeds of approximately $12,629,000 after a prepayment penalty owed by the Partnership and payment of closing costs.  The Partnership used approximately $7,634,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $9,141,000 during the nine months ended September 30, 2006 as a result of the sale. In addition, during the nine months ended September 30, 2006, the Partnership recorded a loss on early extinguishment of debt of approximately $1,601,000 as a result of unamortized loan costs written off and a prepayment penalty.  This amount is included in (loss) income from discontinued operations. The propertys operations, loss of approximately $1,643,000 which includes revenues of approximately $635,000, is included in loss from discontinued operations for the nine months ended September 30, 2006. During the three months ended September 30, 2006, additional operating costs related to Quail Run Apartments in excess of accruals established at March 31, 2006 were incurred.  These costs of approximately $8,000 are included in loss
from discontinued operations for the three months ended September 30, 2006. Included in (loss) income from discontinued operations for the three and nine months ended September 30, 2005 are results of the propertys operations, loss of approximately $25,000 and income of $19,000, respectively, including revenues of approximately $675,000 and $2,006,000, respectively.



Note F  Redevelopment



The Partnerships investment property, Baymeadows Apartments, is currently under redevelopment.  Based on current redevelopment plans, the Corporate General Partner anticipates the redevelopment to be completed in May 2007 at a total estimated cost of approximately $32,327,000 of which approximately $13,195,000 was completed during 2005 and an additional $10,286,000 was completed during the nine months ended September 30, 2006.  Included in these construction costs are capitalized interest costs of approximately $187,000 and $132,000, capitalized tax and insurance expenses of approximately $72,000 and $53,000, and other construction period operating costs of approximately $25,000 and $32,000 for the nine months ended September 30, 2006 and 2005, respectively. The Partnership expects redevelopment costs of approximately $3,317,000 to be incurred during the remainder of 2006. The project was being funded from refinance proceeds and sales proceeds and it is expected that the remaining redevelopment costs will be funded by operating cash flow and advances from an affiliate of the Corporate General Partner.



In addition, a project was approved during the year ended December 31, 2005 to add 288 new apartment units at the property. The Corporate General Partner anticipated the construction to begin during 2007 and to be completed during 2008 at a total estimated cost of approximately $26,953,000 of which approximately $254,000 was completed during 2005. The project was put on hold during the third quarter of 2006. The Corporate General Partner will evaluate when the new unit construction project will be commenced later in 2006. It is expected that the new construction will be funded by operating cash flow and advances from an affiliate of the Corporate General Partner.



Note G  Refinance of Mortgage Note Payable



On August 22, 2005, the Partnership obtained an additional mortgage from a new lender in the principal amount of approximately $15,917,000 on Baymeadows Apartments. The additional mortgage loan agreement requires monthly payments of interest only beginning on October 5, 2005 until September 5, 2007, with the interest rate being 4.87%.  From October 5, 2007 through September 5, 2012, the Loan Agreement requires monthly payments of principal and interest calculated using a 300 month loan amortization period. If the Property completes the required rehabilitation work within 36 months of the date of the loan agreement and the property achieves gross rental income of at least $8,724,000 from not more than 95% of the units within 36 months, then the installments for the remaining period of the loan will be calculated using a 360 month amortization period. If the above two requirements are not met within 36 months, then the installments for the remaining period of the loan will be calculated using a 240 month amortization period.  The mortgage matures on September 5, 2012 at which time the unpaid principal amount and any interest accrued but remaining unpaid becomes due.



The existing lender assigned the existing mortgage note of approximately $24,083,000 to the holder of the additional mortgage note.  The terms of the existing mortgage note were modified to match the terms for the additional mortgage note and the two loans were then combined into one mortgage note issued by the new lender for $40,000,000.  During the nine months ended September 30, 2005, the Partnership recognized a loss on early extinguishment of debt of approximately
$304,000 due to the write off of unamortized loan costs on the original loan and a prepayment penalty paid to the original lender.  Total capitalized loan costs for the additional mortgage were approximately $848,000 during the nine months ended September 30, 2005.



Note H - Contingencies



In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Corporate General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint.  Plaintiffs took an appeal from this order.



On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the Appeal) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the courts use of a referee and its order requiring Objector to pay those fees.



On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.  With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial courts order and remanded to the trial court for further findings on the basis that the state of the record is insufficient to permit meaningful appellate review.  The matter was transferred back to the trial court on June 21, 2005.  With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial courts order striking the first amended complaint.



On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court.  On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the
anti-suit injunction in connection with settlement.  On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion.  On February 3, 2006, the Court held a hearing on the various matters pending before it and  ordered additional briefing from the parties and Objector. On June 30, 2006, the trial court entered an order confirming its approval of the class action settlement and entering judgment thereto after the Court of Appeals had remanded the matter for further findings.  The substantive terms of the settlement agreement remain unchanged.  The trial court also entered supplemental orders on July 1, 2006, denying Objectors Motion to File a Complaint in Intervention, Objectors Motion for Leave of Discovery and Objectors Motion to Dissolve the Anti-Suit Injunction.  Notice of Entry of Judgment was served on July 10, 2006. On August 31, 2006, the Objector filed a Notice of Appeal to the Courts June 30, 2006 and July 1, 2006 orders.



The Corporate General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnerships overall operations.



AIMCO Properties L.P. and NHP Management Company, both affiliates of the CorporateGeneral Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week.   In June 2005 the court conditionally certified the collective action on both the on-call and overtime issues.  Approximately 1,049 individuals opted in to the class. The defendants moved to decertify the collective action on both issues and the plaintiffs have responded.  Because the court denied plaintiffs motion to certify state subclasses, in September 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and in November 2005 in Montgomery County Maryland Circuit Court.  The California and Maryland cases have been stayed pending the outcome of the decertification motion in the District of Columbia case.  Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Corporate General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnerships consolidated financial condition or results of operations.



The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business.



Environmental



Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its properties, the Partnership could potentially be liable for environmental liabilities or costs associated with its property.



Mold



The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements.  The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.  Affiliates of the Corporate General Partner have implemented a national policy and procedures to prevent or eliminate mold from its properties and the Corporate General Partner believes that these measures will minimize the effects that mold could have on residents.  To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.  Because the law regarding mold is unsettled and subject to change the Corporate General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnerships consolidated financial condition or results of operations.













ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission.



The Partnership's investment property consists of one apartment complex. The following table sets forth the average occupancy of the property for each of the nine months ended September 30, 2006 and 2005:



|                          |           |     
|------------------------- | --------- | ----
|                          | Average  
|                          | Occupancy
|Property                  | 2006      | 2005
|                          |           |     
|Baymeadows Apartments (1) |           |     
|Jacksonville, Florida     | 67%       | 79% 



(1)

The Corporate General Partner attributes the decrease in occupancy at Baymeadows Apartments to current redevelopment of the property that has resulted in less units available for rent. At September 30, 2006, approximately 38 units were unoccupied due to the redevelopment of the property.



The Partnerships financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment property, interest rates on mortgage loans, costs incurred to operate the investment property, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the Corporate General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Corporate General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the Corporate General Partner may use rental concessions and rental rate reductions to offset softening market conditions, accordingly, there is no guarantee that the Corporate General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnerships financial results.



Results of Operations



The Partnerships net (loss) income for the three and nine months ended September 30, 2006 was approximately ($1,233,000), and $4,342,000, respectively, compared to net loss of approximately $496,000 and $187,000 for the three and nine months ended
September 30, 2005, respectively. In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the accompanying consolidated statements of operations for the three and nine months ended September 30, 2005 have been restated as of January 1, 2005 to reflect the operations of Quail Run Apartments as (loss) income from discontinued operations due to its sale on March 31, 2006.  The increase in net loss for the three months ended September 30, 2006 is due to an increase in loss from continuing operations partially offset by a decrease in loss from discontinued operations.  The increase in net income for the nine months period is primarily due to the recognition of gain on the sale of Quail Run Apartments, partially offset by increases in both loss from discontinued operations and loss from continuing operations.



On March 31, 2006, the Partnership sold Quail Run Apartments to a third party, for net proceeds of approximately $12,629,000 after a prepayment penalty owed by the Partnership and payment of closing costs.  The Partnership used approximately $7,634,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $9,141,000 during the nine months ended September 30, 2006 as a result of the sale.  In addition, during the nine months ended September 30, 2006, the Partnership recorded a loss on early extinguishment of debt of approximately $1,601,000 as a result of unamortized loan costs written off and a prepayment penalty.  This amount is included in (loss) income from discontinued operations. The propertys operations, loss of approximately $1,643,000 which includes revenues of approximately $635,000, is included in loss from discontinued operations for the nine months ended September 30, 2006. During the three months ended September 30, 2006, additional operating costs related to Quail Run Apartments in excess of accruals established at March 31, 2006 were incurred.  These costs of approximately $8,000 are included in loss from discontinued operations for the three months ended September 30, 2006.  Included in (loss) income from discontinued operations for the three and nine months ended September 30, 2005 are results of the propertys operations, loss of approximately $25,000 and income of $19,000, respectively, including revenues of approximately $675,000 and $2,006,000, respectively.



During the nine months ended September 30, 2006, the Corporate General Partner determined that the limited partners would not receive both their original capital contribution and applicable cumulative return with a future property sale, financing or refinancing.  Therefore, the Corporate General Partner reversed the real estate commission of approximately $178,000 previously accrued associated with the sale of Countrywood Village in 2000, which is included in gain on sale of discontinued operations.



Excluding the discontinued operations and the gain on sale of discontinued operations, the Partnership realized a net loss from continuing operations of approximately $1,225,000 and $3,334,000 for the three and nine months ended September 30, 2006, respectively, compared to net loss of approximately $471,000 and $206,000 for the corresponding periods in 2005.  The increase in loss from continuing operations for the three months ended September 30, 2006 is due to an increase in total expenses, partially offset by an increase in total revenues.  The increase in loss from continuing operations for the nine months ended September 30, 2006 is due to an increase in total expenses and a decrease in total revenues.  Total revenues increased for the three month period due to increases in rental and other income. Total revenues decreased for the nine month period due to a decrease in rental income, partially offset by an increase in other income.  Rental income increased for the three month period due to an increase in occupancy at Baymeadows Apartments.  Rental income decreased for the nine month period due to a decrease in occupancy partially offset by a decrease in bad debt expense and an increase in the average rental rate. Other income increased for the nine months ended September 30, 2006 primarily due to an increase in interest income.  Interest income increased

due to proceeds from the Baymeadows Apartments 2005 refinancing being held to fund the redevelopment project in place at Baymeadows Apartments. Other income increased for the three months ended September 30, 2006 primarily due to an increase in tenant utility reimbursements at the investment property.



Total expenses increased for both the three and nine months ended September 30, 2006 due to increases in operating, depreciation, interest and property tax expenses, partially offset by a decrease in loss on early extinguishment of debt. Operating expense increased for the three month period due to increases in advertising, property, administrative, and insurance expense, partially offset by a decrease in maintenance expense.  Operating expense increased for the nine months period due to increases in advertising, property, administrative, and insurance expense, partially offset by decreases in property management fees and maintenance expense.  Advertising expense increased for both periods due to increases in newspaper advertising, periodical advertising, leasing promotions, and resident relations at Baymeadows Apartments.  Property expense increased for both periods due to increases in payroll costs and related benefits and utilities expense at the investment property.  Administrative expense increased due to increases in contract common area cleaning, uniforms, training and travel, and resident eviction separation at Baymeadows Apartments.  Insurance expense increased for both periods due to increases in hazard insurance premiums at the investment property.   Property management fees decreased for the nine months ended September 30, 2006 at Baymeadows Apartments as a result of the decrease in rental income due to the redevelopment of the property.  Maintenance expense decreased for both periods due to decreases in contract labor and turnover expense such as contract carpet cleaning and interior painting at Baymeadows Apartments. Depreciation expense increased due to property improvements and replacements placed into service during the past twelve months which are now being depreciated.  Interest expense increased due to the refinancing of the mortgage at Baymeadows Apartments, which resulted in a higher principle balance, partially offset by capitalized interest associated with the redevelopment at Baymeadows Apartments and a decrease in interest on advances from an affiliate of the Corporate General Partner. Property tax expense increased at Baymeadows Apartments due to an increase in the assessed value of the property, partially offset by capitalized taxes associated with the redevelopment project at Baymeadows Apartments.



On August 22, 2005, the Partnership refinanced the mortgage encumbering Baymeadows Apartments (See Liquidity and Capital Resources below), during the nine months ended September 30, 2005, the Partnership recognized a loss on early extinguishment of debt of approximately $304,000 due to the write off of unamortized loan costs on the original loan and a prepayment penalty paid to the original lender.



In September 2004, Baymeadows Apartments experienced damage from Hurricanes Frances and Jeanne. During 2004, the Partnership recognized a casualty loss of approximately $6,000 and during the nine months ended September 30, 2005, the Partnership recognized an additional casualty loss of approximately $1,000 as a result of the write-off of undepreciated damaged assets.  This loss is included in operating expense.  In addition to the damages, the Partnership incurred clean up costs of approximately $46,000 during the nine months ended September 30, 2005 for Hurricanes Frances and Jeanne, which were not covered by insurance proceeds, and these costs are also included in operating expenses.



Included in general and administrative expense for the three and nine months ended September 30, 2006 and 2005 are management reimbursements to the Corporate General Partner as allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included.



Liquidity and Capital Resources



At September 30, 2006, the Partnership had cash and cash equivalents of approximately $169,000 compared to approximately $11,980,000 at September 30, 2005. Cash and cash equivalents decreased approximately $5,742,000 since December 31, 2005 due to approximately $6,740,000 of cash used in financing activities, partially offset by approximately $701,000 and $297,000 of cash provided by investing and operating activities, respectively. Cash used in financing activities consisted of repayment of the mortgage note payable on Quail Run apartments, and principal payments on the mortgage encumbering Quail Run Apartments, partially offset by advances from affiliates. Cash provided by investing activities consisted of net proceeds from the sale of Quail Run Apartments, partially offset by property improvements and replacements. The Partnership invests its working capital reserves in interest bearing accounts.



Pursuant to the Partnership Agreement, during the nine months ended September 30, 2006 and 2005, an affiliate of the Corporate General Partner advanced the Partnership approximately $956,000 and $2,413,000, respectively, to fund the redevelopment at Baymeadows Apartments (see below) and to pay 2005 mortgage refinance fees at Baymeadows Apartments. Interest is charged at the prime rate plus 2% (10.25% at September 30, 2006) and interest expense was approximately $9,000 and $27,000 for the nine months ended September 30, 2006 and 2005, respectively. The Partnership repaid approximately $2,440,000 of advances and associated interest during the nine months ended September 30, 2005 from the proceeds from the refinance of Baymeadows Apartments (see below). There were no such payments during the nine months ended September 30, 2006.  At September 30, 2006 the total advances and accrued interest due to the Corporate General Partner was approximately $964,000 and is included in due to affiliates on the consolidated balance sheet included in Item 1. Financial Statements.  Subsequent to September 30, 2006, an affiliate of the Corporate General Partner advanced approximately $400,000 to the Partnership to fund the redevelopment at Baymeadows Apartments.



The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the investment property to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The Corporate General Partner monitors developments in the area of legal and regulatory compliance.  For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance.  Capital improvements planned for the Partnerships property are detailed below.



Quail Run Apartments: During the nine months ended September 30, 2006, the Partnership completed approximately $41,000 of capital improvements at Quail Run Apartments, consisting primarily of floor covering replacements, gutters, and structural improvements. These improvements were funded from operating cash flow. Quail Run Apartments was sold on March 31, 2006.



Baymeadows Apartments: During the nine months ended September 30, 2006, the Partnership completed approximately $10,286,000 of capital improvements at Baymeadows Apartments arising from the redevelopment and new construction of the property, which includes capitalization of construction period interest costs of approximately $187,000, capitalized tax and insurance expenses of approximately $72,000 and other construction period operating costs of approximately $25,000 for the nine months ended September 30, 2006. Approximately 38 units were in redevelopment and not in service at September 30, 2006. Additional capital improvements of approximately $382,000 were also completed which consisted primarily of electrical breakers, signage, building improvements, interior
decoration, golf carts, interior painting, and water heater,  air conditioning unit and floor covering replacements. These improvements were funded from operating cash flow, advances from affiliates, and Partnership reserves. The Partnership regularly evaluates the capital improvement needs of the property.  The property is currently undergoing a redevelopment project in order to become more competitive with other properties in the area in an effort to increase occupancy at the property. Based on current redevelopment plans, the Corporate General Partner anticipates the redevelopment to be completed in May 2007 at a total estimated cost of approximately $32,327,000 of which approximately $23,481,000 was completed as of September 30, 2006.  The project is being funded by Partnership reserves and advances from an affiliate of the Corporate General Partner. The Partnership expects redevelopment costs of approximately $3,317,000 to be incurred during the remainder of 2006. In addition, a project was approved during the year ended December 31, 2005 to add 288 new apartment units at the property. The Corporate General Partner anticipated the construction to begin during 2007 and to be completed during 2008 at a total estimated cost of approximately $26,953,000 of which approximately $254,000 was completed as of September 30, 2006. This project was put on hold during the third quarter of 2006. The Corporate General Partner will evaluate when the new unit construction project will be commenced later in 2006. The balance of the costs associated with the redevelopment are expected to be funded from operating cash flow and advances from affiliates of the Corporate General Partner. In addition to the redevelopment project and the new construction, certain routine capital expenditures are anticipated during 2006. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property.



On August 22, 2005, the Partnership obtained an additional mortgage from a new lender in the principal amount of approximately $15,917,000 on Baymeadows Apartments. The additional mortgage loan agreement requires monthly payments of interest only beginning on October 5, 2005 until September 5, 2007, with the interest rate being 4.87%.  From October 5, 2007 through September 5, 2012, the Loan Agreement requires monthly payments of principal and interest calculated using a 300 month loan amortization period. If the Property completes the required rehabilitation work within 36 months of the date of the loan agreement and the property achieves gross rental income of at least $8,724,000 from not more than 95% of the units within 36 months, then the installments for the remaining period of the loan will be calculated using a 360 month amortization period. If the above two requirements are not met within 36 months, then the installments for the remaining period of the loan will be calculated using a 240 month amortization period.  The mortgage matures on September 5, 2012 at which time the unpaid principal amount and any interest accrued but remaining unpaid becomes due.



The existing lender assigned the existing mortgage note of approximately $24,083,000 to the holder of the additional mortgage note.  The terms of the existing mortgage note were modified to match the terms for the additional mortgage note and the two loans were then combined into one mortgage note issued by the new lender for $40,000,000.  During the nine months ended September 30, 2005, the Partnership recognized a loss on early extinguishment of debt of approximately $304,000 due to the write off of unamortized loan costs on the original loan and a prepayment penalty paid to the original lender. Total capitalized loan costs for the additional mortgage were approximately $848,000 for the nine months ended September 30, 2005.



The Partnerships assets are thought to be sufficient for any near-term needs (exclusive of capital improvements and the redevelopment project) of the Partnership.



The Partnership distributed the following amounts during the nine months ended September 30, 2006 and 2005 (in thousands except per unit data):



|           |                    |             |                    |            
|---------- | ------------------ | ----------- | ------------------ | -----------
|           | Nine Months        | Per Limited | Nine Months        | Per Limited
|           | Ended              | Partnership | Ended              | Partnership
|           | September 30, 2006 | Unit        | September 30, 2005 | Unit       
|           |                    |             |                    |            
|Operations | $--                | $--         | $150               | $2.96      



Future cash distributions will depend on the levels of cash generated from operations and the timing of the debt maturity, property sale, and/or refinancing. The Partnership's cash available for distribution is reviewed on a monthly basis. Given the substantial redevelopment projects ongoing at Baymeadows Apartments, it is not expected that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any distributions to its partners in 2006 or subsequent periods.



Other



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 36,475 limited partnership units (the "Units") in the Partnership representing 72.96% of the outstanding Units at September 30, 2006. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 72.96% of the outstanding Units, AIMCO and its affiliates are in a position to control all such voting decisions with respect to the Partnership. Although the Corporate General Partner owes fiduciary duties to the limited partners of the Partnership, the Corporate General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Corporate General Partner, as corporate general partner, to the Partnership and its limited partners may come into conflict with the duties of the Corporate General Partner to AIMCO as its sole stockholder.



Critical Accounting Policies and Estimates



The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.



Impairment of Long-Lived Asset



Investment property is recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable.  If events or circumstances indicate that the carrying amount of the property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnerships estimate of the undiscounted future cash flows, excluding interest charges, of the property.   If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.



Real property investment is subject to varying degrees of risk.  Several factors may adversely affect the economic performance and value of the Partnerships investment property.  These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing.  Any adverse changes in these factors could cause impairment of the Partnerships asset.



Capitalized Costs Related to Redevelopment and Construction Projects



The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects. Costs associated with redevelopment projects are capitalized in accordance with Statement of Financial Accounting Standard (SFAS) No. 67, Accounting for Costs and the Initial Rental Operations of Real Estate Properties. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level.  The Partnership capitalizes interest, property taxes and operating costs during periods in which redevelopment and construction projects are in progress.



Revenue Recognition



The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.



ITEM 3.

CONTROLS AND PROCEDURES



(a)

Disclosure Controls and Procedures. The Partnerships management, with the participation of the principal executive officer and principal financial officer of the Corporate General Partner, who are the equivalent of the Partnerships principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnerships disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Corporate General Partner, who are the equivalent of the Partnerships principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnerships disclosure controls and procedures are effective.



(b)

Internal Control Over Financial Reporting. There have not been any changes in the Partnerships internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting.













PART II - OTHER INFORMATION





ITEM 1.

LEGAL PROCEEDINGS



In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Corporate General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint.  Plaintiffs took an appeal from this order.



On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the Appeal) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the courts use of a referee and its order requiring Objector to pay those fees.



On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.  With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial courts order and remanded to the trial court for further findings on the basis that the state of the record is insufficient to permit meaningful appellate review.  The matter was transferred back to the trial court on June 21, 2005.  With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial courts order striking the first amended complaint.



On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court.  On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement.  On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion.  On February 3, 2006, the
Court held a hearing on the various matters pending before it and  ordered additional briefing from the parties and Objector. On June 30, 2006, the trial court entered an order confirming its approval of the class action settlement and entering judgment thereto after the Court of Appeals had remanded the matter for further findings.  The substantive terms of the settlement agreement remain unchanged.  The trial court also entered supplemental orders on July 1, 2006, denying Objectors Motion to File a Complaint in Intervention, Objectors Motion for Leave of Discovery and Objectors Motion to Dissolve the Anti-Suit Injunction.  Notice of Entry of Judgment was served on July 10, 2006. On August 31, 2006, the Objector filed a Notice of Appeal to the Courts June 30, 2006 and July 1, 2006 orders.



The Corporate General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnerships overall operations.



AIMCO Properties L.P. and NHP Management Company, both affiliates of the CorporateGeneral Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week.   In June 2005 the court conditionally certified the collective action on both the on-call and overtime issues.  Approximately 1,049 individuals opted in to the class. The defendants moved to decertify the collective action on both issues and the plaintiffs have responded.  Because the court denied plaintiffs motion to certify state subclasses, in September 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and in November 2005 in Montgomery County Maryland Circuit Court.  The California and Maryland cases have been stayed pending the outcome of the decertification motion in the District of Columbia case.  Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Corporate General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnerships consolidated financial condition or results of operations.



ITEM 5.

OTHER INFORMATION



None.



ITEM 6.

EXHIBITS



See Exhibit Index.













SIGNATURES







In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.







|                        |                                    
|----------------------- | -----------------------------------
|                        | SHELTER PROPERTIES IV              
|                        |                                    
|                        | By:   Shelter Realty IV Corporation
|                        | Corporate General Partner          
|                        |                                    
|Date: November 13, 2006 | By:   /s/Martha L. Long            
|                        | Martha L. Long                     
|                        | Senior Vice President              
|                        |                                    
|Date: November 13, 2006 | By:   /s/Stephen B. Waters         
|                        | Stephen B. Waters                  
|                        | Vice President                     



















SHELTER PROPERTIES IV



EXHIBIT INDEX





Exhibit

Description of Exhibit





3

See Exhibit 4(a)



4

(a)

Amended and Restated Certificate and Agreement of Limited Partnership (included as Exhibit A to the Prospectus of Registrant dated June 8, 1982 contained in Amendment No. 1 to Registration Statement No. 2-77217, of Registrant filed June 8, 1982 (the "Prospectus") and incorporated herein by reference).



(b)

Subscription Agreement and Signature Page (included as Exhibit 8 to the Prospectus and incorporated herein by reference).



10

(i)

Contracts related to acquisition of property:



(a)

Real Estate Sales Agreement dated May 5, 1982, First Modification to Real Estate Agreement dated June 18, 1982 (filed as Exhibit 12(b) to Amendment No. 1 to Registration Statement No. 2-77217 of Registrant filed June 8, 1982 and incorporated herein by reference) and Second Modification to Real Estate Sales Agreement dated September 30, 1982 between Baymeadows Associates and U.S. Shelter Corporation to purchase Baymeadows Apartments (filed as Exhibit 10(a) to Form 10-K of Registrant dated January 26, 1983 and incorporated herein by reference).



10(iii)

Contracts related to financing of debt:



(n)

Additional Mortgage Note, dated August 22, 2005 between Shelter Properties IV, L.P., a South Carolina limited partnership and Allstate Life Insurance Company, an Illinois corporation for Baymeadows Apartments (Filed as Exhibit 10(n) to Current Report on Form 8-K of Registrant dated August 22, 2005 and incorporated herein by reference).



(o)

Modification, Restatement and Consolidation of Notes dated August 22, 2005 between Shelter Properties IV, L.P. and Allstate Life Insurance Company (Filed as Exhibit 10(o) to Current Report on Form 8-K of Registrant dated August 22, 2005 and incorporated herein by reference).



(p)

Second Consolidated, Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Agreement, dated August 22, 2005, between Shelter Properties IV, L.P. and Allstate Life Insurance Company (Filed as Exhibit 10(p) to Current Report on Form 8-K of Registrant dated August 22, 2005 and incorporated herein by reference).



(q)

Nonrecourse Exception Indemnity Agreement dated August 22, 2005 by AIMCO Properties, L.P., for the benefit of Allstate Life Insurance Company (Filed as Exhibit 10(q) to Current Report on Form 8-K of Registrant dated August 22, 2005 and incorporated herein by reference).



10(iv)(a)

Purchase and Sale Contract between Quail Run IV Limited Partnership, a South Carolina limited partnership, and the affiliated Selling Partnerships and The Bethany Group, LLC, a California limited liability
company, dated November 2, 2005, incorporated by reference to the Registrants Current Report on Form 8-K dated November 2, 2005 and filed November 8, 2005.



(b)

Second Amendment to Purchase and Sale Contract between Quail Run IV Limited Partnership, a South Carolina limited partnership, and the affiliated Selling Partnerships and The Bethany Group, LLC, a California limited liability company, dated February 9, 2006, incorporated by reference to the Registrants Current Report on Form 8-K dated February 9, 2006 and filed February 15, 2006.



31.1

Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2

Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.1

Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.













Exhibit 31.1

CERTIFICATION

I, Martha L. Long, certify that:

1.

I have reviewed this quarterly report on Form 10-QSB of Shelter Properties IV;

2.

Based on my knowledge, this 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 report;



3.

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



4.

The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c)

Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and



5.

The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date:  November 13, 2006

/s/Martha L. Long

Martha L. Long

Senior Vice President of Shelter Realty IV Corporation, equivalent of the chief executive officer of the Partnership













Exhibit 31.2

CERTIFICATION

I, Stephen B. Waters, certify that:

1.

I have reviewed this quarterly report on Form 10-QSB of Shelter Properties IV;

2.

Based on my knowledge, this 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 report;



3.

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



4.

The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c)

Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and



5.

The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date:  November 13, 2006

/s/Stephen B. Waters

Stephen B. Waters

Vice President of Shelter Realty IV Corporation, equivalent of the chief financial officer of the Partnership













Exhibit 32.1





Certification of CEO and CFO

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002







In connection with the Quarterly Report on Form 10-QSB of Shelter Properties IV (the "Partnership"), for the quarterly period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:



(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.





| |                        
| | -----------------------
| | /s/Martha L. Long      
| | Name: Martha L. Long   
| | Date: November 13, 2006
| |                        
| | /s/Stephen B. Waters   
| | Name: Stephen B. Waters
| | Date: November 13, 2006





This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.