| Maryland                                 | 52-1311532                           |
|------------------------------------------|--------------------------------------|
| (State of Incorporation)                 | (I.R.S. Employer Identification No.) |
|                                     |                                 |
| 11200 Rockville Pike                     |                                 |
| Rockville, MD                            | 20852                                |
| (Address of Principal Executive Offices) | (ZIP Code)                           |

----

|     |                                                              | Page Number |
|----------|-------------------------------------------------------------------|-------------|
|     | PART I                                                            |        |
|     |                                                              |        |
| Item 1.  | Business                                                          | I-1         |
| Item 2.  | Properties                                                        | I-3         |
| Item 3.  | Legal Proceedings                                                 | I-3         |
| Item 4.  | Submission of Matters to a Vote of Security Holders               | I-3         |
|     |                                                              |        |
|     | PART II                                                           |        |
|     |                                                              |        |
| Item 5.  | Market for the Registrant’s Partnership Interests           |        |
|     | and Related Partnership Matters                                   | II-1        |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition |        |
|     | and Results or Operations                                         | II-2        |
| Item 8.  | Financial Statements                                              | II-7        |
| Item 9.  | Changes In and Disagreements With Accountants                     |        |
|     | on Accounting and Financial Disclosure                            | II-7        |
| Item 9A. | Controls and Procedures                                           | II-8        |
| Item 9B. | Other Information                                                 | II-9        |
|     |                                                              |        |
|     | PART III                                                          |        |
|     |                                                              |        |
| Item 10. | Directors and Executive Officers of the Registrant                | III-1       |
| Item 11. | Executive Compensation                                            | III-2       |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management    | III-2       |
| Item 13. | Certain Relationships and Related Transactions                    | III-3       |
| Item 14. | Principal Accountant Fees and Services                            | III-4       |
|     |                                                              |        |
|     | PART IV                                                           |        |
|     |                                                              |        |
| Item 15. | Exhibits and Financial Statements                                 | IV-1        |
|     |                                                              |        |

----

| ITEM 1. | BUSINESS |
|---------|----------|

|  (i)   |   | preserve and protect the Partnership's capital;                                                                                                                                                   |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  (ii)  |   | provide, during the early years of the Partnership's operations, current tax benefits to the partners in the form of tax losses which the partners could use to offset income from other sources; |
|  (iii) |   | provide capital appreciation through increases in the value of the Partnership's investments and increased equity through periodic payments on the indebtedness on the apartment complexes; and   |
|  (iv)  |   | provide cash distributions from sale or refinancing of the Partnership's investments and, on a limited basis, from rental operations.                                                             |

----

| ITEM 1. | BUSINESS - Continued |
|---------|----------------------|

| Name and Locationof Apartment Complex | MortgagePayable at12/31/11 (2)                                                   | Financed and/or Insuredand/or Subsidized Under                                            | Number ofRentalUnits | UnitsAuthorized forLow IncomeSubsidies | ExpirationofHAP Contract |
|---------------------------------------|----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|----------------------|----------------------------------------|--------------------------|
| Meadow Lanes Apts.Holland, MI         |          $ 408,096                       | Michigan State Housing Development Authority/Section 236 of theNational Housing Act (NHA) | 118                  | 0                                      | --                       |
| Monterey/HillcrestWaukesha, WI        |         12,317,581                            | Section 221(d)(4) of theNHA/ Federal HousingAdministration                                | 300                  | 60                                     | 04/23/24 (3)             |
| Villa Mirage IRancho Mirage, CA       |              835,396 | California Housing FinanceAgency (CHFA)/Section 8                                         | 50                   | 50                                     | 12/19/12 (3)(4)          |
| Villa Mirage IIRancho Mirage, CA      |          766,678                    | CHFA/Section 8                                                                            | 48                   | 48                                     | 12/14/15                 |
| Totals (4 Properties)                 | $14,327,751                                                                      |                                                                                      | 516                  | 158                                    |                     |

----

| ITEM 1. | BUSINESS - Continued |
|---------|----------------------|

| Name and Locationof Apartment Complex | Units Occupied AsPercentage of Total UnitsAs of December 31, | Average Effective AnnualRental Per Unitfor the Years EndedDecember 31, |   |
|---------------------------------------|--------------------------------------------------------------|------------------------------------------------------------------------|--------|
|                                  |
|                                  |
| 2011                                  | 2010                                                         | 2009                                                                   | 2008   | 2007 | 2011 | 2010 | 2009 | 2008 | 2007 |   |
| Meadow Lanes Apts.Holland, MI         | 96%                                                          | 91%                                                                    | 86%    | 85% | 89% | $ 6,900 | $ 6,475 | $ 6,085 | $ 5,995 | $ 6,194 |   |
| Monterey/HillcrestWaukesha, WI        | 95%                                                          | 91%                                                                    | 85%    | 89% | 91% | 9,412 | 9,428 | 8,725 | 8,982 | 8,816 |   |
| Villa Mirage IRancho Mirage, CA       | 96%                                                          | 97%                                                                    | 94%    | 100% | 97% | 11,175 | 11,291 | 10,051 | 10,413 | 10,157 |   |
| Villa Mirage IIRancho Mirage, CA      | 98%                                                          | 95%                                                                    | 98%    | 100% | 95% | 10,800 | 10,313 | 10,440 | 10,499 | 9,642 |   |
| Totals (4 Properties) (5)             | 96%                                                          | 92%                                                                    | 91%    | 94% | 93% | $ 9,572 | $ 9,377 | $ 8,825 | $ 8,972 | $ 8,702 |   |

| (1) | All properties are multifamily housing complexes.  No single tenant rents 10% or more of the rentable square footage.  Residential leases are typically one year or less in length, with varying expiration dates, and substantially all rentable space is for residential purposes. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The amounts provided are the balances of first mortgage loans payable by the Local Partnerships as of December 31, 2011. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

| (3) | The Section 8 HAP contract expiration date reflects an extension from the original expiration date, in accordance with Federal legislation. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | It is anticipated that the Local Partnership will extend its Section 8 HAP contract for a one-year period at its expiration. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

| (5) | The totals for the percentage of units occupied and the average effective annual rental per unit are based on a simple average. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|

| ITEM 2. | PROPERTIES |
|---------|------------|

| ITEM 3. | LEGAL PROCEEDINGS |
|---------|-------------------|

| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
|---------|-----------------------------------------------------|

----

| ITEM 5. | MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS |
|---------|---------------------------------------------------|
|    | AND RELATED PARTNERSHIP MATTERS                   |

|   | (a) | There is no established market for the purchase and sale of units of additional limited partner interest (Units) in the Partnership, although various informal secondary market services may exist.  Due to the limited markets, however, investors may be unable to sell or otherwise dispose of their Units. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | As of April 1, 2012 there were approximately 3,660 registered holders of Units in the Partnership. |
|--------|-----|----------------------------------------------------------------------------------------------------|

|   | (c) | On July 28, 2010, the Partnership paid a cash distribution of $898,230 ($15 per Unit) to the Limited Partners who were holders of record as of July 1, 2010. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | No distributions were paid in the year 2011. |
|--------|----------------------------------------------|

----

| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL |
|---------|---------------------------------------------------|
|    | CONDITION AND RESULTS OF OPERATIONS - Continued   |

----

| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL |
|---------|---------------------------------------------------|
|    | CONDITION AND RESULTS OF OPERATIONS - Continued   |

----

| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL |
|---------|---------------------------------------------------|
|    | CONDITION AND RESULTS OF OPERATIONS - Continued   |

| ·   | liquidate the assets and wind up the business of the Partnership; |
|--------------------|-------------------------------------------------------------------|

| ·   | make liquidating distributions in cancellation of the Unit; |
|--------------------|-------------------------------------------------------------|

| ·   | dissolve the Partnership after the sale of all of the Partnership’s assets; and |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | take, or cause the Partnership to take, such other acts and deeds and shall do, or cause the Partnership to do, such other things, as are necessary or appropriate in connection with the dissolution, winding up and liquidation of the Partnership, the termination of the responsibilities and liabilities of the Partnership under applicable law, and the termination of the existence of the Partnership. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

----

| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL |
|---------|---------------------------------------------------|
|    | CONDITION AND RESULTS OF OPERATIONS - Continued   |

----

| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL |
|---------|---------------------------------------------------|
|    | CONDITION AND RESULTS OF OPERATIONS - Continued   |

|                      | For the years ended December 31, |   |
|---------------------------|----------------------------------|--------|
| 2011                      |                             | 2010   |   |
| Combined RentalRevenue    | $4,822,904                       |   | $4,652,197 |   |
| Annual PercentageIncrease |                             | 3.7%   |   | 7.2% |

----

| ITEM 8. |  FINANCIAL STATEMENTS |
|---------|----------------------------|

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS |
|---------|-----------------------------------------------|
|    | ON ACCOUNTING AND FINANCIAL DISCLOSURE        |

----

| ITEM 9A. | CONTROLS AND PROCEDURES |
|----------|-------------------------|

| (1) | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Partnership; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that the Partnership’s receipts and expenditures are being made only in accordance with authorization of the management of the Partnership; and |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’s assets that could have a material effect on the financial statements |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 9A. | CONTROLS AND PROCEDURES - Continued |
|----------|-------------------------------------|

| ITEM 9B. |  OTHER INFORMATION |
|----------|-------------------------|

----

| ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
|----------|----------------------------------------------------|

|   | (c) | There is no family relationship between any of the foregoing directors and executive officers. |
|--------|-----|------------------------------------------------------------------------------------------------|

|   | (d) | Involvement in certain legal proceedings. |
|--------|-----|-------------------------------------------|

----

| ITEM 11. | EXECUTIVE COMPENSATION |
|----------|------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS |
|----------|-------------------------------------------------|
|     | AND MANAGEMENT                                  |

|   |                |                    | % of Total      |
|--------|---------------------|-------------------------|-----------------|
|   | Name and Address    | Amount and Nature       | Units Issued    |
|   | of Beneficial Owner | of Beneficial Ownership | and Outstanding |
|   |                |                    |            |
|   | Equity Resource     | 12,639 Units            | 21.06 %         |
|   | Investments, LLC    |                    |            |
|   | & Affiliates    |                    |            |
|   | 44 Brattle Street   |                    |            |
|   | Cambridge, MA 02138 |                    |            |
|   |                |                    |            |
|   | Peachtree Partners  | 4,347 Units             | 7.24 %          |
|   | & Affiliates    |                    |            |
|   | P. O. Box 47638     |                    |            |
|   | Phoenix, AZ 85068   |                    |            |

----

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS |
|----------|-------------------------------------------------|
|     | AND MANAGEMENT - Continued                      |

|   |                       |                    | % of Total      |
|--------|----------------------------|-------------------------|-----------------|
|   | Name of                    | Amount and Nature       | Units Issued    |
|   | Beneficial Owner           | of Beneficial Ownership | and Outstanding |
|   |                       |                    |            |
|   | William B. Dockser         | None                    | 0.0%            |
|   | H. William Willoughby      | None                    | 0.0%            |
|   | All Directors and Officers | None                    | 0.0%            |
|   | as a Group (2 persons)     |                    |            |

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
|----------|------------------------------------------------|

|   | (c) | Certain business relationships. |
|--------|-----|---------------------------------|

|   | (d) | Transactions with promoters. |
|--------|-----|------------------------------|

----

| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|----------|----------------------------------------|

|                                 |   | 2011   |    |   | 2010   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|
|                                 |   |   |    |   |   |   |
| Audit fees (1)                       |   | $      | 92,500  |   |   | $      | 31,772 |   |
| Tax fees (2)                         |   |   | 13,000  |   |   |   | 16,800 |   |
|                                 |   |   |    |   |   |   |   |   |
|     Total billed |   | $      | 105,500 |   |   | $      | 48,572 |   |

| (1) | Principally fees for the audit of the Partnership’s annual financial statements the independent registered public accounting firm’s review of the Partnership’s quarterly financial statements, and services provided in connection with the Partnership’s regulatory filings. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Fees for preparation of Partnership federal and state tax returns. |
|-----|--------------------------------------------------------------------|

----

| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENTS |
|----------|-----------------------------------|

|   | a. | Definitive Proxy Statement.  (Incorporated by reference to Registrant’s Definitive Proxy Statement dated November 21, 2005.) |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | Certificate of Limited Partnership of Capital Realty Investors-III Limited Partnership.  (Incorporated by reference to Exhibit No. 4 to Registrant's Registration Statement on Form S-11, as amended, dated October 24, 1983.) |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | Amended Certificate and Limited Partnership Agreement of Capital Realty Investors-III Limited Partnership.  (Incorporated by reference to Exhibit No. 4 to Registrant's Registration Statement on Form S-11, as amended, dated October 24, 1983.) |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENTS - Continued |
|----------|-----------------------------------------------|

|   | a.                                                                                                                                                                                                       | Management Services Agreement between CRI and Capital Realty Investors-III Limited Partnership. (Incorporated by reference to Exhibit No. 10(b) to Registrant's Registration Statement on Form S-11, as amended, dated October 24, 1983.) |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                     |                                                                                                                                                                                                                                      |
|   | Exhibit No. 31.1 -Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                |
|   |                                                                                                                                                                                                     |                                                                                                                                                                                                                                      |
|   | Exhibit No. 31.2 -Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                |
|   |                                                                                                                                                                                                     |                                                                                                                                                                                                                                      |
|   | Exhibit No. 32 - Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|   |                                                                                                                                                                                                     |                                                                                                                                                                                                                                      |
|   | Exhibit No. 99 - Additional Exhibits.                                                                                                                                                                    |
|   |                                                                                                                                                                                                     |                                                                                                                                                                                                                                      |
|   | a.                                                                                                                                                                                                       | Prospectus of the Partnership, dated November 7, 1983. (Incorporated by reference to Registrant's Registration Statement on Form S-11, as amended, dated October 24, 1983.)                                                               |

----

|          |   |   | CAPITAL REALTY INVESTORS-III |
|---------------|--------|--------|------------------------------|
|          |   |   |                         | LIMITED PARTNERSHIP |
|          |   |   | (Registrant)                 |
|          |   |   |                         |
|          |   |   |                         |
|          |   |   |                         |
|          |   |   |                         |
| July 23, 2012 |   |   | by:                          | /s/ William B. Dockser |
| DATE          |   |   |                         | William B. Dockser, |
|          |   |   |                         | Director, Chairman of the Board |
|          |   |   |                         |   | and Treasurer |
|          |   |   |                         | Principal Executive Officer) |

|          |   |   |
|---------------|--------|--------|
|          |   |   |
| July 23, 2012 |   |   | by: | /s/ H. William Willoughby |
| DATE          |   |   |   | H. William Willoughby |
|          |   |   |   | Director, President, Secretary, |
|          |   |   | Principal Financial Officer and |
|          |   |   |   | Principal Accounting Officer |

----

|                                                                           | Page   |
|--------------------------------------------------------------------------------|--------|
|                                                                           |   |
| Financial Statements of Capital Realty Investors III, Limited Partnership      |   |
|                                                                           |   |
| Report of Independent Registered Public Accounting Firm                        | IV-5   |
| Balance Sheets as of December 31, 2011 and 2010                                | IV-6   |
| Statements of Operations for the Years Ended                                   |   |
| December 31, 2011 and 2010                                                     | IV-7   |
| Statements of Changes in Partners’ (Deficit) Capital for the Years Ended |   |
| December 31, 2011 and 2010                                                     | IV-8   |
| Statements of Cash Flows for the Years Ended                                   |   |
| December 31, 2011 and 2010                                                     | IV-9   |
| Notes to Financial Statements                                                  | IV-10  |

----

----

|                                                                 |   | December 31, |      |
|----------------------------------------------------------------------|--------|--------------|-----------|
|                                                                 |   | 2011         |      |   | 2010 |   |
|                                                                 |   |         |      |   |   |   |
| Investments in partnerships                                          |   | $            | 3,063,461 |   |   | $ | 2,836,317 |   |
| Cash and cash equivalents                                            |   |         | 2,172,240 |   |   |   | 2,813,153 |   |
| Acquisition fees, principally paid to related parties,               |   |         |      |   |   |   |   |   |
| net of accumulated amortization of $73,562 and $70,990, respectively |   |         | 3,592     |   |   |   | 6,164 |   |
| Property purchase costs,                                             |   |         |      |   |   |   |   |   |
| net of accumulated amortization of $44,380 and $42,764, respectively |   |         | 4,102     |   |   |   | 5,718 |   |
| Other assets                                                         |   |         | -         |   |   |   | 14,446 |   |
|                                                                 |   |         |      |   |   |   |   |   |
| Total assets                                                         |   | $            | 5,243,395 |   |   | $ | 5,675,798 |   |
|                                                                 |   |         |      |   |   |   |   |   |

|                                              |   |   |        |   |   |   |
|---------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Due on investments in partnerships                |   | $      | 119,544     |   |   | $      | 119,544 |   |
| Accrued interest payable                          |   |   | 33,976      |   |   |   | 33,976 |   |
| Accounts payable and accrued expenses             |   |   | 64,123      |   |   |   | 48,344 |   |
|                                              |   |   |        |   |   |   |   |   |
| Total liabilities                                 |   |   | 217,643     |   |   |   | 201,864 |   |
|                                              |   |   |        |   |   |   |   |   |
| Partners' deficit                                 |   |   |        |   |   |   |   |   |
|                                              |   |   |        |   |   |   |   |   |
| Capital paid-in:                                  |   |   |        |   |   |   |   |   |
| General Partners                                  |   |   | 2,000       |   |   |   | 2,000 |   |
| Limited Partners                                  |   |   | 60,001,500  |   |   |   | 60,001,500 |   |
|                                              |   |   |        |   |   |   |   |   |
|                                              |   |   | 60,003,500  |   |   |   | 60,003,500 |   |
| Less:                                             |   |   |        |   |   |   |   |   |
| Accumulated distributions to partners             |   |   | (27,472,135 | )      |   |   | (27,472,135 | ) |
| Offering costs                                    |   |   | (6,156,933  | )      |   |   | (6,156,933 | ) |
| Accumulated losses                                |   |   | (21,348,680 |   |   |   | (20,900,498 | ) |
|                                              |   |   |        |   |   |   |   |   |
| Total partners' (deficit) capital                 |   |   | 5,025,752   |   |   |   | 5,473,934 |   |
|                                              |   |   |        |   |   |   |   |   |
| Total liabilities and partners' (deficit) capital |   | $      | 5,243,395   |   |   | $      | 5,675,798 |   |
|                                              |   |   |        |   |   |   |   |   |
|                                              |   |   |        |   |   |   |   |   |
|                                              |   |   |        |   |   |   |   |   |

----

|                                                                                                     |   |                |     |   |   |   |
|----------------------------------------------------------------------------------------------------------|--------|---------------------|----------|--------|--------|--------|
|                                                                                                     |   | For the years ended |     |
|                                                                                                     |   | December 31,        |     |
|                                                                                                     |   | 2011                |     |   | 2010   |   |
|                                                                                                     |   |                |     |   |   |   |
| Share of income (loss) from partnerships                                                                 |   | $                   | 298,073  |   |   | $      | 214,155 |   |
|                                                                                                     |   |                |     |   |   |   |   |   |
| Other revenue and expenses                                                                               |   |                |     |   |   |   |   |   |
|                                                                                                     |   |                |     |   |   |   |   |   |
|     Revenue:                                                                         |   |                |     |   |   |   |   |   |
|          Interest and other                                 |   |                | 25,860   |   |   |   | 257,465 |   |
|                                                                                                     |   |                |     |   |   |   |   |   |
|     Expenses:                                                                        |   |                |     |   |   |   |   |   |
|         General and administrative                               |   |                | 337,304  |   |   |   | 292,762 |   |
|         Management fee                                           |   |                | 300,000  |   |   |   | 300,000 |   |
|         Professional fees                                        |   |                | 130,623  |   |   |   | 147,964 |   |
|         Amortization of deferred costs                           |   |                | 4,188    |   |   |   | 4,188 |   |
|                                                                                                     |   |                | 772,115  |   |   |   | 744,914 |   |
|                                                                                                     |   |                |     |   |   |   |   |   |
|             Total other revenue and expenses |   |                | (746,255 | )      |   |   | (487,449 | ) |
|                                                                                                     |   |                |     |   |   |   |   |   |
|                                                                                                     |   |                |     |   |   |   |   |   |
| Net loss                                                                                                 |   | $                   | (448,182 | )      |   | $      | (273,294 | ) |
|                                                                                                     |   |                |     |   |   |   |   |   |
|                                                                                                     |   |                |     |   |   |   |   |   |
| Net loss allocated to General Partners (1.5%)                                                            |   | $                   | (6,768   | )      |   | $      | (4,127 | ) |
|                                                                                                     |   |                |     |   |   |   |   |   |
| Net loss allocated to Initial and                                                                        |   |                |     |   |   |   |   |   |
|     Special Limited Partners (1.49%)                                                 |   | $                   | (6,677   | )      |   | $      | (4,072 | ) |
|                                                                                                     |   |                |     |   |   |   |   |   |
| Net loss allocated to Additional Limited Partners (97%)                                                  |   | $                   | (434,737 | )      |   | $      | (265,095 | ) |
|                                                                                                     |   |                |     |   |   |   |   |   |
| Net loss per unit of Additional Limited Partner                                                          |   |                |     |   |   |   |   |   |
|    Interest based on 59,882 units outstanding                                             |   | $                   | (7.26    | )      |   | $      | (4.43 | ) |
|                                                                                                     |   |                |     |   |   |   |   |   |
|                                                                                                     |   |                |     |   |   |   |   |   |

----

|                                           |   |     |     |   | Initial and |   |     |       |   |   |      |   |
|------------------------------------------------|--------|----------|----------|--------|-------------|--------|----------|------------|--------|--------|-----------|--------|
|                                           |   |     |     |   | special     |   |     | Additional |   |   |      |   |
|                                           |   | General  |     |   | Limited     |   |     | Limited    |   |   |      |   |
|                                           |   | Partners |     |   | Partners    |   |     | Partners   |   |   | Total     |   |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |
| Partners' (deficit) capital, January 1, 2010   |   | $        | (438,244 | )      |        | $      | (433,045 | )          |   | $      | 7,516,747 |   |   | $ | 6,645,458 |   |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Net loss                                       |   |     | (4,127   | )      |        |   | (4,072   | )          |   |   | (265,095  | )      |   |   | (273,294 | ) |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Distribution of $15 per Unit                   |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| of Limited Partner Interest                    |   |     | -        |   |        |   | -        |       |   |   | (898,230  | )      |   |   | (898,230 | ) |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Partners' (deficit) capital, December 31, 2010 |   |     | (442,371 | )      |        |   | (437,117 | )          |   |   | 6,353,422 |   |   |   | 5,473,934 |   |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Net loss                                       |   |     | (6,786   | )      |        |   | (6,677   | )          |   |   | (434,737  | )      |   |   | (448,182 | ) |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Partners' (deficit) capital, December 31 2011  |   | $        | (449,139 | )      |        | $      | (443,794 | )          |   | $      | 5,918,685 |   |   | $ | 5,025,752, |   |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
|                                           |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |

----

|                                                        |   | For the years ended |      |
|-------------------------------------------------------------|--------|---------------------|-----------|
|                                                        |   | December 31,        |      |
|                                                        |   | 2011                |      |   | 2010 |   |
|                                                        |   |                |      |   |   |   |
|                                                        |   |                |      |   |   |   |
| Cash flows from operating activities:                       |   |                |      |   |   |   |
| Net loss                                                    |   | $                   | (294,662  | ) |   | $ | (273,294 | ) |
|                                                        |   |                |      |   |   |   |   |   |
| Adjustments to reconcile net loss to net cash               |   |                |      |   |   |   |   |   |
| used in operating activities:                               |   |                |      |   |   |   |   |   |
| Share of income from partnerships                           |   |                | (298,073  | ) |   |   | (214,155 | ) |
| Amortization of deferred costs                              |   |                | 4,188     |   |   |   | 4,188 |   |
| Extinguishment of Debt                                      |   |                | (153,520  | ) |   |   | - |   |
|                                                        |   |                |      |   |   |   |   |   |
| Changes in assets and liabilities:                          |   |                |      |   |   |   |   |   |
| Decrease (increase) in other assets                         |   |                | 14,446    |   |   |   | (14,446 | ) |
| Increase(decrease) in accounts payable and accrued expenses |   |                | 15,779    |   |   |   | (230,967 | ) |
|                                                        |   |                |      |   |   |   |   |   |
| Net cash used in operating activities                       |   |                | (711,842  | ) |   |   | (728,674 | ) |
|                                                        |   |                |      |   |   |   |   |   |
| Cash flows from investing activities:                       |   |                |      |   |   |   |   |   |
| Receipt of distributions from partnerships                  |   |                | 70,929    |   |   |   | 11,535 |   |
| Advance to Local Partnership                                |   |                | -         |   |   |   | (13,686 | ) |
|                                                        |   |                |      |   |   |   |   |   |
| Net cash provided by (used in) investing activities         |   |                | 70,929    |   |   |   | (2,151 | ) |
|                                                        |   |                |      |   |   |   |   |   |
|                                                        |   |                |      |   |   |   |   |   |
| Cash flows from financing activities:                       |   |                |      |   |   |   |   |   |
| Distributions to Additional Limited Partners                |   |                | -         |   |   |   | (898,230 | ) |
|                                                        |   |                |      |   |   |   |   |   |
| Net cash used in financing activities                       |   |                | -         |   |   |   | (898,230 | ) |
|                                                        |   |                |      |   |   |   |   |   |
| Net decrease in cash and cash equivalents                   |   |                | (640,913  | ) |   |   | (1,629,055 | ) |
|                                                        |   |                |      |   |   |   |   |   |
| Cash and cash equivalents, beginning of year                |   |                | 2,813,153 |   |   |   | 4,442,208 |   |
|                                                        |   |                |      |   |   |   |   |   |
| Cash and cash equivalents, end of year                      |   | $                   | 2,172,240 |   |   | $ | 2,813,153 |   |

----

|   | a. | Organization |
|--------|----|--------------|

----

| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
|----|-------------------------------------------------------------------------|

----

| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
|----|-------------------------------------------------------------------------|

|   | f. | Investment in partnerships held for sale or transfer |
|--------|----|------------------------------------------------------|

----

| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
|----|-------------------------------------------------------------------------|

|   | 1. | Level 1 Inputs -- quoted prices in active markets for identical assets of liabilities. |
|--------|----|----------------------------------------------------------------------------------------|

|   | 2. | Level 2 Inputs -- observable inputs other than quoted prices in active markets for identical assets and liabilities. |
|--------|----|----------------------------------------------------------------------------------------------------------------------|

|   | 3. | Level 3 Inputs -- unobservable inputs. |
|--------|----|----------------------------------------|

| ·   | liquidate the assets and wind up the business of the Partnership; |
|--------------------|-------------------------------------------------------------------|

| ·   | make liquidating distributions in cancellation of the Unit; |
|--------------------|-------------------------------------------------------------|

| ·   | dissolve the Partnership after the sale of all of the Partnership’s assets; and |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | take, or cause the Partnership to take, such other acts and deeds and shall do, or cause the Partnership to do, such other things, as are necessary or appropriate in connection with the dissolution, winding up and liquidation of the Partnership, the termination of the responsibilities and liabilities of the Partnership under applicable law, and the termination of the existence of the Partnership. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
|----|-------------------------------------------------------------------------|

----

| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
|----|-------------------------------------------------------------------------|

----

----

----

|   | d. | Advances to Local Partnerships |
|--------|----|--------------------------------|

----

|                                         |   | Equity |      |   |      |   |        |   |   |
|----------------------------------------------|--------|--------|-----------|--------|-----------|--------|-------------|--------|--------|
|                                         |   | Method |      |   | Suspended |   |        | Total  |   |
|                                         |   |   |      |   |      |   |        |   |   |
| Number of Local Partnerships                 |   |   | 2         | (a)    |      |   | 2           | (b)    |   |   | 4 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Rental property, at cost, net of accumulated |   |   |      |   |      |   |        |   |   |   |   |   |
| depreciation of $4,236,640 and $2,948,051,   |   |   |      |   |      |   |        |   |   |   |   |   |
| respectively                                 |   | $      | 1,101,086 |   |      | $      | 10,426      |   |   | $ | 1,111,512 |   |
| Land                                         |   |   | 432,415   |   |      |   | 237,909     |   |   |   | 670,324 |   |
| Other assets                                 |   |   | 2,422,446 |   |      |   | 5,466,901   |   |   |   | 7,889,347 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Total assets                                 |   | $      | 3,955,947 |   |      | $      | 5,715,236   |   |   | $ | 9,671,183 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Mortgage notes payable                       |   | $      | 1,243,492 |   |      | $      | 13,084,259  |   |   | $ | 14,327,751 |   |
| Other liabilities                            |   |   | 476,752   |   |      |   | 1,482,250   |   |   |   | 1,959,002 |   |
| Due to general partners                      |   |   | 1,183,533 |   |      |   | 1,470,716   |   |   |   | 2,654,249 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities                            |   |   | 2,903,777 |   |      |   | 16,037,225  |   |   |   | 18,941,007 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Partners' capital (deficit)                  |   |   | 1,052,170 |   |      |   | (10,321,989 | )      |   |   | (9,269,819 | ) |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities and partners' capital      |   |   |      |   |      |   |        |   |   |   |   |   |
| (deficit)                                    |   | $      | 3,955,947 |   |      | $      | 5,715,236   |   |   | $ | 9,671,183 |   |

----

|                                               |   | Equity |      |   |      |   |      |   |   |
|----------------------------------------------------|--------|--------|-----------|--------|-----------|--------|-----------|--------|--------|
|                                               |   | Method |      |   | Suspended |   |      | Total  |   |
|                                               |   |   |      |   |      |   |      |   |   |
| Number of Local Partnerships                       |   |   | 2         | (a)    |      |   | 2         | (b)    |   |  4 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |
| Revenue:                                           |   |   |      |   |      |   |      |   |   |   |   |
| Rental                                             |   | $      | 1,372,972 |   |      | $      | 3,449,932 |   |   | $ | 4,822,904 |   |
| Other                                              |   |   | 206,948   |   |      |   | 219,414   |   |   |   | 426,362 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Total revenue                                      |   |   | 1,579,920 |   |      |   | 3,669,346 |   |   |   | 5,249,266 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Expenses:                                          |   |   |      |   |      |   |      |   |   |   |   |   |
| Operating and other                                |   |   | 1,062,690 |   |      |   | 2,123,914 |   |   |   | 3,186,604 |   |
| Interest                                           |   |   | 33,968    |   |      |   | 789,475   |   |   |   | 823,443 |   |
| Depreciation and amortization                      |   |   | 239,712   |   |      |   | 483,435   |   |   |   | 723,147 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Total expenses                                     |   |   | 1,336,370 |   |      |   | 3,396,824 |   |   |   | 4,733,194 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Net income                                         |   | $      | 243,550   |   |      | $      | 272,522   |   |   | $ | 516,072 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Cash distributions                                 |   | $      | 11,535    |   |      | $      | 59,394    |   |   | $ | 70,929 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Cash distribution recorded as reduction of         |   |   |      |   |      |   |      |   |   |   |   |   |
| investments in partnerships                        |   | $      | 11,535    |   |      | $      | --        |   |   | $ | 11,535 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Cash distribution recorded as share of income      |   |   |      |   |      |   |      |   |   |   |   |   |
| from partnerships                                  |   | $      | --        |   |      | $      | 59,394    |   |   | $ | 59,394 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Partnership’s share of Local Partnership net |   |   |      |   |      |   |      |   |   |   |   |   |
| Income                                             |   |   | 238,679   |   |      |   | --        |   |   |   | 238,679 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Share of income from partnerships                  |   | $      | 238,679   |   |      | $      | 59,394    |   |   | $ | 298,073 |   |

----

|                                         |   | Equity |      |   |      |   |        |   |   |
|----------------------------------------------|--------|--------|-----------|--------|-----------|--------|-------------|--------|--------|
|                                         |   | Method |      |   | Suspended |   |        | Total  |   |
|                                         |   |   |      |   |      |   |        |   |   |
| Number of Local Partnerships                 |   |   | 2         | (a)    |      |   | 2           | (b)    |   |   | 4 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Rental property, at cost, net of accumulated |   |   |      |   |      |   |        |   |   |   |   |   |
| depreciation of $6,987,185 and $17,673,702,  |   |   |      |   |      |   |        |   |   |   |   |   |
| respectively                                 |   | $      | 1,224,861 |   |      | $      | 2,359,509   |   |   | $ | 3,584,370 |   |
| Land                                         |   |   | 432,415   |   |      |   | 1,848,318   |   |   |   | 2,280,733 |   |
| Other assets                                 |   |   | 2,313,057 |   |      |   | 1,808,396   |   |   |   | 4,121,453 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Total assets                                 |   | $      | 3,970,333 |   |      | $      | 6,016,223   |   |   | $ | 9,986,556 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Mortgage notes payable                       |   | $      | 1,540,296 |   |      | $      | 13,500,953  |   |   | $ | 15,041,249 |   |
| Other liabilities                            |   |   | 456,912   |   |      |   | 1,559,852   |   |   |   | 2,016,764 |   |
| Due to general partners                      |   |   | 1,152,735 |   |      |   | 1,425,266   |   |   |   | 2,578,001 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities                            |   |   | 3,149,943 |   |      |   | 16,486,071  |   |   |   | 19,636,014 |   |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Partners' capital (deficit)                  |   |   | 820,390   |   |      |   | (10,469,848 | )      |   |   | (9,649,458 | ) |
|                                         |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities and partners' capital      |   |   |      |   |      |   |        |   |   |   |   |   |
| (deficit)                                    |   | $      | 3,970,333 |   |      | $      | 6,016,223   |   |   | $ | 9,986,556 |   |

----

|                                               |   | Equity |      |   |      |   |      |   |   |
|----------------------------------------------------|--------|--------|-----------|--------|-----------|--------|-----------|--------|--------|
|                                               |   | Method |      |   | Suspended |   |      | Total  |   |
|                                               |   |   |      |   |      |   |      |   |   |
| Number of Local Partnerships                       |   |   | 2         | (a)    |      |   | 2         | (b)    |   |   | 4 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Revenue:                                           |   | $      | 1,328,622 |   |      | $      | 3,323,575 |   |   | $ | 4,652,197 |   |
| Rental                                             |   |   | 178,450   |   |      |   | 246,002   |   |   |   | 424,452 |   |
| Other                                              |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   |   | 1,507,072 |   |      |   | 3,569,577 |   |   |   | 5,076,649 |   |
| Total revenue                                      |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Expenses:                                          |   |   | 931,680   |   |      |   | 1,946,245 |   |   |   | 2,877,925 |   |
| Operating and other                                |   |   | 52,286    |   |      |   | 818,623   |   |   |   | 870,909 |   |
| Interest                                           |   |   | 245,455   |   |      |   | 636,013   |   |   |   | 881,468 |   |
| Depreciation and amortization                      |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   |   | 1,229,421 |   |      |   | 3,400,881 |   |   |   | 4,630,302 |   |
| Total expenses                                     |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   | $      | 277,651   |   |      | $      | 168,696   |   |   | $ | 446,347 |   |
| Net income                                         |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   | $      | 11,535    |   |      | $      | --        |   |   | $ | 11,535 |   |
| Cash distributions                                 |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Cash distribution recorded as reduction of         |   | $      | 11,535    |   |      | $      | --        |   |   | $ | 11,535 |   |
| investments in partnerships                        |   |   |      |   |      |   |      |   |   |   |   |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Partnership’s share of Local Partnership net |   |   |      |   |      |   |      |   |   |   |   |   |
| Income                                             |   |   | 227,841   |   |      |   | --        |   |   |   | 227,841 |   |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Advances to Local Partnerships                     |   |   | --        |   |      |   | (13,686   | )      |   |   | (13,686 | ) |
|                                               |   |   |      |   |      |   |      |   |   |   |   |   |
| Share of income from partnerships                  |   | $      | 227,841   |   |      | $      | (13,686   | )      |   | $ | 214,155 |   |

|                                    |   | For the years ended |    |
|-----------------------------------------|--------|---------------------|---------|
|                                    |   | December 31,        |    |
|                                    |   | 2011                |    |   | 2010 |   |
|                                    |   |                |    |   |   |   |
| Financial statement net income (loss)   |   | $                   | 516,072 |   |   | $ | 446,347 |   |
|                                    |   |                |    |   |   |   |   |   |
| Differences between financial statement |   |                |    |   |   |   |   |   |
| and tax depreciation, amortization,     |   |                |    |   |   |   |   |   |
| and miscellaneous differences           |   |                | 221,901 |   |   |   | 410,602 |   |
|                                    |   |                |    |   |   |   |   |   |
| Taxable income                          |   | $                   | 737,973 |   |   | $ | 856,949 |   |

----

| Investments in partnerships at January 1, 2010:   |   | $      | 2,620,011 |   |
|---------------------------------------------------|--------|--------|-----------|--------|
|                                              |   |   |      |   |
| Share of income from partnerships                 |   |   | 214,155   |   |
| Distribution from partnerships                    |   |   | (11,535   | )      |
| Advance to Local Partnership                      |   |   | 13,686    |   |
|                                              |   |   |      |   |
| Investments in partnerships at December 31, 2010: |   |   | 2,836,317 |   |
|                                              |   |   |      |   |
| Share of income from partnerships                 |   |   | 298,073   |   |
| Distribution from partnerships                    |   |   | (70,929   | )      |
|                                              |   |   |      |   |
| Investments in partnerships at December 31, 2011: |   | $      | 3,063,461 |   |

----

|   | (i) | First, on a monthly basis as an operating expense before any distributions to limited partners in the amount computed as described in the Partnership Agreement, provided that such annual amount shall not be greater than $300,000; and |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Second, after distributions to the limited partners in the amount of one percent of the gross proceeds of the offering, the balance of such 0.25% of invested assets. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)    |   | to the payment of debts and liabilities of the Partnership (including all expenses of the Partnership incident to the sale or refinancing) other than loans or other debts and liabilities of the Partnership to any partner or any affiliate; such debts and liabilities, in the case of a non-liquidating distribution, to be only those which are then required to be paid or, in the judgment of the Managing General Partner, required to be provided for;                                                                                                                                                                                                                                                                                                                             |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)   |   | to the establishment of any reserves which the Managing General Partner deems reasonably necessary for contingent, unmatured or unforeseen liabilities or obligations of the Partnership;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (iii)  |   | to each partner in an amount equal to the positive balance in his capital account as of the date of the sale or refinancing, adjusted for operations and distributions to that date, but before allocation of any profits for tax purposes realized from such sale or refinancing and allocated pursuant to the Partnership Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (iv)   |   | to the limited partners (A) an aggregate amount of proceeds from sale or refinancing and all prior sales or refinancings equal to their capital contributions, without reduction for prior cash distributions other than prior distributions of sale and refinancing proceeds, plus (B) an additional amount equal to a cumulative non-compounded six percent return on each limited partners' capital contribution, reduced, but not below zero, by (1) an amount equal to 50% of the losses for tax purposes plus tax credits allocated to such limited partner and (2) distributions of net cash flow to each limited partner, such return, losses for tax purposes and net cash flow distributions commencing on the first day of the month in which the capital contribution was made; |
| (v)    |   | to the repayment of any unrepaid loans theretofore made by any partner or any affiliate to the Partnership for Partnership obligations and to the payment of any unpaid amounts owing to the General Partners pursuant to the Partnership Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (vi)   |   | to the General Partners in the amount of their capital contributions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

| (vii)  |   | thereafter, for their services to the Partnership, in equal shares to certain general partners (or their designees), whether or not any is then a general partner, an aggregate fee of one percent of the gross proceeds resulting from (A) such sale (if the proceeds are from a sale rather than a refinancing) and (B) any prior sales from which such one percent fee was not paid to the General Partners or their designees; and, [Messrs. Willoughby and Dockser waived their share of any such deferred fee in the Liquidation Proxy.] |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (viii) |   | the remainder, 12% to the General Partners (or their assignees), 3% to the Special Limited Partner and 85% to the Initial and Additional Limited Partners (or their assignees).                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

|                                                        |   | For the years ended |     |
|-------------------------------------------------------------|--------|---------------------|----------|
|                                                        |   | December 31,        |     |
|                                                        |   | 2011                |     |   | 2010 |   |
|                                                        |   |                |     |   |   |   |
| Financial statement net loss                                |   | $                   | (448,182 | ) |   | $ | (273,294 | ) |
|                                                        |   |                |     |   |   |   |   |   |
| Adjustments:                                                |   |                |     |   |   |   |   |   |
| Differences between financial statement net income and      |   |                |     |   |   |   |   |   |
| taxable income related to the Partnership’s equity in |   |                |     |   |   |   |   |   |
| the Local Partnerships' income or losses and                |   |                |     |   |   |   |   |   |
| accrued expenses                                            |   |                | 431,051  |   |   |   | 642,793 |   |
|                                                        |   |                |     |   |   |   |   |   |
| Differences between financial statement                     |   |                |     |   |   |   |   |   |
| gain and taxable gain from the sale or                      |   |                |     |   |   |   |   |   |
| transfer of properties                                      |   |                | --       |   |   |   | (255,000 | ) |
|                                                        |   |                |     |   |   |   |   |   |
| Costs amortized over a shorter period                       |   |                |     |   |   |   |   |   |
| for income tax purposes                                     |   |                | 4,188    |   |   |   | 4,188 |   |
|                                                        |   |                |     |   |   |   |   |   |
| Taxable(loss)income                                         |   | $                   | (12,943  | ) |   | $ | 118,687 |   |