----

| 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-4         |
|     |                                                              |        |
|     | 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-6        |
| Item 9.  | Changes In and Disagreements With Accountants                     |        |
|     | on Accounting and Financial Disclosure                            | II-6        |
| Item 9A. | Controls and Procedures                                           | II-7        |
| Item 9B. | Other Information                                                 | II-7        |
|     |                                                              |        |
|     | 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        |
|     |                                                              |        |

----

|   | (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. |
|--------|------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

----

|                            |                                     |                                                       |         | Units                          |            |
|---------------------------------|------------------------------------------|------------------------------------------------------------|--------------|--------------------------------|-----------------|
|                            | Mortgage                                 |                                                       | Number of    | Authorized for                 | Expiration      |
| Name and Location               | Payable at                               | Financed and/or Insured                                    | Rental       | Low Income                     | of              |
| of Apartment Complex            | 12/31/09 (2)                             | and/or Subsidized Under                                    | Units        | Subsidies                      | HAP Contract    |
|                            |                                     |                                                       |         |                           |            |
| Meadow Lanes Apts.Holland, MI   |    $    693,193 | Michigan State HousingDevelopment Authority/               | 118          | 0                              | --              |
|                            |                                     | Section 236 of theNational Housing Act (NHA)               |         |                           |            |
|                            |                                     |                                                       |         |                           |            |
| Monterey/HillcrestWaukesha, WI  |     12,857,743            | Section 221(d)(4) of theNHA/ Federal HousingAdministration | 300          | 60                             | 04/23/24 (3)    |
|                            |                                     |                                                       |         |                           |            |
| Villa Mirage IRancho Mirage, CA |       1,323,931 | California Housing Finance Agency (CHFA)/Section 8    | 50           | 50                             | 12/19/10 (3)(4) |
|                            |                                     |                                                       |         |                           |            |
| Villa Mirage II                 |       1,347,910 | CHFA/Section 8                                             | 48           | 48                             | 12/14/15        |
| Rancho Mirage, CA               |                                     |                                                       |         |                           |            |
|                            |                                     |                                                       |    |       |            |
|                            |                                     |                                                       |         |                           |            |
| Totals (4 Properties)           |    $16,222,777                 |                                                       | 516          | 158                            |            |

----

|                      |   |                      |   |   | Average Effective Annual |   |
|---------------------------|--------|---------------------------|--------|--------|--------------------------|--------|
|                      |   | Units Occupied As         |   |   | Rental Per Unit          |   |
|                      |   | Percentage of Total Units |   |   | for the Years Ended      |   |
|                      |   | As of December 31,        |   |   | December 31,             |   |
|  Name and Location   |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of Apartment Complex      |   | 2009                      |   |   | 2008                     |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                      |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Meadow Lanes Apts.        |   |                      | 86     | %      |                     |   | 85 | % |   |   | 89 | % |   |   | 82 | % |   |   | 96 | % |   | $ | 6,085 |   |   | $ | 5,995 |   |   | $ | 6,194 |   |   | $ | 6,302 |   |   | $ | 6,257 |   |
| Holland, MI               |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Monterey/Hillcrest        |   |                      | 85     | %      |                     |   | 89 | % |   |   | 91 | % |   |   | 91 | % |   |   | 95 | % |   |   | 8,725 |   |   |   | 8,982 |   |   |   | 8,816 |   |   |   | 8,785 |   |   |   | 8,461 |   |
| Waukesha, WI              |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Villa Mirage I            |   |                      | 94     | %      |                     |   | 100 | % |   |   | 97 | % |   |   | 100 | % |   |   | 98 | % |   |   | 10,051 |   |   |   | 10,413 |   |   |   | 10,157 |   |   |   | 10,106 |   |   |   | 10,087 |   |
| Rancho Mirage, CA         |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Villa Mirage II           |   |                      | 98     | %      |                     |   | 100 | % |   |   | 95 | % |   |   | 98 | % |   |   | 100 | % |   |   | 10,440 |   |   |   | 10,499 |   |   |   | 9,642 |   |   |   | 10,083 |   |   |   | 9,960 |   |
| Rancho Mirage, CA         |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Totals (4 Properties) (5) |   |                      | 91     | %      |                     |   | 94 | % |   |   | 93 | % |   |   | 93 | % |   |   | 97 |   |   | $ | 8,825 |   |   | $ | 8,972 |   |   | $ | 8,702 |   |   | $ | 8,819 |   |   | $ | 8,691 |   |

|   (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, 2009. |
|------------|--------------------------------------------------------------------------------------------------------------------------|

|   (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. |
|------------|---------------------------------------------------------------------------------------------------------------------------------|

----

|   | (1) | the sale of all of the Partnership’s assets and the dissolution of the Partnership pursuant to a Plan of Liquidation and Dissolution, and the amendment of the Partnership’s Limited Partnership Agreement to permit the Managing General Partner, CRI, to be eligible to receive an increased property disposition fee from the Partnership on the same basis as such fees may currently be paid to Local General Partners, real estate brokers or other third party intermediaries employed to sell properties in which the Partnership holds interests, to the extent that CRI markets and sells the Partnership’s assets instead of such persons (a “Disposition Fee”); and |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | the amendment of the Partnership’s Limited Partnership Agreement to permit CRI to be eligible to receive a partnership liquidation fee in the amount of $500,000, payable only if the Managing General Partner is successful in liquidating all of the Partnership’s investments within 48 months from the date the liquidation is approved [January 20, 2006], in recognition that one or more of the properties in which the Partnership holds an interest might not be saleable to parties not affiliated with the respective Local Partnership due to the amount and/or terms of their current indebtedness (the “Partnership Liquidation Fee”). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | FOR      |   |   | AGAINST |   |   | ABSTAIN  |   |   | TOTAL   |   |
|-----------------------------|--------|----------|--------|--------|---------|--------|--------|----------|--------|--------|---------|--------|
|                        |   | Units of |   |   |    |   |   | Units of |   |   |    |   |   | Units of |   |   |   |   |   | Units of |   |   |   |   |
|                        |   | limited  |   |   |    |   |   | Limited  |   |   |    |   |   | Limited |   |   |   |   |   | limited |   |   |   |   |
|                        |   | partner  |   |   |    |   |   | Partner  |   |   |    |   |   | Partner |   |   |   |   |   | partner |   |   |   |   |
| Description                 |   | interest |   |   | Percent |   |   | Interest |   |   | Percent |   |   | Interest |   |   | Percent |   |   | interest |   |   | Percent |   |
|                        |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale, dissolution           |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and increased   |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Disposition Fee |   |     | 34,464 |   |    |   | 57.55  | %        |   |   | 1,778   |   |   |   | 2.97 | % |   |   | 250 |   |   |   | 0.42 | % |   |   | 36,492 |   |   |   | 60.94 | % |
|                        |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $500,000 Partnership        |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Liquidation Fee |   |     | 30,535 |   |    |   | 50.99  | %        |   |   | 5,087   |   |   |   | 8.49 | % |   |   | 860 |   |   |   | 1.44 | % |   |   | 36,482 |   |   |   | 60.92 | % |

----

----

|   | (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 March 25, 2010 there were approximately 3,796 registered holders of Units in the Partnership. |
|--------|-----|-----------------------------------------------------------------------------------------------------|

|   | (c) | No distributions were paid in the years 2009 and 2008. |
|--------|-----|--------------------------------------------------------|

----

----

----

----

----

|              |   | For the years ended December 31, |      |
|-------------------|--------|----------------------------------|-----------|
|              |   | 2009                             |      |   |   | 2008 |   |   |   | 2007 |   |   |   | 2006 |   |   |   | 2005 |   |
|              |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Combined Rental   |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue           |   | $                                | 4,339,145 |   |   |   | $ | 4,426,527 |   |   |   | $ | 4,346,226 |   |   |   | $ | 4,368,345 |   |   |   | $ | 4,259,139 |   |
|              |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Annual Percentage |   |                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase          |   |                             |      |   | (2.0)% |   |   |   |   | 1.8% |   |   |   |   | (0.5)% |   |   |   |   | 2.6% |   |   |   |   |

----

----

| 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. |
|--------|-----|-------------------------------------------|

----

|   |   |                |                    | % of Total      |
|--------|--------|---------------------|-------------------------|-----------------|
|   |   | Name and Address    | Amount and Nature       | Units Issued    |
|   |   | of Beneficial Owner | of Beneficial Ownership | and Outstanding |
|   |   |                |                    |            |
|   |   | Equity Resource     | 12,506 Units            | 20.88%          |
|   |   | Investments, LLC    |                    |            |
|   |   | 44 Brattle Street   |                    |            |
|   |   | Cambridge, MA 02138 |                    |            |
|   |   |                |                    |            |
|   |   | Peachtree Partners  | 3,817 Units             | 6.37%           |
|   |   | & Affiliates    |                    |            |
|   |   | P. O. Box 47638     |                    |            |
|   |   | Phoenix, AZ 85068   |                    |            |

----

|   |   |                       |                    | % 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)     |                    |            |

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

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

----

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

|   |               |   | Year Ended December 31 |    |
|--------|--------------------|--------|------------------------|---------|
|   |               |   | 2009                   |    |   | 2008 |   |
|   |               |   |                   |    |   |   |   |
|   | Audit fees         |   | $                      | 112,500 |   |   | $ | 112,900 |   |
|   | Audit-related fees |   |                   | --      |   |   |   | -- |   |
|   | Tax fees (1)       |   |                   | 16,000  |   |   |   | 16,000 |   |
|   | All other fees     |   |                   | --      |   |   |   | -- |   |
|   |               |   |                   |    |   |   |   |   |   |
|   | Total billed       |   | $                      | 128,500 |   |   | $ | 128,900 |   |

|   | (1)  Preparation of Partnership federal and state tax returns. |
|--------|---------------------------------------------------------------------|

----

|   | 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.) |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 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. |
|--------|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 PARTNERSHIPS                                                          |
|                                                     | (Registrant)                                                                                                                                                                                                                                                                                                                                                               |
|                                                     |                                                                                                                                                                                                                                                                                                                                                                       |
|                                                     |                                                                                                                                                                                                                                                                                                                                                                       |
|     March 25, 2010    | By:        /s/ William B. Dockser                                                                                                                                                                                                                                                                    |
| DATE                                                     | William B. Dockser                                                                                                                                                                                                                                                                                                                                                         |
|                                                     | Director, Chairman of the Board,                                                                                                                                                                                                                                                                                                                                           |
|                                                     | and Treasurer                                                                                                                                                                                                                                                                                                                                                              |
|                                                     | Principal Executive Officer                                                                                                                                                                                                                                                                                                                                                |
|                                                     |                                                                                                                                                                                                                                                                                                                                                                       |

|     March 25, 2010    | By:        /s/ H. William Willoughby                   |
|----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| DATE                                                     | H. William Willoughby                                                                                                                                                                    |
|                                                     | Director, President, Secretary,                                                                                                                                                          |
|                                                     | Principal Financial Officer and                                                                                                                                                          |
|                                                     | Principal Account Officer                                                                                                                                                                |
|                                                     |                                                                                                                                                                                     |

----

|                                                                           | Page   |
|--------------------------------------------------------------------------------|--------|
|                                                                           |   |
| Financial Statements of Capital Realty Investors, Ltd.                         |   |
|                                                                           |   |
| Report of Independent Registered Public Accounting Firm                        | IV-5   |
| Balance Sheets as of December 31, 2009 and 2008                                | IV-6   |
| Statements of Operations for the Years Ended                                   |   |
| December 31, 2009, 2008 and 2007                                               | IV-7   |
| Statements of Changes in Partners’ (Deficit) Capital for the Years Ended |   |
| December 31, 2009, 2008 and 2007                                               | IV-8   |
| Statements of Cash Flows for the Years Ended                                   |   |
| December 31, 2009, 2008 and 2007                                               | IV-9   |
| Notes to Financial Statements                                                  | IV-10  |

----

----

|                                                                 |   | December 31, |      |
|----------------------------------------------------------------------|--------|--------------|-----------|
|                                                                 |   | 2009         |      |   | 2008 |   |
|                                                                 |   |         |      |   |   |   |
| Investments in partnerships                                          |   | $            | 2,620,011 |   |   | $ | 2,543,918 |   |
| Cash and cash equivalents                                            |   |         | 4,442,208 |   |   |   | 5,229,267 |   |
| Acquisition fees, principally paid to related parties,               |   |         |      |   |   |   |   |   |
| net of accumulated amortization of $68,419 and $65,847, respectively |   |         | 8,736     |   |   |   | 11,308 |   |
| Property purchase costs,                                             |   |         |      |   |   |   |   |   |
| net of accumulated amortization of $41,148 and $39,532, respectively |   |         | 7,334     |   |   |   | 8,950 |   |
| Other assets                                                         |   |         | --        |   |   |   | 5,645 |   |
|                                                                 |   |         |      |   |   |   |   |   |
| Total assets                                                         |   | $            | 7,078,289 |   |   | $ | 7,799,088 |   |

| Due on investments in partnerships      |   | $      | 119,544     |   |   | $      | 119,544     |   |
|-----------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|
| Accrued interest payable                |   |   | 33,976      |   |   |   | 33,976      |   |
| Accounts payable and accrued expenses   |   |   | 279,311     |   |   |   | 339,199     |   |
|                                    |   |   |        |   |   |   |        |   |
| Total liabilities                       |   |   | 432,831     |   |   |   | 492,719     |   |
|                                    |   |   |        |   |   |   |        |   |
| Commitments and contingencies           |   |   |        |   |   |   |        |   |
|                                    |   |   |        |   |   |   |        |   |
| 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   |   |   | (26,573,905 | )      |   |   | (26,573,905 | )      |
| Offering costs                          |   |   | (6,156,933  | )      |   |   | (6,156,933  | )      |
| Accumulated losses                      |   |   | (20,627,204 | )      |   |   | (19,966,293 | )      |
|                                    |   |   |        |   |   |   |        |   |
| Total partners' capital                 |   |   | 6,645,458   |   |   |   | 7,306,369   |   |
|                                    |   |   |        |   |   |   |        |   |
| Total liabilities and partners' capital |   | $      | 7,078,289   |   |   | $      | 7,799,088   |   |

----

|                                                               |   | For the years ended |     |
|--------------------------------------------------------------------|--------|---------------------|----------|
|                                                               |   | December 31,        |     |
|                                                               |   | 2009                |     |   | 2008 |   |   | 2007 |   |
|                                                               |   |                |     |   |   |   |   |   |   |
| Share of (loss) income from partnerships                           |   | $                   | (40,353  | ) |   | $ | 59,468 |   |   | $ | 37,785 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Other revenue and expenses:                                        |   |                |     |   |   |   |   |   |   |   |   |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Revenue:                                                           |   |                |     |   |   |   |   |   |   |   |   |   |
| Gain from extinguishment of debt                                   |   |                | --       |   |   |   | -- |   |   |   | 3,096,290 |   |
| Interest and other                                                 |   |                | 15,369   |   |   |   | 156,074 |   |   |   | 237,275 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
|                                                               |   |                | 15,369   |   |   |   | 156,074 |   |   |   | 3,333,565 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Expenses:                                                          |   |                |     |   |   |   |   |   |   |   |   |   |
| General and administrative                                         |   |                | 246,195  |   |   |   | 267,577 |   |   |   | 358,376 |   |
| Management fee                                                     |   |                | 300,000  |   |   |   | 300,000 |   |   |   | 300,000 |   |
| Professional fees                                                  |   |                | 85,544   |   |   |   | 112,330 |   |   |   | 190,080 |   |
| Amortization of deferred costs                                     |   |                | 4,188    |   |   |   | 4,188 |   |   |   | 17,192 |   |
| Interest                                                           |   |                | --       |   |   |   | -- |   |   |   | 232 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
|                                                               |   |                | 635,927  |   |   |   | 684,095 |   |   |   | 865,880 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Total other revenue and expenses                                   |   |                | (620,558 | ) |   |   | (528,021 | ) |   |   | 2,467,685 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| (Loss) income before gain on disposition of investment in          |   |                |     |   |   |   |   |   |   |   |   |   |
| partnerships and impairment loss                                   |   |                | (660,911 | ) |   |   | (468,553 | ) |   |   | 2,505,470 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Gain on disposition of investment in partnerships,                 |   |                |     |   |   |   |   |   |   |   |   |   |
| net of disposition fees                                            |   |                | --       |   |   |   | -- |   |   |   | 260,209 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Impairment loss                                                    |   |                | --       |   |   |   | (9,296 | ) |   |   | (262,590 | ) |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                  |   | $                   | (660,911 | ) |   | $ | (477,849 | ) |   | $ | 2,503,089 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Net (loss) income allocated to General Partners (1.51%)            |   | $                   | (9,980   | ) |   | $ | (7,216 | ) |   | $ | 37,797 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Net (loss) income allocated to Initial and                         |   |                |     |   |   |   |   |   |   |   |   |   |
| Special Limited Partners (1.49%)                                   |   | $                   | (9,848   | ) |   | $ | (7,120 | ) |   | $ | 37,296 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Net (loss) income allocated to Additional Limited Partners (97%)   |   | $                   | (641,083 | ) |   | $ | (463,513 | ) |   | $ | 2,427,996 |   |
|                                                               |   |                |     |   |   |   |   |   |   |   |   |   |
| Net (loss) income per unit of Additional Limited Partner Interest, |   |                |     |   |   |   |   |   |   |   |   |   |
| based on 59,882 units outstanding                                  |   | $                   | (10.71   | ) |   | $ | (7.74 | ) |   | $ | 40.55 |   |

----

|                                                 |   |     |     |   | Initial and |   |     |       |   |   |      |   |
|------------------------------------------------------|--------|----------|----------|--------|-------------|--------|----------|------------|--------|--------|-----------|--------|
|                                                 |   |     |     |   | Special     |   |     | Additional |   |   |      |   |
|                                                 |   | General  |     |   | Limited     |   |     | Limited    |   |   |      |   |
|                                                 |   | Partners |     |   | Partners    |   |     | Partners   |   |   | Total     |   |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |
| Partners’ (deficit) capital, January 1, 2007   |   | $        | (458,845 | )      |        | $      | (453,373 | )          |   | $      | 6,193,006 |   |   | $ | 5,280,788 |   |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Net income                                           |   |     | 37,797   |   |        |   | 37,296   |       |   |   | 2,427,996 |   |   |   | 2,503,089 |   |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Abandoned units                                      |   |     | --       |   |        |   | --       |       |   |   | 341       |   |   |   | 341 |   |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Partners’ (deficit) capital, December 31, 2007 |   |     | (421,048 | )      |        |   | (416,077 | )          |   |   | 8,621,343 |   |   |   | 7,784,218 |   |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Net loss                                             |   |     | (7,216   | )      |        |   | (7,120   | )          |   |   | (463,513  | )      |   |   | (477,849 | ) |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Partners’ (deficit) capital, December 31, 2008 |   |     | (428,264 | )      |        |   | (423,197 | )          |   |   | 8,157,830 |   |   |   | 7,306,369 |   |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Net loss                                             |   |     | (9,980   | )      |        |   | (9,848   | )          |   |   | (641,083  | )      |   |   | (660,911 | ) |
|                                                 |   |     |     |   |        |   |     |       |   |   |      |   |   |   |   |   |
| Partner’s (deficit) capital, December 31, 2009 |   | $        | (438,244 | )      |        | $      | (433,045 | )          |   | $      | 7,516,747 |   |   | $ | 6,645,458 |   |

----

|                                                    |   | For the years ended |      |
|---------------------------------------------------------|--------|---------------------|-----------|
|                                                    |   | December 31,        |      |
|                                                    |   | 2009                |      |   | 2008 |   |   | 2007 |   |
|                                                    |   |                |      |   |   |   |   |   |   |
| Cash flows from operating activities:                   |   |                |      |   |   |   |   |   |   |
| Net (loss) income                                       |   | $                   | (660,911  | ) |   | $ | (477,849 | ) |   | $ | 2,503,089 |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Adjustments to reconcile net (loss) income to net cash  |   |                |      |   |   |   |   |   |   |   |   |   |
| used in operating activities:                           |   |                |      |   |   |   |   |   |   |   |   |   |
| Share of loss (income) from partnerships                |   |                | 40,353    |   |   |   | (59,468 | ) |   |   | (37,785 | ) |
| Amortization of deferred costs                          |   |                | 4,188     |   |   |   | 4,188 |   |   |   | 17,192 |   |
| Gain from extinguishment of debt                        |   |                | --        |   |   |   | -- |   |   |   | (3,096,290 | ) |
| Gain on disposition of investment in partnerships,      |   |                |      |   |   |   |   |   |   |   |   |   |
| net of disposition fees                                 |   |                | --        |   |   |   | -- |   |   |   | (260,209 | ) |
| Impairment loss                                         |   |                |      |   |   |   | 9,296 |   |   |   | 262,590 |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Changes in assets and liabilities:                      |   |                |      |   |   |   |   |   |   |   |   |   |
| Decrease in other assets                                |   |                | 5,645     |   |   |   | 18,390 |   |   |   | 207,064 |   |
| Increase in accrued interest payable                    |   |                | --        |   |   |   | -- |   |   |   | 232 |   |
| Decrease in accounts payable and accrued expenses       |   |                | (59,888   | ) |   |   | (101,533 | ) |   |   | (184,321 | ) |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Net cash used in operating activities                   |   |                | (670,613  | ) |   |   | (606,976 | ) |   |   | (588,438 | ) |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                   |   |                |      |   |   |   |   |   |   |   |   |   |
| Proceeds from disposition of investment in partnerships |   |                | --        |   |   |   | -- |   |   |   | 231,412 |   |
| Collection of sales proceeds receivable                 |   |                | --        |   |   |   | -- |   |   |   | 132,873 |   |
| Receipt of distributions from partnerships              |   |                | 11,534    |   |   |   | 8,660 |   |   |   | 11,533 |   |
| Sale transaction fees payable                           |   |                | --        |   |   |   | -- |   |   |   | (255,000 | ) |
| Advance to Local Partnership                            |   |                | (127,980  | ) |   |   | -- |   |   |   | (35,745 | ) |
| Collection of advance to Local Partnership              |   |                | --        |   |   |   | -- |   |   |   | 35,745 |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Net (used in) cash provided by investing activities     |   |                | (116,446  | ) |   |   | 8,660 |   |   |   | 120,818 |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                   |   |                |      |   |   |   |   |   |   |   |   |   |
| Distributions to Additional Limited Partners            |   |                | --        |   |   |   | -- |   |   |   | 341 |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Net decrease in cash and cash equivalents               |   |                | (787,059  | ) |   |   | (598,316 | ) |   |   | (467,279 | ) |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of year            |   |                | 5,229,267 |   |   |   | 5,827,583 |   |   |   | 6,294,862 |   |
|                                                    |   |                |      |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, end of year                  |   | $                   | 4,442,208 |   |   | $ | 5,229,267 |   |   | $ | 5,827,583 |   |

----

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

----

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

----

|   | 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. |
|--------|----|----------------------------------------|

----

|   | (1) | the sale of all of the Partnership’s assets and the dissolution of the Partnership pursuant to a Plan of Liquidation and Dissolution, and the amendment of the Partnership’s Limited Partnership Agreement to permit the Managing General Partner, CRI, to be eligible to receive an increased property disposition fee from the Partnership on the same basis as such fees may currently be paid to Local General Partners, real estate brokers or other third party intermediaries employed to sell properties in which the Partnership holds interests, to the extent that CRI markets and sells the Partnership’s assets instead of such persons (a “Disposition Fee”); and |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | the amendment of the Partnership’s Limited Partnership Agreement to permit CRI to be eligible to receive a partnership liquidation fee in the amount of $500,000, payable only if the Managing General Partner is successful in liquidating all of the Partnership’s investments within 48 months from the date the liquidation is approved [January 20, 2006], in recognition that one or more of the properties in which the Partnership holds an interest might not be saleable to parties not affiliated with the respective Local Partnership due to the amount and/or terms of their current indebtedness (the “Partnership Liquidation Fee”). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                        |   | FOR      |   |   | AGAINST |   |   | ABSTAIN  |   |   | TOTAL   |   |
|-----------------------------|--------|----------|--------|--------|---------|--------|--------|----------|--------|--------|---------|--------|
|                        |   | Units of |   |   |    |   |   | Units of |   |   |    |   |   | Units of |   |   |   |   |   | Units of |   |   |   |   |
|                        |   | limited  |   |   |    |   |   | Limited  |   |   |    |   |   | Limited |   |   |   |   |   | limited |   |   |   |   |
|                        |   | partner  |   |   |    |   |   | Partner  |   |   |    |   |   | Partner |   |   |   |   |   | partner |   |   |   |   |
| Description                 |   | interest |   |   | Percent |   |   | Interest |   |   | Percent |   |   | Interest |   |   | Percent |   |   | interest |   |   | Percent |   |
|                        |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale, dissolution           |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and increased   |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Disposition Fee |   |     | 34,464 |   |    |   | 57.55  | %        |   |   | 1,778   |   |   |   | 2.97 | % |   |   | 250 |   |   |   | 0.42 | % |   |   | 36,492 |   |   |   | 60.94 | % |
|                        |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $500,000 Partnership        |   |     |   |   |    |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Liquidation Fee |   |     | 30,535 |   |    |   | 50.99  | %        |   |   | 5,087   |   |   |   | 8.49 | % |   |   | 860 |   |   |   | 1.44 | % |   |   | 36,482 |   |   |   | 60.92 | % |

----

----

|   | c. | Advances to Local Partnerships |
|--------|----|--------------------------------|

----

----

----

|                                              |   | Equity |      |   |      |   |        |   |   |
|---------------------------------------------------|--------|--------|-----------|--------|-----------|--------|-------------|--------|--------|
|                                              |   | Method |      |   | Suspended |   |        | Total  |   |
|                                              |   |   |      |   |      |   |        |   |   |
| Number of Local Partnerships                      |   |   | 1         |   |      |   | 3           |   |   |   | 4 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Rental property, at cost, net of accumulated      |   |   |      |   |      |   |        |   |   |   |   |   |
| depreciation of $3,858,076, $19,998,718, and      |   |   |      |   |      |   |        |   |   |   |   |   |
| and $23,856,794, respectively                     |   | $      | 1,360,934 |   |      | $      | 2,841,215   |   |   | $ | 4,202,149 |   |
| Land                                              |   |   | 168,760   |   |      |   | 2,108,943   |   |   |   | 2,277,703 |   |
| Other assets                                      |   |   | 1,834,673 |   |      |   | 1,878,352   |   |   |   | 3,713,025 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Total assets                                      |   | $      | 3,364,367 |   |      | $      | 6,828,510   |   |   | $ | 10,192,877 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Mortgage notes payable                            |   | $      | 693,193   |   |      | $      | 15,529,584  |   |   | $ | 16,222,777 |   |
| Other liabilities                                 |   |   | 43,018    |   |      |   | 1,510,240   |   |   |   | 1,553,258 |   |
| Due to general partners                           |   |   | --        |   |      |   | 2,500,877   |   |   |   | 2,500,877 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities                                 |   |   | 736,211   |   |      |   | 19,540,701  |   |   |   | 20,276,912 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Partners' capital (deficit)                       |   |   | 2,628,156 |   |      |   | (12,712,191 | )      |   |   | (10,084,035 | ) |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities and partners' capital (deficit) |   | $      | 3,364,367 |   |      | $      | 6,828,510   |   |   | $ | 10,192,877 |   |

----

|                                                      |   | Equity |    |   |      |   |      |   |   |
|-----------------------------------------------------------|--------|--------|---------|--------|-----------|--------|-----------|--------|--------|
|                                                      |   | Method |    |   | Suspended |   |      | Total  |   |
|                                                      |   |   |    |   |      |   |      |   |   |
| Number of Local Partnerships                              |   |   | 1       |   |      |   | 3         |   |   |   | 4 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Revenue:                                                  |   | $      |    |   |      | $      |      |   |   | $ |   |   |
| Rental                                                    |   |   | 718,064 |   |      |   | 3,621,081 |   |   |   | 4,339,145 |   |
| Other                                                     |   |   | 131,747 |   |      |   | 218,378   |   |   |   | 350,125 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Total revenue                                             |   |   | 849,811 |   |      |   | 3,839,459 |   |   |   | 4,689,270 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Expenses:                                                 |   |   |    |   |      |   |      |   |   |   |   |   |
| Operating and other                                       |   |   | 599,096 |   |      |   | 2,394,794 |   |   |   | 2,993,890 |   |
| Interest                                                  |   |   | (49,562 | )      |      |   | 986,173   |   |   |   | 936,611 |   |
| Depreciation and amortization                             |   |   | 210,862 |   |      |   | 858,954   |   |   |   | 1,069,816 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Total expenses                                            |   |   | 760,396 |   |      |   | 4,239,921 |   |   |   | 5,000,317 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Net income (loss)                                         |   | $      | 89.415  |   |      | $      | (400,462  | )      |   | $ | (311,047 | ) |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Cash Distributions                                        |   | $      | 11,535  |   |      | $      | --        |   |   | $ | 11,535 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Cash distribution recorded as reduction of                |   |   |    |   |      |   |      |   |   |   |   |   |
| investments in partnerships                               |   | $      | 11,535  |   |      | $      | --        |   |   | $ | 11,535 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Partnership’s share of Local Partnership net income |   |   | 87,627  |   |      |   | --        |   |   |   | 87,627 |   |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Advances to Local Partnerships                            |   |   | --      |   |      |   | (127,980  | )      |   |   | (127,980 | ) |
|                                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Share of income (loss) partnerships                       |   | $      | 87,627  |   |      | $      | (127,980  | )      |   | $ | (40,353 | ) |

----

|                                                                                    |   | Equity |      |   |      |   |        |   |   |
|-----------------------------------------------------------------------------------------|--------|--------|-----------|--------|-----------|--------|-------------|--------|--------|
|                                                                                    |   | Method |      |   | Suspended |   |        | Total  |   |
|                                                                                    |   |   |      |   |      |   |        |   |   |
| Number of Local Partnerships                                                            |   |   | 1         |   |      |   | 3           |   |   |   | 4 |   |
|                                                                                    |   |   |      |   |      |   |        |   |   |   |   |   |
| Rental property, at cost, net of accumulateddepreciation of $3,691,830 $19,142,608, and |   |   |      |   |      |   |        |   |   |   |   |   |
|   $22,834,438, respectively                                                   |   | $      | 1,423,564 |   |      | $      | 3,633,812   |   |   | $ | 5,057,376 |   |
|                                                                                    |   |   |      |   |      |   |        |   |   |   |   |   |
| Land                                                                                    |   |   | 168,760   |   |      |   | 2,108,943   |   |   |   | 2,277,703 |   |
| Other assets                                                                            |   |   | 1,858,873 |   |      |   | 1,795,775   |   |   |   | 3,654,648 |   |
|                                                                                    |   |   |      |   |      |   |        |   |   |   |   |   |
| Total assets                                                                            |   | $      | 3,451,197 |   |      | $      | 7,538,530   |   |   | $ | 10,989,727 |   |
|                                                                                    |   |   |      |   |      |   |        |   |   |   |   |   |
| Mortgage notes payable                                                                  |   | $      | 822,686   |   |      | $      | 16,022,288  |   |   | $ | 16,844,974 |   |
| Other liabilities                                                                       |   |   | 78,000    |   |      |   | 1,398,701   |   |   |   | 1,476,701 |   |
| Due to general partners                                                                 |   |   | --        |   |      |   | 2,429,270   |   |   |   | 2,429,270 |   |
|                                                                                    |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities                                                                       |   |   | 900,686   |   |      |   | 19,850,259  |   |   |   | 20,750,945 |   |
|                                                                                    |   |   |      |   |      |   |        |   |   |   |   |   |
| Partners' capital (deficit)                                                             |   |   | 2,550,511 |   |      |   | (12,311,729 | )      |   |   | (9,761,218 | ) |
|                                                                                    |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities and partners' capital (deficit)                                       |   | $      | 3,451,197 |   |      | $      | 7,538,530   |   |   | $ | 10,989,727 |   |

|                                      |   | Equity |    |   |      |   |      |   |   |
|-------------------------------------------|--------|--------|---------|--------|-----------|--------|-----------|--------|--------|
|                                      |   | Method |    |   | Suspended |   |      | Total  |   |
|                                      |   |   |    |   |      |   |      |   |   |
| Number of Local Partnerships              |   |   | 1       |   |      |   | 3         |   |   |   | 4 |   |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Revenue:                                  |   |   |    |   |      |   |      |   |   |   |   |   |
|   Rental                        |   | $      | 707,396 |   |      | $      | 3,719,131 |   |   | $ | 4,426,527 |   |
|   Other                         |   |   | 129,588 |   |      |   | 215,564   |   |   |   | 345,152 |   |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
|     Total revenue     |   |   | 836,984 |   |      |   | 3,934,695 |   |   |   | 4,771,679 |   |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Expenses:                                 |   |   |    |   |      |   |      |   |   |   |   |   |
|   Operating and other           |   |   | 636,645 |   |      |   | 2,415,147 |   |   |   | 3,051,792 |   |
|   Interest                      |   |   | (42,225 | )      |      |   | 1,014,252 |   |   |   | 972,027 |   |
|   Depreciation and amortization |   |   | 191,368 |   |      |   | 848,625   |   |   |   | 1,039,993 |   |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
|     Total expenses    |   |   | 785,788 |   |      |   | 4,278,024 |   |   |   | 5,063,812 |   |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Net income (loss)                         |   | $      | 51,196  |   |      | $      | (343,329  | )      |   | $ | (292,133 | ) |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Cash distributions                        |   | $      | 8,660   |   |      | $      | --        |   |   | $ | 8,660 |   |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
|                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Share of income from partnerships         |   | $      | 50,172  |   |      | $      | 9,296     |   |   | $ | 59,468 |   |

----

|                                              |   | Equity |      |   |      |   |        |   |   |
|---------------------------------------------------|--------|--------|-----------|--------|-----------|--------|-------------|--------|--------|
|                                              |   | Method |      |   | Suspended |   |        | Total  |   |
|                                              |   |   |      |   |      |   |        |   |   |
| Number of Local Partnerships                      |   |   | 1         |   |      |   | 3           |   |   |   | 4 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Rental property, at cost, net of accumulated      |   |   |      |   |      |   |        |   |   |   |   |   |
| depreciation of $3,551,542 $18,296,826, and       |   |   |      |   |      |   |        |   |   |   |   |   |
| $21,848,368, respectively                         |   | $      | 1,456,474 |   |      | $      | 4,450,817   |   |   | $ | 5,907,291 |   |
| Land                                              |   |   | 168,760   |   |      |   | 1,833,799   |   |   |   | 2,002,559 |   |
| Other assets                                      |   |   | 1,874,668 |   |      |   | 2,059,022   |   |   |   | 3,933,690 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Total assets                                      |   | $      | 3,499,902 |   |      | $      | 8,343,638   |   |   | $ | 11,843,540 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Mortgage notes payable                            |   | $      | 944,841   |   |      | $      | 16,513,189  |   |   | $ | 17,458,030 |   |
| Other liabilities                                 |   |   | 46,909    |   |      |   | 1,441,187   |   |   |   | 1,488,096 |   |
| Due to general partners                           |   |   | --        |   |      |   | 2,357,662   |   |   |   | 2,357,662 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities                                 |   |   | 991,750   |   |      |   | 20,312,038  |   |   |   | 21,303,788 |   |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Partners' capital (deficit)                       |   |   | 2,508,152 |   |      |   | (11,968,400 | )      |   |   | (9,460,248 | ) |
|                                              |   |   |      |   |      |   |        |   |   |   |   |   |
| Total liabilities and partners' capital (deficit) |   | $      | 3,499,902 |   |      | $      | 8,343,638   |   |   | $ | 11,843,540 |   |

----

|                                           |   | Equity |    |   |      |   |      |   |   |
|------------------------------------------------|--------|--------|---------|--------|-----------|--------|-----------|--------|--------|
|                                           |   | Method |    |   | Suspended |   |      | Total  |   |
|                                           |   |   |    |   |      |   |      |   |   |
| Number of Local Partnerships                   |   |   | 1       |   |      |   | 3         |   |   |   | 4 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Revenue:                                       |   |   |    |   |      |   |      |   |   |   |   |   |
| Rental                                         |   | $      | 730,879 |   |      | $      | 3,615,347 |   |   | $ | 4,346,226 |   |
| Other                                          |   |   | 126,793 |   |      |   | 222,702   |   |   |   | 349,495 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Total revenue                                  |   |   | 857,672 |   |      |   | 3,838,049 |   |   |   | 4,695,721 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Expenses:                                      |   |   |    |   |      |   |      |   |   |   |   |   |
| Operating and other                            |   |   | 591,086 |   |      |   | 2,387,105 |   |   |   | 2,978,191 |   |
| Interest                                       |   |   | (34,931 | )      |      |   | 1,059,413 |   |   |   | 1,024,482 |   |
| Depreciation and amortization                  |   |   | 189,619 |   |      |   | 812,647   |   |   |   | 1,002,266 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Total expenses                                 |   |   | 745,774 |   |      |   | 4,259,165 |   |   |   | 5,004,939 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Net income (loss)                              |   | $      | 111,898 |   |      | $      | (421,116  | )      |   | $ | (309,218 | ) |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Cash distributions                             |   | $      | 11,535  |   |      | $      | --        |   |   | $ | 11,535 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Cash distributions recorded as reduction       |   |   |    |   |      |   |      |   |   |   |   |   |
| of investments in partnerships                 |   | $      | 11,535  |   |      | $      | --        |   |   | $ | 11,535 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Partnership’s share of Local Partnership |   |   |    |   |      |   |      |   |   |   |   |   |
| net income (loss)                              |   | $      | 109,660 |   |      | $      | (35,418   | )      |   | $ | 74,242 |   |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Advance to Local Partnership                   |   |   | --      |   |      |   | (36,457   | )(1)   |   |   | (36,457 | )(1) |
|                                           |   |   |    |   |      |   |      |   |   |   |   |   |
| Share of income (loss) from partnerships       |   | $      | 109,660 |   |      | $      | (71,875   | )      |   | $ | 37,785 |   |

|   | (1)Windham Village sold October 2007. |
|--------|---------------------------------------|

----

|   |     All of the cash distributions recorded as income are included in share of income from partnerships on the statements of operations for the respective years, and are recorded as cash receipts on the respective balance sheets.  Cash distributions recorded as a reduction of the related investment are recorded as cash receipts on the respective balance sheets, and are recorded as a reduction of investments in partnerships, also on the respective balance sheets. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | For the years ended |     |
|-------------------------------------------------------|--------|---------------------|----------|
|                                                  |   | December 31,   |     |
|                                                  |   | 2009                |     |   | 2008 |   |   | 2007 |   |
|                                                  |   |                |     |   |   |   |   |   |   |
|  Financial statement net loss                    |   | $                   | (311,047 | ) |   | $ | (292,133 | ) |   | $ | (309,218 | ) |
|                                                  |   |                |     |   |   |   |   |   |   |   |   |   |
|  Differences between financial statement         |   |                |     |   |   |   |   |   |   |   |   |   |
|    and tax depreciation, amortization, |   |                |     |   |   |   |   |   |   |   |   |   |
|    and miscellaneous differences       |   |                | 756,313  |   |   |   | 814,671 |   |   |   | 704,399 |   |
|                                                  |   |                |     |   |   |   |   |   |   |   |   |   |
|  Taxable income                                  |   | $                   | 445,266  |   |   | $ | 522,538 |   |   | $ | 395,181 |   |

----

|   | (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), three percent to the Special Limited Partner and 85% to the Initial and Additional Limited Partners (or their assignees). |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                         |   | For the years ended |        |
|--------------------------------------------------------------------------------------------------------------|--------|---------------------|-------------|
|                                                                                                         |   | December 31,        |        |
|                                                                                                         |   | 2009                |        |   | 2008 |   |   | 2007 |   |
|                                                                                                         |   |                |        |   |   |   |   |   |   |
| Financial statement net (loss) income                                                                        |   | $                   | (660,911    | ) |   | $ | (477,849 | ) |   | $ | 2,503,089 |   |
|                                                                                                         |   |                |        |   |   |   |   |   |   |   |   |   |
| 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                                                  |   |                | 485,621     |   |   |   | 472,365 |   |   |   | 315,721 |   |
|                                                                                                         |   |                |        |   |   |   |   |   |   |   |   |
|     Differences between financial statement                                                   |   |                |        |   |   |   |   |   |   |   |   |
|        gain and taxable gain from the sale or                        |   |                |        |   |   |   |   |   |   |   |   |
| transfer of properties                                                                                       |   |                |  --    |   |   |   |  -- |   |   |   |  5,258,931 |
|                                                                                                         |   |                |        |   |   |   |   |   |   |   |   |   |
|     Costs amortized over a shorter period                                                     |   |                |        |   |   |   |   |   |   |   |   |
|        for income tax purposes                                       |   |                |  4,188 |   |   |   |  4,188 |   |   |   |  16,767 |
|                                                                                                         |   |                |        |   |   |   |   |   |   |   |   |   |
| Taxable (loss) income                                                                                   |   | $                   | (171,102    | ) |   | $ | (1,296 | ) |   | $ | 8,094,508 |   |

----