UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K


(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the fiscal year ended March 31, 2006

                                       OR

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


                         COMMISSION FILE NUMBER 0-13782

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
             (Exact name of registrant as specified in its charter)


            Delaware                                             13-3646846
--------------------------------                            --------------------
(State or other jurisdiction of                             (I.R.S. Employer
  incorporation or organization)                             Identification No.)

 625 Madison Avenue, New York, New York                            10022
----------------------------------------                    --------------------
(Address of principal executive offices)                         (Zip Code)


Registrant's telephone number, including area code (212) 517-3700

Securities registered pursuant to Section 12(b) of the Act:

     None

Securities registered pursuant to Section 12(g) of the Act:

     Title of Class
     --------------
     Limited Partnership Interests and Beneficial Assignment Certificates

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):

Large accelerated filer [ ]    Accelerated filer [ ]   Non-accelerated filer [X]

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

     The  approximate  aggregate book value of the voting and non-voting  common
equity held by  non-affiliates  of the  Registrant  as of September 30, 2005 was
($27,000) based on Limited Partner equity (deficit) as of such date.

     Registrant's voting and non-voting common equity is not publicly traded.

                       DOCUMENTS INCORPORATED BY REFERENCE

     None


<PAGE>

                                     PART I


Item 1. Business.

General
-------

Independence  Tax  Credit  Plus  L.P.  II  (the   "Partnership")  is  a  limited
partnership which was formed under the laws of the State of Delaware on February
11,  1992.  The  general  partner of the  Partnership  is  Related  Independence
Associates L.P., a Delaware limited  partnership  (the "General  Partner").  The
general partner of the General Partner is Related Independence  Associates Inc.,
a Delaware  corporation  ("RIAI") and is an affiliate of CharterMac  Capital LLC
("CharterMac Capital") (formerly known as Related Capital Company, LLC).

On November 17,  2003,  CharterMac  acquired  CharterMac  Capital,  which is the
parent  of RCC  Manager  LLC,  the sole  shareholder  of RIAI.  Pursuant  to the
acquisition,  CharterMac acquired controlling  interests in the General Partner.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partner's management team remained unchanged.

On November 8, 2005,  CharterMac announced that Stuart J. Boesky would step down
as Chief  Executive  Officer and trustee of CharterMac.  Upon his stepping down,
which was  effective on November 15, 2005, he also resigned from his position as
Senior  Vice  President  of RIAI.  Mr.  Boesky will stay on as a  consultant  to
CharterMac  for the next year in order to ensure a smooth  transition.  On March
14,  2006,  CharterMac's  Board of Trustees  named Marc D.  Schnitzer  the Chief
Executive  Officer,  effective  immediately.  Mr. Schnitzer  replaced Stephen M.
Ross, who had served as interim Chief  Executive  Officer since Stuart J. Boesky
resigned in November of 2005.  Mr.  Schnitzer also replaced Mr. Boesky as Senior
Vice President of RIAI.

On  January  19,  1993,  the  Partnership   commenced  a  public  offering  (the
"Offering")  of  Beneficial   Assignment   Certificates   ("BACs")  representing
assignments  of  limited  partnership  interests  in the  Partnership  ("Limited
Partnership Interests").  The Partnership received $58,928,000 of gross proceeds
from the Offering (the "Gross  Proceeds") from 3,475 investors ("BACs holders").
The Offering was terminated on April 7, 1994.

The Partnership's  business is primarily to invest as a limited partner in other
partnerships ("Local Partnerships",  "subsidiaries" or "subsidiary partnership")
owning apartment  complexes  ("Apartment  Complexes" or  "Properties")  that are
eligible for the low-income housing tax credit ("Tax Credit") enacted in the Tax
Reform  Act of  1986,  some of  which  may  also be  eligible  for the  historic
rehabilitation tax credit ("Historic Tax Credit"). The Partnership's  investment
in each Local Partnership  represents 98.99% of the partnership interests in the
Local Partnership.  As of March 31, 2006, the Partnership had acquired interests
in fifteen Local  Partnerships  and does not  anticipate  making any  additional
investments.  As of March 31, 2006,  approximately  $47,000,000  (not  including
acquisition  fees  of  approximately  $3,502,000)  of the  net  proceeds  of the
Offering has been invested in fifteen Local Partnerships, of which approximately
$282,000  remains  to be paid  (including  approximately  $24,000  being held in
escrow) to the Local  Partnerships,  as  certain  benchmarks  such as  occupancy
levels must be attained prior to the release of such funds. The Partnership does
not intend to acquire  additional  properties;  however,  the Partnership may be
required to pay for potential  purchase  price  adjustments  based on tax credit
adjustor clauses. See Item 2. Properties, below.

Investment Objectives/Government Incentives
-------------------------------------------

The  Partnership  was formed to invest in Apartment  Complexes that are eligible
for the Tax  Credit  enacted  in the Tax  Reform  Act of  1986.  Some  Apartment
Complexes  may  also be  eligible  for  Historic  Tax  Credits.  The  investment
objectives of the Partnership are described below.

1.  Entitle  qualified  BACs  holders  to Tax  Credits  over the  period  of the
Partnership's entitlement to claim Tax Credits (for each Property, generally ten
years from the date of investment or, if later,  the date the Property is leased
to qualified tenants; referred to herein as the "Credit Period") with respect to
each Apartment Complex.

2. Preserve and protect the Partnership's capital.

3.  Participate in any capital  appreciation  in the value of the Properties and
provide  distributions  of sale or refinancing  proceeds upon the disposition of
the Properties.

4. Allocate  passive losses to individual  BACs holders to offset passive income
that they may realize  from rental real  estate  investments  and other  passive
activities,  and allocate  passive  losses to  corporate  BACs holders to offset
business income.

One of the Partnership's  objectives is to entitle qualified BACs holders to Tax
Credits  over the Credit  Period.  Each of the Local  Partnerships  in which the
Partnership  has acquired an interest has been  allocated by the relevant  state
credit  agencies the authority to recognize Tax Credits during the Credit Period
provided  that the Local  Partnership  satisfies the rent  restriction,  minimum
set-aside and other requirements for recognition of the Tax Credits at all times
during such period.  Once a Local  Partnership  has become eligible to recognize
Tax Credits,  it may lose such eligibility and suffer an event of "recapture" if
its Property  fails to remain in  compliance  with the Tax Credit  requirements.
None of the Local Partnerships in which the Partnership has acquired an interest
has suffered an event of recapture.

The Tax  Credits  are  attached  to a Local  Partnership  for the 10 year Credit
Period and are  transferable  with the  Property  during the entirety of such 10
year  period.  If  trends  in the real  estate  market  warranted  the sale of a
Property,  the remaining Tax Credits  would  transfer to the new owner,  thereby
adding value to the Property on the market.  However,  such value  declines each
year and is not included in the financial  statement carrying amount. The Credit
Periods are scheduled to expire at various times through  December 31, 2007 with
respect  to the  Local  Partnerships  depending  upon  when  the  Credit  Period
commenced.

A loss on  impairment of assets is recorded when  management  estimates  amounts
recoverable   through  future   operations  and  sale  of  the  Property  on  an
undiscounted  basis  are  below  depreciated  cost.  At that  time the  Property
investments  themselves are reduced to estimated fair value (generally using the


                                       2
<PAGE>



discounted cash flow valuation method).  Through March 31, 2006, the Partnership
has recorded  approximately  $3,926,000  as an aggregate  loss on  impairment of
assets or reduction to estimated fair value.

While the value of the  remaining Tax Credits are a factor in  calculating  fair
value,  the expiration of the Credit Period,  in and of itself,  is not the only
factor in determining whether there is an impairment and generally does not have
any adverse impact on the fair value of the Local Partnerships.

There can be no  assurance  that the  Partnership  will  achieve its  investment
objectives as described above.

The  Partnership  is subject to the risks  incident to potential  losses arising
from the management and ownership of improved real estate.  The  Partnership can
also be affected by poor economic conditions generally, however no more than 33%
of the  Properties are located in any single state.  There are also  substantial
risks associated with owning  interests in properties,  as does the Partnership,
which receive government  assistance,  for example the possibility that Congress
may not  appropriate  funds to  enable  the  Department  of  Housing  and  Urban
Development  ("HUD") to make  rental  assistance  payments.  HUD also  restricts
annual  cash  distributions  to  partners  based  on  operating  results  and  a
percentage of the owner's equity  contribution.  The Partnership  cannot sell or
substantially  liquidate its investments in subsidiary  partnerships  during the
period that the subsidy  agreements  are in existence  without  HUD's  approval.
Furthermore,  there may not be market demand for apartments at full market rents
when the rental assistance contracts expire.

Segments
--------
The Partnership operates in one segment, which is the investment in multi-family
residential  property.  Financial information about this segment is set forth in
Item 8 hereto.

Competition
-----------
The real estate  business is highly  competitive  and  substantially  all of the
Properties  acquired by the Partnership are expected to have active  competition
from similar  properties in their respective  vicinities.  Various other limited
partnerships have, in the past, and may, in the future, be formed by the General
Partner and/or its  affiliates to engage in businesses  which may be competitive
with the Partnership.

Employees
---------
The Partnership does not have any direct  employees.  All services are performed
for the  Partnership  by the  General  Partner and its  affiliates.  The General
Partner receives compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partner and
certain  of  its  affiliates  for  expenses  incurred  in  connection  with  the
performance  by their  employees of services for the  Partnership  in accordance
with the  Partnership's  Amended and Restated  Agreement of Limited  Partnership
(the "Partnership Agreement").

Item 1A.  Risk Factors

The Partnership's  investment as a limited partner in the Local  Partnerships is
subject to the risks of potential  losses arising from  management and ownership
of improved real estate.  The Partnership's  investments also could be adversely
affected by poor economic  conditions  generally,  which could increase  vacancy
levels and rental payment defaults,  and by increased operating expenses, any or
all of which could threaten the financing  viability of one or more of the Local
Partnerships.

The  Partnership  is subject to the risks  incident to potential  losses arising
from the management and ownership of improved real estate.  The  Partnership can
also  be  affected  by  poor  economic  conditions  generally.  There  also  are
substantial risks associated with the operation of Apartment Complexes receiving
government assistance.  These include governmental regulations concerning tenant
eligibility,  which  may  make  it more  difficult  to  rent  apartments  in the
Apartment  Complexes;  difficulties  in obtaining  government  approval for rent
increases; limitations on the percentage of income which low and moderate-income
tenants may pay as rent; the possibility that Congress may not appropriate funds
to enable HUD to make the rental assistance  payments it has contracted to make;
and that when the rental assistance  contracts  expire,  there may not be market
demand for  apartments at full market rents in a Local  Partnership's  Apartment
Complex.

Item 1B.  Unresolved Staff Comments

Not applicable


                                       3
<PAGE>



Item 2.  Properties

The  Partnership  holds a 98.99% limited  partnership  interest in fifteen Local
Partnerships  as of March 31,  2006.  Set forth below is a schedule of the Local
Partnerships including certain information concerning their respective Apartment
Complexes (the "Local Partnership  Schedule").  Further  information  concerning
these  Local  Partnerships  and their  Properties,  including  any  encumbrances
affecting the Properties, may be found in Item 15. Schedule III.

                           Local Partnership Schedule
                           --------------------------

<TABLE>
<CAPTION>

                                                              % of Units Occupied at May 1,
                                                       ------------------------------------------
       Name and Location              Date Acquired     2006     2005     2004     2003     2002
--------------------------------     --------------    ------   ------   ------   ------   ------
<S>                                  <C>                <C>      <C>      <C>      <C>      <C>
Lincoln Renaissance
  Reading, PA (52)                       April 1993      90%      98%      97%     100%      98%

United Germano-Millgate
  Limited Partnership
  Chicago, IL (350)                    October 1993      98%      87%      98%      99%      99%

Mansion Court Associates
  Philadelphia, PA (30)               November 1993      70%      87%      57%      87%      97%

Derby Run Associates, L.P.
  Hampton, VA (160)                   February 1994      96%      98%      91%      96%      98%

Renaissance Plaza `93
  Associates , L.P.
  Baltimore, MD (95)                  February 1994      98%      99%      97%      98%     100%

Tasker Village Associates
  Philadelphia, PA (28)                    May 1994     100%     100%      79%     100%     100%

Martha Bryant Manor, L.P.
  Los Angeles, CA (77)               September 1994      95%      99%      99%     100%      95%

Colden Oaks
  Limited Partnership
  Los Angeles, CA (38)               September 1994     100%      97%      97%     100%     100%

Brynview Terrace, L.P.
  Los Angeles, CA (8)                September 1994     100%     100%     100%     100%     100%

NLEDC, L.P.
  Los Angeles, CA (43)               September 1994      95%      98%      98%     100%     100%

Creative Choice
  Homes VI, Ltd.
  Miami, FL (102)                    September 1994      57%      99%      99%      99%     100%

P&P Homes for the Elderly, L.P.
  Los Angeles, CA (107)              September 1994      96%      96%      98%     100%     100%

Clear Horizons
  Limited Partnership
  Shreveport, LA (84)                 December 1994      94%      96%      95%      99%      95%

Neptune Venture, L.P.
  Neptune Township, NJ (99)              April 1995     100%     100%     100%     100%     100%

Affordable Green Associates L.P.
  New York, NY (41)                      April 1995     100%     100%     100%     100%     100%

</TABLE>

All leases are  generally  for  periods  not  exceeding  one to two years and no
tenant occupies more than 10% of the total rentable square footage in any single
Apartment Complex.

Rents from commercial  tenants (to which average rental per square foot applies)
comprise  less  than  5% of the  rental  revenues  of the  Partnership.  Maximum
allowable rents for the residential units are determined annually by HUD.


                                       4
<PAGE>


Management  continuously  reviews  the  physical  state  of the  Properties  and
suggests to the respective  general partners of the Local  Partnerships  ("Local
General Partners") budget improvements which are generally funded from cash flow
from operations or release of replacement reserve escrows.

Management  continuously  reviews the insurance  coverage of the  Properties and
believes such coverage is adequate.

See Item 1, Business,  above for the general competitive conditions to which the
Properties described above are subject.

Real estate taxes are calculated using rates and assessed valuations  determined
by the  township  or city in which the  Property  is  located.  Such  taxes have
approximated 1% of the aggregate cost of the Properties as shown in Schedule III
to the financial statements included herein.

In connection with investments in  development-stage  Apartment  Complexes,  the
General  Partner  generally  required  that the Local General  Partners  provide
completion guarantees and/or undertake to repurchase the Partnership's  interest
in the Local  Partnership if  construction or  rehabilitation  was not completed
substantially  on time or on  budget  ("Development  Deficit  Guarantees").  The
Development Deficit Guarantees generally also required the Local General Partner
to provide  any funds  necessary  to cover net  operating  deficits of the Local
Partnership  until such time as the  Apartment  Complex had achieved  break-even
operations.  The  General  Partner  generally  required  that the Local  General
Partners  undertake  an  obligation  to fund  operating  deficits  of the  Local
Partnership  (up to a stated  maximum  amount)  during a limited  period of time
(typically  three  to  five  years)  following  the  achievement  of  break-even
operations  ("Operating  Deficit  Guarantees").  As of March 31, 2006, the gross
amount of the Operating Deficit Guarantees aggregated approximately  $5,670,000,
of which  $4,840,000 had expired.  Management does not expect that expiration to
have a material  impact on liquidity,  based on prior years'  fundings.  Amounts
funded under such  agreements  are treated as noninterest  bearing loans,  which
will be paid only out of 50% of available cash flow or out of available net sale
or refinancing proceeds. In some instances, the Local General Partners have been
required to undertake an obligation to comply with a Rent-Up Guaranty Agreement,
whereby  the Local  General  Partner  has  agreed to pay  liquidated  damages if
predetermined occupancy rates are not achieved.  These payments are made without
a right of  repayment.  In  cases  where  the  General  Partner  has  deemed  it
appropriate,  the  obligations of a Local General  Partner under the Development
Deficit,  Operating  Deficit  and/or  Rent-Up  Guarantees  have been  secured by
letters of credit and/or cash escrow deposits.

Tax  Credits  with  respect to a given  Apartment  Complex are  available  for a
ten-year  period  that  commences  when the  Property  is placed  into  service.
However,  the annual Tax Credits  available  in the year in which the  Apartment
Complex is placed in service must be prorated based upon the months remaining in
the year.  The amount of the annual Tax Credit not  available  in the first year
will be  available in the  eleventh  year.  In certain  cases,  the  Partnership
acquired its interest in a Local  Partnership  after the Local  Partnership  had
placed its Apartment Complex in service.  In these cases, the Partnership may be
allocated Tax Credits only  beginning in the month  following the month in which
it acquired its  interest and Tax Credits  allocated in any prior period are not
available to the Partnership.

Item 3.  Legal Proceedings

None

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

None

                                     PART II

Item 5. Market for Registrant's  Common Equity,  Related Security Holder Matters
and Issuer Purchases of Equity Securities

As of March 31, 2006, the Partnership had issued and outstanding  58,928 Limited
Partnership  Interests,  each representing a $1,000 capital  contribution to the
Partnership,  or an aggregate capital  contribution of $58,928,000 before volume
discounts  of  $2,000.  All of the issued and  outstanding  Limited  Partnership
Interests have been issued to Independence  Assignor Inc. (the "Assignor Limited
Partner"), which has in turn issued 58,928 BACs to the purchasers thereof for an
aggregate  purchase price of $58,928,000  reduced by volume discounts of $2,000.
Each BAC  represents  all of the economic  and  virtually  all of the  ownership
rights  attributable  to a Limited  Partnership  Interest  held by the  Assignor
Limited Partner.  BACs may be converted into Limited Partnership Interests at no
cost to the  holder  (other  than the  payment of  transfer  costs not to exceed
$100),  but  Limited  Partnership  Interests  so  acquired  are  not  thereafter
convertible into BACs.

Neither  the  BACs nor the  Limited  Partnership  Interests  are  traded  on any
established  trading market. The Partnership does not intend to include the BACs
for  quotation  on NASDAQ or for  listing  on any  national  or  regional  stock
exchange or any other  established  securities  market.  The Revenue Act of 1987
contained  provisions  which have an adverse  impact on  investors  in "publicly
traded  partnerships."  Accordingly,  the General  Partner  has imposed  limited
restrictions  on the  transferability  of the BACs and the  Limited  Partnership
Interests in secondary market  transactions.  Implementation of the restrictions
should prevent a public trading market from developing and may adversely  affect
the ability of an investor to liquidate  his or her  investment  quickly.  It is
expected that these  procedures  will remain in effect until such time, if ever,
as further  revision of the Revenue  Act of 1987 may permit the  Partnership  to
lessen the scope of the restrictions.

As of May 18, 2006, the Partnership has approximately  3,455 registered  holders
of an aggregate of 58,928 BACs.

All  of  the  Partnership's  general  partnership  interests,   representing  an
aggregate capital contribution of $1,000, are held by the General Partner.

There are no material legal  restrictions  in the  Partnership  Agreement on the
ability of the Partnership to make distributions.  However,  the Partnership has
made no  distributions to the BACs holders as of March 31, 2006. The Partnership
does not anticipate  providing cash distributions to its BACs holders other than
from net refinancing or sales proceeds.

Transfer Procedures
-------------------
The Partnership  from time to time receives  requests by unit holders and others
to transfer BACs and/or limited partnership  interests.  Such requests may occur
in connection  with tender  offers for the  Partnership's  units.  Such requests


                                       5
<PAGE>



implicate  the  Partnership's   policies  and  procedures  concerning  transfers
generally and tender offers in particular, which were adopted by the Partnership
pursuant to the terms of its Partnership  Agreement,  to ensure  compliance with
applicable  law,  avoid adverse tax  consequences  for the  Partnership  and its
investors, and preserve the Partnership's advantageous tax status.

In prior years,  the  Partnership  relied on the 5% safe harbor  established  by
Internal Revenue Service ("IRS")  regulations to avoid being  characterized as a
"publicly-traded  partnership"  that  is  taxed  as a  corporation.  The 5% safe
harbor,  however,  expired and is no longer  available  as of December 31, 2005.
Accordingly,  the  Partnership  now relies on a 2% safe  harbor  established  by
another  IRS  regulation  to avoid  being  characterized  as a  "publicly-traded
partnership" that is taxed as a corporation.

A brief  summary of certain of the  Partnership's  key  policies,  practices and
requirements with respect to transfers and tender offers is as follows:

o    No  transfer  (whether  for  substitution,   assignment  or  otherwise)  is
     effective or binding on the Partnership  unless and until it is approved by
     the General Partner.

o    No transfer will be approved  unless the transferor  and transferee  submit
     complete  and properly  executed  forms of the  Partnership's  own transfer
     documentation.   The   Partnership   does  not  accept  forms  of  transfer
     documentation  other  than its own and does not accept  signatures  made by
     power of attorney in lieu of original signatures by each of the transferors
     and transferees.

o    The Partnership will not approve transfers that in the cumulative aggregate
     for any tax  year  exceed  the IRS 2% safe  harbor,  unless  a  financially
     responsible  person  provides the  Partnership and its partners with (i) an
     indemnity  (in form and  substance  in all ways  acceptable  to the General
     Partner) for all liability (including,  without limitation, any adverse tax
     consequences)  arising from or relating to exceeding the 2% safe harbor and
     (ii) a legal opinion (in form and  substance in all ways  acceptable to the
     General  Partner)  that there will be no adverse  tax  consequences  to the
     Partnership and its partners from exceeding the 2% safe harbor.

o    It order to avoid the  undesirable  situation of one or more tender  offers
     consuming  the  entire  safe  harbor  limitation  early in the tax year and
     leaving the Partnership's remaining investors with no liquidity opportunity
     for the rest of that tax year,  the  Partnership  restricts the  cumulative
     aggregate  total of transfers made pursuant to all tender offers to 1.5% of
     its outstanding  units in each tax year,  unless a financially  responsible
     person  conducting  such tender  offer  provides  the  Partnership  with an
     acceptable  indemnity and legal opinion of the type described above. At the
     end of each tax year, the General Partner, in its discretion, may allow the
     cumulative  total number of transfers  (including those by tender offer) to
     reach the 2% safe harbor limit.

o    The Partnership  requires that all tender offers for its units be conducted
     in accordance with all applicable law including,  without  limitation,  the
     federal securities laws.

The foregoing is solely a summary of the  Partnership's  policies,  requirements
and  practices  with  respect to  transfers  and tender  offers.  More  complete
information,  including  a copy  of  the  Partnership's  transfer  documentation
package, may be obtained from the Partnership.

Item 6.  Selected Financial Data

The  information  set  forth  below  presents  selected  financial  data  of the
Partnership.  Additional  financial  information  is set  forth  in the  audited
consolidated financial statements in Item 8 hereof.

<TABLE>
<CAPTION>

                                                                        Year Ended March 31,
                                            ----------------------------------------------------------------------------
                OPERATIONS                      2006            2005            2004            2003            2002
------------------------------------------  ------------    ------------    ------------    ------------    ------------
<S>                                         <C>             <C>             <C>             <C>             <C>
Revenues                                    $ 10,023,797    $ 10,073,012    $  9,359,288    $  9,140,057    $  9,013,667
Operating expenses                           (14,950,857)    (14,861,056)    (14,653,886)    (13,685,802)    (13,154,549)
                                            ------------    ------------    ------------    ------------    ------------

Loss before minority interest                 (4,927,060)     (4,788,044)     (5,294,598)     (4,545,745)     (4,140,882)
Minority interest in loss of subsidiaries         11,477          11,499          16,161          10,959           8,204
                                            ------------    ------------    ------------    ------------    ------------
Net loss                                    $ (4,915,583)   $ (4,776,545)   $ (5,278,437)   $ (4,534,786)   $ (4,132,678)
                                            ============    ============    ============    ============    ============

Net loss per weighted average BAC           $     (82.58)   $     (80.25)   $     (88.68)   $     (76.19)   $     (69.43)
                                            ============    ============    ============    ============    ============

</TABLE>
<TABLE>
<CAPTION>

                                                                             March 31,
                                            ----------------------------------------------------------------------------
            FINANCIAL POSITION                  2006            2005            2004            2003            2002
------------------------------------------  ------------    ------------    ------------    ------------    ------------
<S>                                         <C>             <C>             <C>             <C>             <C>
Total assets                                $ 78,547,380    $ 82,380,900    $ 84,016,822    $ 87,502,402    $ 90,796,504
                                            ============    ============    ============    ============    ============

Total liabilities                           $ 82,812,788    $ 81,233,675    $ 77,992,941    $ 76,092,507    $ 74,604,701
                                            ============    ============    ============    ============    ============

Minority interest                           $ (1,048,455)   $   (551,405)   $   (451,294)   $   (343,717)   $    (96,595)
                                            ============    ============    ============    ============    ============

Total partners' (deficit) capital           $ (3,216,953)   $  1,698,630    $  6,475,175    $ 11,753,612    $ 16,288,398
                                            ============    ============    ============    ============    ============

</TABLE>


                                       6
<PAGE>


During the years ended March 31, 2006, 2005, 2004, 2003 and 2002,  respectively,
total  assets  decreased  primarily  due to  depreciation  partially  offset  by
improvements to property and equipment.

Cash Distributions
------------------
The  Partnership has made no  distributions  to the BACs holders as of March 31,
2006.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Liquidity and Capital Resources
-------------------------------

Through March 31, 2006, the  Partnership has invested all of the net proceeds of
its  Offering in fifteen  Local  Partnerships  of which  approximately  $282,000
remains to be paid (including approximately $24,000 being held in escrow).

Short-Term
----------

The  Partnership's  primary  source of funds is a working  capital  reserve  and
interest  thereon.  This source of funds is available to meet obligations of the
Partnership.  At March 31, 2006, there is a balance of approximately $297,000 in
the working capital  reserve.  The General Partner believes that these reserves,
plus  cash  distributions  to be  received  from  the  operations  of the  Local
Partnerships,  will be  sufficient  (subject to the  continued  deferral of fees
payable to the General Partner) to fund the Partnership's ongoing operations for
the  foreseeable  future.  During the years ended March 31, 2006, 2005 and 2004,
amounts received from operations of the Local  Partnerships  were  approximately
$215,000, $165,000 and $88,000,  respectively.  Management anticipates receiving
distributions  in the  future,  although  not to a level  sufficient  to  permit
providing cash distributions to BACs holders.

For the year ended March 31, 2006, cash and cash  equivalents of the Partnership
and  its  fifteen  consolidated  Local  Partnerships   decreased   approximately
$759,000.  This  decrease  was due to  improvements  to property  and  equipment
($309,000),  a net  decrease in due to local  general  partners  and  affiliates
relating to investing and financing activities ($61,000),  principal payments of
mortgage  notes   ($589,000),   capitalization   of  consolidated   subsidiaries
attributable  to minority  interest  ($486,000)  and an increase in cash held in
escrow relating to investing  activities  ($18,000) which exceeded cash provided
by operating activities ($704,000). Included in the adjustments to reconcile the
net loss to net cash  provided  by  operating  activities  is  depreciation  and
amortization ($3,406,000).

The General Partner generally required that the Local General Partners undertake
an  obligation  to fund  operating  deficits of the Local  Partnership  (up to a
stated maximum amount) during a limited period of time (typically  three to five
years) following the achievement of break-even  operations  ("Operating  Deficit
Guarantees").  As of March 31, 2006,  the gross amount of the Operating  Deficit
Guarantees aggregated approximately $5,670,000, of which $4,840,000 had expired.
Management  does  not  expect  that  expiration  to have a  material  impact  on
liquidity,  based on prior years' fundings. Amounts funded under such agreements
are treated as noninterest  bearing loans, which will be paid only out of 50% of
available  cash flow or out of available net sale or  refinancing  proceeds.  In
some  instances,  the Local General  Partners have been required to undertake an
obligation  to  comply  with a Rent-Up  Guaranty  Agreement,  whereby  the Local
General Partner has agreed to pay liquidated damages if predetermined  occupancy
rates are not achieved. These payments are made without a right of repayment. In
cases where the General Partner has deemed it appropriate,  the obligations of a
Local General Partner under the Operating Deficit and/or Rent-Up Guarantees have
been secured by letters of credit and/or cash escrow deposits.

Total  expenses  for the years ended March 31,  2006,  2005 and 2004,  excluding
depreciation and amortization, interest and general and administrative - related
parties, totaled $7,430,315, $7,040,517 and $7,264,854, respectively.

Accounts  payable as of March 31,  2006 and 2005 was  $1,094,824  and  $720,880,
respectively.  Accounts payable are short term liabilities which are expected to
be paid  from  operating  cash  flows,  working  capital  balances  at the Local
Partnership level,  Local General Partner advances and in certain  circumstances
advances from the  Partnership.  Because the  provisions of the secondary  loans
defer the payment of accrued interest of the respective Local Partnerships,  the
Partnership  believes it (and the applicable Local  Partnerships) has sufficient
liquidity  and  ability  to  generate  cash and to meet  existing  and  known or
reasonably likely future cash requirements over both the short and long term.

Accrued  interest as of March 31, 2006 and 2005 was $16,935,473 and $15,226,268,
respectively.  Accrued interest  represents the accrued interest on all mortgage
loans,  which include primary and secondary loans.  Certain secondary loans have
provisions  such that  interest is accrued but not payable  until a future date.
The  Partnership  anticipates  the payment of accrued  interest on the secondary
loans (which make up the majority of the accrued  interest  payable amount which
have been  accumulating  since the  Partnership's  investment in the  respective
Local  Partnership)  will be made from future  refinancings or sales proceeds of
the  respective  Local  Partnerships.  In  addition,  each  Local  Partnership's
mortgage  notes are  collateralized  by the land and buildings of the respective
Local Partnership, and are without further recourse to the Partnership.

Partnership   management  fees  owed  to  the  General   Partner   amounting  to
approximately  $3,755,000 and $3,635,000 were accrued and unpaid as of March 31,
2006  and  2005,  respectively  (see  Note 8 in Item  8).  Without  the  General
Partner's  advances and continued  accrual  without  payment of certain fees and
expense  reimbursements,  the Partnership would not be in a position to meet its
obligations.  The General Partner has continued to advance and allow the accrual
without  payment of these  amounts but is under no  obligation to continue to do
so.

Long-Term
---------

For a discussion of  contingencies  affecting  certain Local  Partnerships,  see
Results of Operations of Certain Local  Partnerships,  below.  Since the maximum
loss the Partnership would be liable for is its net investment in the respective
subsidiary  partnerships,  the resolution of the existing  contingencies  is not
anticipated  to impact  future  results of  operations,  liquidity  or financial
condition in a material way. However,  the Partnership's  loss of its investment
in a Local Partnership will eliminate the ability to generate future Tax Credits
from such Local  Partnership  and may also result in recapture of Tax Credits if
the investment is lost before expiration of the Credit Period.


                                       7
<PAGE>



Except as  described  above,  management  is not aware of any  trends or events,
commitments or uncertainties,  which have not otherwise been disclosed that will
or are likely to impact  liquidity in a material  way.  Management  believes the
only impact would be from laws that have not yet been adopted.  The portfolio is
diversified by the location of the  Properties  around the United States so that
if one  area of the  country  is  experiencing  downturns  in the  economy,  the
remaining Properties in the portfolio may be experiencing upswings.  However the
geographic  diversification  of the portfolio may not protect  against a general
downturn in the national  economy.  The Partnership has invested the proceeds of
its Offering in 15 Local Partnerships, all of which have their Tax Credits fully
in place.  Tax Credits are attached to a Property for a period of ten years, and
are transferable  with the Property during the remainder of the ten-year period.
If  trends in the real  estate  market  warranted  the sale of a  Property,  the
remaining Tax Credits would  transfer to the new owner,  thereby adding value to
the Property on the market.  However,  such value  declines each year and is not
included in the financial  statement  carrying  amount.  The Credit  Periods are
scheduled to expire at various times  through  December 31, 2007 with respect to
the Local Partnerships depending upon when the Credit Period commenced.

Tabular Disclosure of Contractual Obligations
---------------------------------------------
The following  table  summarizes the  Partnership's  commitments as of March 31,
2006 to make future  payments under its debt  agreements  and other  contractual
obligations.

<TABLE>
<CAPTION>

                                                Less than       1 - 3         3 -5        More than
                                    Total        1 Year         Years         Years        5 Years
                                 -----------   -----------   -----------   -----------   -----------
<S>                              <C>           <C>           <C>           <C>           <C>
Mortgage notes payable (a)       $58,682,893   $   651,934   $ 1,447,558   $ 3,073,127   $53,510,274
Loans payable to local general
   partner and affiliates (b)        236,374       236,374             0             0             0
                                 -----------   -----------   -----------   -----------   -----------

                                 $58,919,267   $   888,308   $ 1,447,558   $ 3,073,127   $53,510,274
                                 ===========   ===========   ===========   ===========   ===========

</TABLE>

(a)  The  mortgage  notes are  payable  in  aggregate  monthly  installments  of
     approximately  $161,000  including  principal and interest at rates ranging
     from 0% to  9.65%  per  annum,  through  the  year  2052.  Each  subsidiary
     partnership's  mortgage  note  payable  is  collateralized  by the land and
     buildings of the respective subsidiary partnership,  the assignment of each
     certain subsidiary  partnership's  rents and leases, and is without further
     recourse.

(b)  See Note 8 (B) in Item 8. Financial Statements and Supplementary Data

Off Balance Sheet Arrangements
------------------------------

The Partnership has no off-balance sheet arrangements.

Critical Accounting Policies
----------------------------

The preparation of consolidated financial statements requires management to make
estimates and assumptions.  These estimates and assumptions  affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities  at the  date  of the  consolidated  financial  statements  and  the
reported  amounts of revenue and expenses  during the reporting  period.  Actual
results could differ from those estimates. The following is a summary of certain
accounting estimates considered critical by the Partnership.

Property and Equipment
----------------------

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price, acquisition fees and expenses,  construction period interest
and any other costs incurred in acquiring the  Properties.  The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods.  Expenditures for repairs and maintenance are charged
to expense as incurred;  major renewals and betterments are capitalized.  At the
time property and  equipment are retired or otherwise  disposed of, the cost and
accumulated   depreciation  are  eliminated  from  the  assets  and  accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings.  The  Partnership  complies  with  Statement of  Financial  Accounting
Standards  ("SFAS")  No. 144  "Accounting  for the  Impairment  or  Disposal  of
Long-Lived  Assets".  A loss on impairment of assets is recorded when management
estimates amounts recoverable through future operations and sale of the Property
on an  undiscounted  basis are below  depreciated  cost. At that time,  Property
investments  themselves  are reduced to estimated  fair value  (generally  using
discounted  cash flows) when the Property is  considered  to be impaired and the
depreciated cost exceeds estimate fair value.

Through March 31, 2006, the Partnership has recorded approximately $3,926,000 as
an aggregate loss on impairment of assets.

Revenue Recognition
-------------------

Rental income is earned  primarily under standard  residential  operating leases
and is typically  due the first day of each month,  but can vary by Property due
to the terms of the tenant leases.  Rental income is recognized  when earned and
charged to tenants' accounts  receivable if not received by the due date. Rental
payments  received in advance of the due date are deferred until earned.  Rental
subsidies  are  recognized  as  rental  income  during  the month in which it is
earned.

Other  revenues are  recorded  when earned and consist of the  following  items:
Interest  income  earned on cash and cash  equivalent  balances and cash held in
escrow balances,  income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.


                                       8
<PAGE>



Other revenues  include the following  amounts at both the Partnership and Local
Partnership level:

<TABLE>
<CAPTION>

                                            2006           2005*          2004
                                          --------       --------       --------
<S>                                       <C>            <C>            <C>
Interest                                  $ 83,615       $ 45,121       $ 36,944
Other                                      175,324        521,798        139,461
                                          --------       --------       --------

  Total other revenue                     $258,939       $566,919       $176,405
                                          ========       ========       ========

</TABLE>

* Reclassified for comparative purposes.

Income Taxes
------------

The  Partnership  is not  required to provide  for, or pay,  any federal  income
taxes.  Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The  Partnership may be subject
to state and local taxes in jurisdictions  in which it operates.  For income tax
purposes, the Partnership has a fiscal year ending December 31.

New Accounting Pronouncements
-----------------------------

In June 2005, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
154,  Accounting  Changes and Error  Corrections  ("FAS 154").  FAS 154 replaces
Accounting  Principles  Board Opinion No. 20,  Accounting  Changes and Financial
Accounting  Standard No. 3, Reporting  Accounting  Changes in Interim  Financial
Statements.  FAS 154 requires that a voluntary change in accounting principle be
applied  retrospectively with all prior period financial statements presented on
the new accounting  principle.  FAS 154 also requires that a change in method of
depreciating  or  amortizing a long-lived  nonfinancial  asset be accounted  for
prospectively  as a change in estimate,  and  correction of errors in previously
issued financial statements should be termed a restatement. FAS 154 is effective
for accounting  changes and correction of errors made in fiscal years  beginning
after December 15, 2005. The implementation of FAS 154 is not expected to have a
material impact on the Partnership's consolidated financial statements.

In June 2005, the FASB issued Emerging  Issues Task Force No. 04-5,  Determining
Whether a General  Partner,  or the  General  Partners  as a Group,  Controls  a
Limited  Partnership  or Similar  Entity When the Limited  Partners Have Certain
Rights ("EITF No. 04-5"). EITF No. 04-5 replaces counterpart requirements in the
Statement  of  Position  78-9,   which  provides   guidance  on  accounting  for
investments in  real-estate  ventures and limited  partnerships.  Under EITF No.
04-5, the general  partner's  control would be overcome if the limited  partners
have  either (i)  "kick-out  rights"-  the right to dissolve  or  liquidate  the
partnership  or otherwise  remove the general  partner  "without  cause" or (ii)
"participating  rights" - the right to  effectively  participate  in significant
decisions  made  in the  ordinary  course  of the  partnership's  business.  The
kick-out  rights and the  participating  rights must be  substantive in order to
overcome the general partner's  control.  EITF No. 04-5 is now effective.  Since
the Partnership's  financial  statements are presented on a consolidated  basis,
the adoption of EITF No. 04-5 has not had a material effect on the Partnership's
consolidated results of operations.

Results of Operations
---------------------

The following is a summary of the results of operations of the  Partnership  for
the years ended March 31,  2006,  2005 and 2004 (the 2005,  2004 and 2003 Fiscal
Years, respectively).

The net  loss for the  2005,  2004 and 2003  Fiscal  Years  totaled  $4,915,583,
$4,776,545 and $5,278,437, respectively.

The  Partnership and BACs holders began to recognize Tax Credits with respect to
a Property when the Credit Period for such  Property  commenced.  Because of the
time required for the  acquisition,  completion and rent-up of  Properties,  the
amount of Tax Credits per BAC gradually  increased over the first three years of
the  Partnership.  Tax Credits not  recognized  in the first three years will be
recognized in the 11th through 13th years. The Partnership generated $4,827,456,
$8,384,145 and $8,746,267 of Tax Credits during each of the 2005,  2004 and 2003
tax years, respectively.

2005 vs. 2004
-------------
The  Partnership's  results of  operations  for the 2005 and 2004  Fiscal  Years
consisted  primarily of the results of the  Partnership's  investment in fifteen
consolidated  Local  Partnerships.  The  majority  of Local  Partnership  income
continues  to be in the form of rental  income with the  corresponding  expenses
being divided among operations, depreciation and mortgage interest.

Rental income increased approximately 3% for the 2005 Fiscal Year as compared to
the 2004  Fiscal  Year,  primarily  due to rental  rate  increases  at the Local
Partnerships.

Other  income  decreased  approximately  $308,000  for the 2005  Fiscal  Year as
compared to the 2004  Fiscal  Year,  primarily  due to an  insurance  settlement
received  during  the  2004  Fiscal  Year at one  Local  Partnership  offset  by
reimbursements  received  for prior  year's  legal  expenses  at a second  Local
Partnership   and   increases  in  interest   income  at  several   other  Local
Partnerships.

Total expenses, excluding operating, remained consistent with a decrease of less
than 1% for the 2005 Fiscal Year as compared to the 2004 Fiscal Year.

Operating expenses increased  approximately $116,000 for the 2005 Fiscal Year as
compared to the 2004 Fiscal Year,  primarily  due to increases in gas charges at
three Local Partnerships.


                                       9
<PAGE>



2004 vs. 2003
-------------
The  Partnership's  results of  operations  for the 2004 and 2003  Fiscal  Years
consisted  primarily of the results of the  Partnership's  investment in fifteen
consolidated  Local  Partnerships.  The  majority  of Local  Partnership  income
continues  to be in the form of rental  income with the  corresponding  expenses
being divided among operations, depreciation and mortgage interest.

Rental income increased approximately 4% for the 2004 Fiscal Year as compared to
the 2003  Fiscal  Year,  primarily  due to rental  rate  increases  at the Local
Partnerships.

Other  income  increased  approximately  $391,000  for the 2004  Fiscal  Year as
compared to the 2003  Fiscal  Year,  primarily  due to an  insurance  settlement
received at one Local Partnership.

Total expenses, excluding financial, remained consistent with a decrease of less
than 1% for the 2004 Fiscal Year as compared to the 2003 Fiscal Year.

Financial expenses increased  approximately $287,000 for the 2004 Fiscal Year as
compared to the 2003  Fiscal  Year,  primarily  due to a  prepayment  penalty of
$256,000  incurred at one of the Local  Partnerships  as a result of refinancing
its loan (See Item 8, Note 7).

Results of Operations of Certain Local Partnerships
---------------------------------------------------

Clear Horizons Limited Partnership
----------------------------------
At December 31, 2005, Clear Horizons Limited  Partnership's  ("Clear  Horizons")
current  liabilities  exceeded  its current  assets by $255,020.  Although  this
condition  could  raise  substantial  doubt  about  Clear  Horizons'  ability to
continue as a going concern, such doubt is alleviated as follows:

1.  Included in current  liabilities  at December 31, 2005,  is $244,136 owed to
related  parties  who have  advised  Clear  Horizons  that they do not intend to
pursue collection beyond Clear Horizons' ability to pay.

2. The Local  General  Partner of Clear  Horizons  has agreed to fund  operating
deficits up to $250,000.

Accordingly, management believes that Clear Horizons has the ability to continue
as a going concern for at least one year from December 31, 2005.

Other
-----

The Partnership's  investment as a limited partner in the Local  Partnerships is
subject to the risks of potential  losses arising from  management and ownership
of improved real estate.  The Partnership's  investments also could be adversely
affected by poor economic  conditions  generally,  which could increase  vacancy
levels and rental payment defaults and by increased operating  expenses,  any or
all of which could threaten the financing  viability of one or more of the Local
Partnerships.

There also are  substantial  risks  associated  with the  operation of Apartment
Complexes   receiving   government   assistance.   These  include   governmental
regulations  concerning tenant eligibility,  which may make it more difficult to
rent apartments in the Apartment Complexes; difficulties in obtaining government
approval for rent  increases;  limitations on the percentage of income which low
and  moderate-income  tenants may pay as rent; the possibility that Congress may
not appropriate  funds to enable HUD to make the rental  assistance  payments it
has contracted to make; and that when the rental  assistance  contracts  expire,
there may not be market  demand for  apartments  at full market rents in a Local
Partnership's Apartment Complex.

The Local  Partnerships  are impacted by inflation  in several  ways.  Inflation
allows for  increases in rental rates  generally to reflect the impact of higher
operating and  replacement  costs.  Furthermore,  inflation  generally  does not
impact the fixed long-term financing under which real property  investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating  costs as, for example,  for such items as fuel,  utilities and labor.
The Credit Periods are scheduled to expire at various times through December 31,
2007 with  respect  to the Local  Partnerships  depending  upon when the  Credit
Period commenced.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

Mortgage notes are payable in aggregate monthly installments including principal
and interest at rates varying from 0% to 9.65% per annum.  The Partnership  does
not believe there is a material risk associated with the various  interest rates
associated  with the  mortgage  notes as the  majority of the Local  Partnership
mortgage notes have fixed rates. The Partnership  currently discloses in Item 8,
Note 3 to the financial statements the fair value of the mortgage notes payable.
The Partnership does not have any other market risk sensitive instruments.


                                       10
<PAGE>



Item 8.    Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
                                                                                                   Sequential
                                                                                                      Page
                                                                                                   ----------

<S>   <C>                                                                                              <C>
(a)1. Consolidated Financial Statements

      Report of Independent Registered Public Accounting Firm                                          12

      Consolidated Balance Sheets at March 31, 2006 and 2005                                           35

      Consolidated Statements of Operations for the Years Ended March 31, 2006, 2005 and 2004          36

      Consolidated Statements of Changes in Partners' (Deficit) Capital for the Years Ended
        March 31, 2006, 2005 and 2004                                                                  37

      Consolidated Statements of Cash Flows for the Years Ended March 31, 2006, 2005 and 2004          38

      Notes to Consolidated Financial Statements                                                       39

</TABLE>


                                       11
<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


To the Partners of
Independence Tax Credit Plus L.P. II and Subsidiaries
(A Delaware Limited Partnership)

We have audited the consolidated  balance sheets of Independence Tax Credit Plus
L.P. II and Subsidiaries (A Delaware  Limited  Partnership) as of March 31, 2006
and 2005,  and the related  consolidated  statements of  operations,  changes in
partners' capital (deficit),  and cash flows for the years ended March 31, 2006,
2005,  and 2004 (the 2005,  2004,  and 2003 Fiscal Years,  respectively).  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We did not audit the financial  statements for six (Fiscal 2005 and
2004) and thirteen (Fiscal 2003) subsidiary partnerships whose losses aggregated
$2,085,890,  $1,946,642,  and  $3,685,633  for the 2005,  2004,  and 2003 Fiscal
Years,   respectively,   and  whose  assets  constituted  39%  and  40%  of  the
Partnership's assets at March 31, 2006 and 2005, respectively,  presented in the
accompanying  consolidated  financial  statements.  The financial  statements of
these  subsidiary  partnerships  were audited by other  auditors  whose  reports
thereon have been furnished to us and our opinion expressed  herein,  insofar as
it relates to the amounts included for these subsidiary  partnerships,  is based
solely upon the reports of the other auditors.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  based upon our audits,  and the reports of the other  auditors,
the accompanying  consolidated  financial  statements  referred to above present
fairly,  in all material  respects,  the financial  position of Independence Tax
Credit Plus L.P. II and Subsidiaries at March 31, 2006 and 2005, and the results
of their  operations  and their cash flows for the years ended  March 31,  2006,
2005,  and  2004,  in  conformity  with  U.S.  generally   accepted   accounting
principles.



/s/TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 20, 2006

                                       12
<PAGE>

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Lincoln Renaissance

We have audited the  accompanying  balance  sheets of Lincoln  Renaissance as of
December  31,  2003 and 2002,  and the  related  statements  of profit and loss,
changes in partners'  equity  (deficit) and cash flows for the years then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Lincoln  Renaissance  as of
December 31, 2003 and 2002,  and the results of its  operations,  the changes in
partners'  equity  (deficit)  and its cash  flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued our report
for  the  year  ended  December  31,  2003,  dated  January  30,  2004,  on  our
consideration of Lincoln Renaissance's internal control over financial reporting
and on our test of its compliance with certain provisions of laws,  regulations,
contracts and grants.  That report is an integral part of an audit  performed in
accordance with Government  Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 27
through  30 is  presented  for  purposes  of  additional  analysis  and is not a
required  part of the basis  financial  statements.  Such  information  has been
subjected to the auditing procedures applied in the audit of the basis financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.


/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 30, 2004

                                       13
<PAGE>

[Letterhead of WIELAND & COMPANY, INC.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
United - Germano - Millgate Limited Partnership
Chicago, Illinois

We have audited the  accompanying  balance sheets of United - Germano - Millgate
Limited Partnership as of December 31, 2005 and 2004, and the related statements
of operations,  partners' equity and cash flows for the years then ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting  Oversight  Board (United  States),  and the standards  applicable to
financial  audits  contained  in  GOVERNMENT  AUDITING  STANDARDS  issued by the
Comptroller  General of the United States, and the Illinois Housing  Development
Authority's   FINANCIAL  REPORTING  AND  AUDITS  GUIDELINES  FOR  MORTGAGORS  OF
MULTIFAMILY  HOUSING  DEVELOPMENTS.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material  misstatement.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of United - Germano - Millgate
Limited  Partnership  as of December  31, 2005 and 2004,  and the results of its
operations, changes in partners' equity, and cash flows for the years then ended
in conformity with accounting principles generally accepted in the United States
of America.

In accordance with GOVERNMENT AUDITING  STANDARDS,  we have also issued a report
dated January 19, 2006, on our consideration of the internal control of United -
Germano - Millgate Limited Partnership,  and on our tests of its compliance with
certain provisions of laws, regulations, contracts, grants, agreements and other
matters. The purpose of those reports is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that
testing and not to provide an opinion on the internal  control over reporting or
on  compliance.  Those  reports are an integral  part of an audit  performed  in
accordance with GOVERNMENT  AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audit.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  on pages 11 - 12 is presented for purposes of  additional  analysis
and is not a required part of the basic financial statements of United - Germano
- Millgate  Limited  Partnership.  Such  information  has been  subjected to the
auditing procedures applied in the audit of the basic financial  statements and,
in our opinion,  is fairly  stated in all  material  respects in relation to the
basic financial statements taken as a whole.


/s/ Wieland & Company, Inc.
Batavia, Illinois
January 19, 2006

EIN 36-4025026
Engagement Partner:  Paul H. Wieland

                                       14
<PAGE>

[Letterhead of WIELAND & COMPANY, INC.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
United - Germano - Millgate Limited Partnership
Chicago, Illinois

We have audited the  accompanying  balance sheets of United - Germano - Millgate
Limited Partnership as of December 31, 2003 and 2002, and the related statements
of operations,  partners' equity and cash flows for the years then ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audits in accordance with auditing standards generally accepted
in the United  States of America,  and the  standards  applicable  to  financial
audits  contained in GOVERNMENT  AUDITING  STANDARDS  issued by the  Comptroller
General of the United States, and the Illinois Housing  Development  Authority's
FINANCIAL  REPORTING AND AUDITS GUIDELINES FOR MORTGAGORS OF MULTIFAMILY HOUSING
DEVELOPMENTS.  Those  standards  require  that we plan and  perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of United - Germano - Millgate
Limited  Partnership  as of December  31, 2003 and 2002,  and the results of its
operations, changes in partners' equity, and cash flows for the years then ended
in conformity with accounting principles generally accepted in the United States
of America.

In accordance with GOVERNMENT AUDITING  STANDARDS,  we have also issued a report
dated February 9, 2004, on our consideration of the internal control of United -
Germano - Millgate Limited Partnership,  and on our tests of its compliance with
certain provisions of laws,  regulations,  contracts,  and grants. Those reports
are an  integral  part of an  audit  performed  in  accordance  with  GOVERNMENT
AUDITING  STANDARDS  and  should  be read in  conjunction  with  this  report in
considering the results of our audit.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  on pages 11 - 12 is presented for purposes of  additional  analysis
and is not a required part of the basic financial statements of United - Germano
- Millgate  Limited  Partnership.  Such  information  has been  subjected to the
auditing procedures applied in the audit of the basic financial  statements and,
in our opinion,  is fairly  stated in all  material  respects in relation to the
basic financial statements taken as a whole.


/s/ Wieland & Company, Inc.
Batavia, Illinois
February 9, 2004

                                       15
<PAGE>

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT


To the Partners
Mansion Court Associates

We have audited the  accompanying  balance sheets of Mansion Court Associates as
of December 31, 2003 and 2002,  and the related  statements  of profit and loss,
changes in partners'  equity  (deficit) and cash flows for the years then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Mansion Court Associates as of
December 31, 2003 and 2002,  and the results of its  operations,  the changes in
partners'  equity  (deficit)  and its cash  flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued our report
for  the  year  ended  December  31,  2003,  dated  February  6,  2004,  on  our
consideration  of Mansion Court  Associates 's internal  control over  financial
reporting  and on our test of its  compliance  with certain  provisions of laws,
regulations,  contracts and grants.  That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 24
through  27 is  presented  for  purposes  of  additional  analysis  and is not a
required  part of the basis  financial  statements.  Such  information  has been
subjected to the auditing procedures applied in the audit of the basis financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 6, 2004

                                       16
<PAGE>

[Letterhead of WALL, EINHORN & CHERNITZER, P.C.]

INDEPENDENT AUDITOR'S REPORT


To the Partners
DERBY RUN ASSOCIATES, L.P.
(A Virginia Limited Partnership)
Virginia Beach, Virginia


We have audited the accompanying balance sheets of DERBY RUN ASSOCIATES, L.P. (A
Virginia Limited  Partnership) as of December 31, 2005 and 2004, and the related
statements of income,  partners'  (deficit) equity, and cash flows for the years
then ended.  These financial  statements are the responsibility of the project's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not required to have, nor we were engaged to perform,  an
audit of its  internal  control over  financial  reporting.  Our audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for  the  purpose  of  expressing  an  opinion  on  the   effectiveness  of  the
Partnership's internal control over financial reporting. Accordingly, we express
no  such  opinion.  An  audit  includes  examining,  on a test  basis,  evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of DERBY RUN ASSOCIATES,  L.P. as
of December  31, 2005 and 2004,  and the results of its  operations,  changes in
partners'  (deficit)  equity  and its cash  flows  for the years  then  ended in
conformity with accounting  principles  generally  accepted in the United States
and America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements referred to above. The Partnership's management has elected
to disclose certain  information  relating to the low-income housing tax credits
allocated to the Partnership as described in Note 6 to the financial  statements
which are not required to be disclosed in accordance with accounting  principles
generally  accepted in the United States of America.  Such  disclosures have not
been subjected to the auditing procedures applied in the audits of the financial
statements, and accordingly, we express no opinion on them.


/s/ Wall, Einhorn & Chernitzer, P.C.
Norfolk, Virginia
February 9, 2006

                                       17
<PAGE>

[Letterhead of WALL, EINHORN & CHERNITZER, P.C.]

INDEPENDENT AUDITOR'S REPORT


To the Partners                           Virginia Housing Development Authority
DERBY RUN ASSOCIATES, L.P.                601 South Belvidere Street
(A Virginia Limited Partnership)          Richmond, Virginia 23320
Virginia Beach, Virginia


We have audited the accompanying balance sheets of DERBY RUN ASSOCIATES, L.P. (A
Virginia Limited  Partnership) as of December 31, 2003 and 2002, and the related
statements of operations,  partners'  equity,  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  project's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of DERBY RUN ASSOCIATES,  L.P. as
of December  31, 2003 and 2002,  and the results of its  operations,  changes in
partners'  equity and its cash flows for the years then ended in conformity  and
accounting principles generally accepted in the United States and America.

The accompanying  supplementary information shown on pages 14 - 20, is presented
for  purposes of  additional  analysis  and is not a required  part of the basic
financial  statements.  Such  information  has been  subjected  to the  auditing
procedures  applied in the audits of the basic financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements referred to above. The Partnership's management has elected
to disclose certain  information  relating to the low-income housing tax credits
allocated to the Partnership as described in Note 7 to the financial  statements
which are not required to be disclosed in  accordance  with  auditing  standards
generally  accepted in the United States of America.  Such  disclosures have not
been subjected to the auditing procedures applied in the audits of the financial
statements, and accordingly, we express no opinion on them.


/s/ Wall, Einhorn & Chernitzer, P.C.
Norfolk, Virginia
January 23, 2004

                                       18
<PAGE>

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Tasker Village Associates

We have audited the accompanying  balance sheets of Tasker Village Associates as
of December 31, 2003 and 2002,  and the related  statements  of profit and loss,
changes in partners'  equity  (deficit) and cash flows for the years then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material misstatement.  An audit includes examining, on the test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe that our audits  provides a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Tasker Village Associates as of
December 31, 2003 and 2002,  and the results of its  operations,  the changes in
partners'  equity  (deficit)  and its cash  flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued our report
for  the  year  ended  December  31,  2003,  dated  January  16,  2004,  on  our
consideration of Tasker Village's internal control over financial  reporting and
on our test of its  compliance  with certain  provisions  of laws,  regulations,
contracts and grants.  That report is an integral part of an audit  performed in
accordance with Government  Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 25
through  29 is  presented  for  purposes  of  additional  analysis  and is not a
required  part of the basis  financial  statements.  Such  information  has been
subjected to the auditing procedures applied in the audit of the basis financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 16, 2004

                                       19
<PAGE>

[Letterhead of CLIFFORD R. BENN]


INDEPENDENT AUDITOR'S REPORT


General Partner
Martha Bryant Manor, L.P.
Los Angeles, California

I have audited the balance sheet of Martha  Bryant  Manor,  L.P. at December 31,
2003 and the related statements of loss, changes in partners' capital,  and cash
flow for the year then ended. These financial  statements are the responsibility
of Martha Bryant Manor,  L.P.'s  management.  My responsibility is to express an
opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally  accepted  auditing  standards
used in the United States of America.  Those  standards  require that I plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material  misstatements.  An audit include examining on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also include assessing the accounting  principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial statement presentation.  I believe that my audit provides a reasonable
basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of Martha  Bryant  Manor,  L.P. at
December  31, 2003 and the results of its  operations  and its cash flow for the
year then ended in conformity with generally accepted accounting principles used
in the United States of America.


/s/ Clifford R. Benn
February 11, 2004
Carson, California

                                       20
<PAGE>

[Letterhead of MARVIN D. MASON]

To the Partners of
Colden Oaks, A California Limited Partnership
Los Angeles, California

I have  audited the  accompanying  balance  sheets of Colden  Oaks, a California
Limited  Partnership,  as of  December  31,  2005  and  2004,  and  the  related
statements  of  operations,  changes in partners'  equity and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
Partnership's  management.  My  responsibility is to express an opinion on these
financial statements based on my audits.

I conducted my audit in  accordance  with the  standards  of the Public  Company
Accounting Oversight Board (United States).  Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material  misstatement.  The  Partnership  has determined
that it is not required to have,  nor was I engaged to perform,  an audit of its
internal control over financial  reporting.  My audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  I express no such  opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by the management,  as
well as evaluating the overall financial statement presentation.  I believe that
my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in the
material  respects,  the financial position of Colden Oaks, a California Limited
Partnership,  at December 31, 2005 and 2004, and the results of its  operations,
changes  in  partners'  equity  and its cash  flows for the year  then  ended in
conformity with accounting  principles  general accepted in the United States of
America.


/s/ Marvin Mason
Certified Public Accountant
Tarzana, California
February 28, 2006

                                       21
<PAGE>

[Letterhead of MARVIN D. MASON]

To the Partners of
Colden Oaks, A California Limited Partnership
Los Angeles, California

I have  audited the  accompanying  balance  sheets of Colden  Oaks, a California
Limited  Partnership,  as of  December  31,  2003  and  2002,  and  the  related
statements  of  operations,  changes in partners'  equity and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
Partnership's  general  partners.  My responsibility is to express an opinion on
these financial statements based on my audit.

I conducted my audit in accordance  with general  accepted  auditing  standards.
Those standards  require that I plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles used and significant  estimates made by the
Partnership's  general  partners,  as well as evaluating  the overall  financial
statement presentation.  I believe that my audit provides a reasonable basis for
my opinion.

In my opinion, the financial statements referred to above present fairly, in the
material  respects,  the financial position of Colden Oaks, a California Limited
Partnership,  at December 31, 2003 and 2002, and the results of its  operations,
changes  in  partners'  equity  and its cash  flows for the year  then  ended in
conformity with general accepted accounting principles.


/s/ Marvin Mason
Certified Public Accountant
Tarzana, California
February 28, 2004

                                       22
<PAGE>

[Letterhead of CLIFFORD R. BENN, CPA]

INDEPENDENT AUDITOR'S REPORT

General Partner
Brynview Terrace, L.P.
Los Angeles, California

I have audited the balance sheet of Brynview Terrace,  L.P. at December 31, 2005
and the related statements of loss, changes in partners' capital,  and cash-flow
for the year then ended.  These financial  statements are the  responsibility of
Brynview Terrace, L.P.'s management.  My responsibility is to express an opinion
on these financial statements based on my audit.

I conducted my audit in  accordance  with the  standards  of the Public  Company
Accounting  Oversight  Board,  used  in the  United  States  of  America.  Those
standards  require  that I plan  and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements.  The  partnership has determined that it is not required to have,
nor was I engaged to perform,  an audit of its internal  control over  financial
reporting.  My audit included  consideration  of internal control over financial
reporting as a basis for designing audit  procedures that are appropriate in the
circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on the
effectiveness of the  partnership's  internal control over financial  reporting.
Accordingly,  I express no such opinion.  An audit includes  examining on a test
basis,  evidence  supporting  the  amounts  and  disclosures  in  the  financial
statements.  An audit also include assessing the accounting  principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial statement presentation.  I believe that my audit provides a reasonable
basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects,  the financial position of Brynview Terrace, L.P. at December
31, 2005 and the results of its  operations  and its cash flow for the year then
ended in conformity with generally  accepted  accounting  principles used in the
United States of America.


/s/ Clifford R. Benn, CPA
February 1, 2006
Carson, California

                                       23
<PAGE>

[Letterhead of CLIFFORD R. BENN, CPA]

INDEPENDENT AUDITOR'S REPORT

General Partner
Brynview Terrace, L.P.
Los Angeles, California

I have audited the balance sheet of Brynview Terrace,  L.P. at December 31, 2004
and the related statements of loss, changes in partners' capital,  and cash-flow
for the year then ended.  These financial  statements are the  responsibility of
Brynview Terrace, L.P.'s management.  My responsibility is to express an opinion
on these financial statements based on my audit.

I conducted my audit in  accordance  with the  standards  of the Public  Company
Accounting  Oversight  Board,  used  in the  United  States  of  America.  Those
standards  require  that I plan  and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements.  The  partnership has determined that it is not required to have,
nor was I engaged to perform,  an audit of its internal  control over  financial
reporting.  My audit included  consideration  of internal control over financial
reporting as a basis for designing audit  procedures that are appropriate in the
circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on the
effectiveness of the  partnership's  internal control over financial  reporting.
Accordingly,  I express no such opinion.  An audit includes  examining on a test
basis,  evidence  supporting  the  amounts  and  disclosures  in  the  financial
statements.  An audit also include assessing the accounting  principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial statement presentation.  I believe that my audit provides a reasonable
basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects,  the financial position of Brynview Terrace, L.P. at December
31, 2004 and the results of its  operations  and its cash flow for the year then
ended in conformity with generally  accepted  accounting  principles used in the
United States of America.


/s/ Clifford R. Benn, CPA
February 17, 2005
Carson, California

                                       24
<PAGE>

[Letterhead of CLIFFORD R. BENN]

INDEPENDENT AUDITOR'S REPORT

General Partner
Brynview Terrace, L.P.
Los Angeles, California

I have audited the balance sheet of Brynview Terrace,  L.P. at December 31, 2003
and the related statements of loss, changes in partners' capital,  and cash-flow
for the year then ended.  These financial  statements are the  responsibility of
Brynview Terrace, L.P.'s management.  My responsibility is to express an opinion
on these financial statements based on my audit.

I conducted my audit in accordance with generally  accepted  auditing  standards
used in the United States of America.  Those  standards  require that I plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatements.  An audit includes examining on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also include assessing the accounting  principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial statement presentation.  I believe that my audit provides a reasonable
basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects,  the financial position of Brynview Terrace, L.P. at December
31, 2003 and the results of its  operations  and its cash flow for the year then
ended in conformity with generally  accepted  accounting  principles used in the
United States of America.


/s/ Clifford R. Benn
February 20, 2004
Carson, California

                                       25
<PAGE>

[Letterhead of ROBERT J. PACHECO]

Independent Auditor's Report

To the Partners of NLEDC, L.P., A California Limited Partnership:

We have  audited the  accompanying  balance  sheet of NLEDC,  L.P., a California
Limited  Partnership,  as of December 31, 2005,  and the related  statements  of
operations,  changes  in  partners'  capital,  and cash  flows for the year then
ended.  These financial  statements are the  responsibility of the Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Oversight  Board  (United  States).  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material  misstatement.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of NLEDC,  L.P., a California
Limited Partnership, at December 31, 2005, and the results of its operations and
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles in the United States of America.

In  accordance  with the  CONSOLIDATED  AUDIT  GUIDE FOR AUDITS OF HUD  PROGRAMS
issued by the United States Department of Housing and Urban Development, we have
also issued report dated February 27, 2006, on the Partnership's compliance with
specific requirements applicable to nonmajor HUD program transactions.


/s/ Robert Pacheco
Pasadena, California
February 27, 2006

                                       26
<PAGE>

[Letterhead of ROBERT J. PACHECO]

Independent Auditor's Report

To the Partners of NLEDC, L.P., A California Limited Partnership:

We have  audited the  accompanying  balance  sheet of NLEDC,  L.P., a California
Limited  Partnership,  as of December 31, 2004,  and the related  statements  of
income,  changes in partners'  capital,  and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Oversight  Board  (United  States).  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material  misstatement.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of NLEDC,  L.P., a California
Limited Partnership, at December 31, 2004, and the results of its operations and
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles in the United States of America.

In  accordance  with the  CONSOLIDATED  AUDIT  GUIDE FOR AUDITS OF HUD  PROGRAMS
issued by the United States Department of Housing and Urban Development, we have
also issued report dated February 11, 2005, on the Partnership's compliance with
specific requirements applicable to nonmajor HUD program transactions.


/s/ Robert Pacheco
Pasadena, California
February 11, 2005


                                       27
<PAGE>

[Letterhead of THORNTON & PACHECO]

Independent Auditor's Report

To the Partners of NLEDC, L.P., A California Limited Partnership:

We have  audited the  accompanying  balance  sheet of NLEDC,  L.P., a California
Limited  Partnership,  as of December 31, 2003,  and the related  statements  of
income,  changes in partners'  capital,  and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  GOVERNMENT  AUDITING  STANDARDS  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes  assessing the principles used and  significant  estimates made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of NLEDC,  L.P., a California
Limited  Partnership,  at December 31, 2003, and the results of its  operations,
changes  in  partners'  capital  and  cash  flows  for the  year  then  ended in
conformity with generally accepted accounting principles.

In accordance  with GOVERNMENT  AUDITING  STANDARDS AND THE  CONSOLIDATED  AUDIT
GUIDE FOR AUDITS OF HUD PROGRAMS  issued by the U. S.  Department of Housing and
Urban  Development,  we have also issued  reports dated February 7, 2004, on our
consideration  of the  Partnership's  internal  control,  on its compliance with
specific   requirements   applicable  to  nonmajor  HUD  programs  and  specific
requirements applicable to Fair Housing and Non-Discrimination.


/s/ Robert Pacheco
Pasadena, California
February 7, 2004

                                       28
<PAGE>

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Creative Choice Homes VI, Ltd.

We have audited the accompanying balance sheet of Creative Choice Homes VI, Ltd.
as of December 31, 2003,  and the related  statements of  operations,  partners'
equity and cash flows for the year then ended.  These  financial  statements are
the  responsibility of the partnership's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Creative Choice Homes VI, Ltd.
as of  December  31,  2003,  and the results of its  operations,  the changes in
partners'  equity and cash flows for the year then  ended,  in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
May 18, 2004

                                       29
<PAGE>

[Letterhead of BERT D. SAMUELS CPA]

Independent Auditor's Report

The Partners
P & P Home For The Elderly, L.P.
Los Angeles, California

I have  audited the  accompanying  balance  sheet of P & P Home For The Elderly,
L.P. as of December 31, 2005, and the related  statements of income,  changes in
partners'  equity  and  cash  flows  for the  year  then  ended.  The  financial
statements  are  the   responsibility  of  the  Partnership's   management.   My
responsibility  is to express an opinion on these financial  statements based on
my audit.

I conducted my audit in  accordance  with the  auditing  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
I plan and perform the audit to obtain  reasonable  assurance  about whether the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not  required to have,  nor am I engaged to  perform,  an
audit of its  internal  control  over  financial  reporting.  My audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit procedures that are appropriate in the circumstances but not for
the purpose of expressing an opinion on the  effectiveness of the  Partnership's
internal  control  over  financial  reporting.  Accordingly,  I express  no such
opinion. An audit includes examining,  on a test basis,  evidence supporting the
amounts and  disclosures  in the  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of P & P Home For The Elderly, L.P. as
of December 31, 2005,  and the results of its  operations and cash flows for the
year then ended in conformity with accounting  principles  generally accepted in
the United States of America.


/s/ Bert D. Samuels CPA
Encino, California
February 10, 2006

                                       30
<PAGE>

[Letterhead of BERT D. SAMUELS CPA]

Independent Auditor's Report

The Partners
P & P Home For The Elderly, L.P.
Los Angeles, California

I have  audited the  accompanying  balance  sheet of P & P Home For The Elderly,
L.P. as of December 31, 2004, and the related  statements of income,  changes in
partners'  equity  and  cash  flows  for the  year  then  ended.  The  financial
statements  are  the   responsibility  of  the  Partnership's   management.   My
responsibility  is to express an opinion on these financial  statements based on
my audit.

I conducted my audit in  accordance  with the  auditing  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
I plan and perform the audit to obtain  reasonable  assurance  about whether the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not  required to have,  nor am I engaged to  perform,  an
audit of its  internal  control  over  financial  reporting.  My audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit procedures that are appropriate in the circumstances but not for
the purpose of expressing an opinion on the  effectiveness of the  Partnership's
internal  control  over  financial  reporting.  Accordingly,  I express  no such
opinion. An audit includes examining,  on a test basis,  evidence supporting the
amounts and  disclosures  in the  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of P & P Home For The Elderly, L.P. as
of December 31, 2004,  and the results of its  operations and cash flows for the
year then ended in conformity with accounting  principles  generally accepted in
the United States of America.


/s/ Bert D. Samuels CPA
Encino, California
February 12, 2005

                                       31
<PAGE>

[Letterhead of BERT D. SAMUELS CPA]

Independent Auditor's Report

To the Partners
P & P Home for the Elderly, L.P.
Los Angeles, California

I have  audited the  accompanying  balance  sheet of P & P Home for the Elderly,
L.P. as of December 31, 2003, and the related  statements of income,  changes in
partners'  equity  and  cash  flows  for the  year  then  ended.  The  financial
statements  are  the   responsibility  of  the  Partnership's   management.   My
responsibility  is to express an opinion on these financial  statements based on
my audit.

I conducted my audit in accordance with auditing standards generally accepted in
the United States of America.  Those  standards  require that I plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement presentation.  I believe that my audit provides a reasonable basis for
my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of P & P Home for the Elderly, L.P. as
of December 31, 2003,  and the results of its  operations and cash flows for the
year then ended, in conformity with accounting  principles generally accepted in
the United States of America.


/s/ Bert D. Samuels CPA
Encino, California
February 28, 2004

                                       32
<PAGE>

[Letterhead of COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION

Clear Horizons Limited Partnership
Shreveport, Louisiana

We have  audited  the  accompanying  balance  sheet  of Clear  Horizons  Limited
Partnership, at December 31, 2003, and the related statements of income, capital
and cash  flows for the year then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted  our audit in  accordance  with U.S.  generally  accepted  auditing
standards and Government Auditing  Standards,  issued by the Comptroller General
of the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the  financial  statements  referred to in the first  paragraph
above present fairly, in all material respects,  the financial position of Clear
Horizons  Limited  Partnership,  at  December  31,  2003 and the  results of its
operations,  changes  in  capital,  and cash  flows for the year  then  ended in
conformity with U.S. generally accepted accounting principles.

Our audit was made  primarily for the purpose of forming an opinion on the basic
financial  statements for the year ended December 31, 2003 taken as a whole. The
supplementary  Schedules 1 through 6 are  presented  for purposes of  additional
analysis and are not a required  part of the basic  financial  statements.  Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and, in our opinion,  is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  9,  2004  on  our   consideration  of  Clear  Horizons  Limited
Partnership's  internal  control and on our tests of its compliance with certain
provisions of laws,  regulations,  contracts,  and grants.  Those reports are an
integral  part of an audit  performed in  accordance  with  Government  Auditing
Standards and should be read in conjunction  with this report in considering the
results of our audit.


/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 9, 2004

                                       33
<PAGE>

[Letterhead of LAWLOR, O'BRIEN & CHERVENAK, LLC]

INDEPENDENT AUDITORS' REPORT

To the Partners
Affordable Green Associates, L.P.

We have audited the accompanying  balance sheet of Affordable Green  Associates,
L.P. as of December 31, 2003 and the related  statements of operations,  changes
in partners' (deficit),  and cash flows for the year then ended. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
in  the  United  States  and  Government  Auditing  Standards,   issued  by  the
Comptroller  General of the United States.  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Affordable Green Associates,
L.P. as of  December  31,  2003 and the  results of its  operations,  changes in
partners'  (deficit),  and its cash flows for the year then ended in  conformity
with generally accepted accounting principles in the United States of America.


/s/ Lawlor, O'Brien & Chervenak, LLC
Totowa, New Jersey
February 24, 2004

                                       34
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                     ASSETS


                                                                                       March 31,
                                                                             ----------------------------
                                                                                 2006             2005
                                                                             ------------    ------------
<S>                                                                          <C>             <C>
Property and equipment  net, less  accumulated  depreciation
 (Notes 2, 4 and 7)                                                          $ 73,467,404    $ 76,531,547
Cash and cash equivalents (Notes 2, 3 and 11)                                   1,061,848       1,820,457
Cash held in escrow (Notes 3 and 5)                                             3,190,261       3,199,191
Deferred costs, less accumulated amortization (Notes 2 and 6)                     272,045         305,553
Other assets                                                                      555,822         524,152
                                                                             ------------    ------------

                                                                             $ 78,547,380    $ 82,380,900
                                                                             ============    ============


                               LIABILITIES AND PARTNERS' (DEFICIT) CAPITAL


Liabilities:
Mortgage notes payable (Note 7)                                              $ 58,682,893    $ 59,271,697
Accounts payable                                                                1,094,824         720,880
Security deposits payable                                                         410,366         420,694
Accrued interest                                                               16,935,473      15,226,268
Due to local general partners and affiliates (Note 8)                           1,562,079       1,636,184
Due to general partner and affiliates (Note 8)                                  4,127,153       3,957,952
                                                                             ------------    ------------

                                                                               82,812,788      81,233,675
                                                                             ------------    ------------

Minority interest                                                              (1,048,455)       (551,405)
                                                                             ------------    ------------

Commitments and contingencies (Notes 7, 8 and 11)

Partners' (deficit) capital:
Limited partners (58,928 BACs issued and outstanding)                          (2,660,834)      2,205,593
General partner                                                                  (556,119)       (506,963)
                                                                             ------------    ------------

Total partners' (deficit) capital                                              (3,216,953)      1,698,630
                                                                             ------------    ------------

Total liabilities and partners' (deficit) capital                            $ 78,547,380    $ 82,380,900
                                                                             ============    ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       35
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                    Years Ended March 31,
                                                        --------------------------------------------
                                                            2006            2005*           2004*
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Revenues

Rental income                                           $  9,764,858    $  9,506,093    $  9,182,883
Other income                                                 258,939         566,919         176,405
                                                        ------------    ------------    ------------
                                                          10,023,797      10,073,012       9,359,288
                                                        ------------    ------------    ------------
Expenses
General and administrative                                 2,539,758       2,329,317       2,523,719
General and administrative-related parties (Note 8)        1,288,342       1,187,669       1,170,652
Repairs and maintenance                                    2,145,867       2,123,011       2,205,546
Operating                                                  1,263,106       1,146,968       1,105,217
Taxes                                                        712,948         709,655         733,695
Insurance                                                    768,636         731,566         696,677
Financial, principally interest                            2,825,974       3,079,737       2,792,662
Depreciation and amortization                              3,406,226       3,553,133       3,425,718
                                                        ------------    ------------    ------------
Total expenses                                            14,950,857      14,861,056      14,653,886
                                                        ------------    ------------    ------------

Loss before minority interest                             (4,927,060)     (4,788,044)     (5,294,598)

Minority interest in loss of subsidiary partnerships          11,477          11,499          16,161
                                                        ------------    ------------    ------------

Net loss                                                $ (4,915,583)   $ (4,776,545)   $ (5,278,437)
                                                        ============    ============    ============

Net loss - limited partners                             $ (4,866,427)   $ (4,728,780)   $ (5,225,653)
                                                        ============    ============    ============

Number of BACs outstanding                                    58,928          58,928          58,928
                                                        ============    ============    ============

Net loss per BAC                                        $     (82.58)   $     (80.25)   $     (88.68)
                                                        ============    ============    ============
</TABLE>

*  Reclassified for comparative purposes

          See accompanying notes to consolidated financial statements.

                                       36
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
                                                                 Limited         General
                                                 Total           Partners        Partners
                                              ------------    ------------    ------------

<S>                                           <C>             <C>             <C>
Partners capital (deficit) - April 1, 2003    $ 11,753,612    $ 12,160,026    $   (406,414)


Net loss                                        (5,278,437)     (5,225,653)        (52,784)
                                              ------------    ------------    ------------


Partners capital (deficit) - March 31, 2004      6,475,175       6,934,373        (459,198)


Net loss                                        (4,776,545)     (4,728,780)        (47,765)
                                              ------------    ------------    ------------

Partners capital (deficit) - March 31, 2005      1,698,630       2,205,593        (506,963)

Net loss                                        (4,915,583)     (4,866,427)        (49,156)
                                              ------------    ------------    ------------

Partners capital (deficit) - March 31, 2006   $ (3,216,953)   $ (2,660,834)   $   (556,119)
                                              ============    ============    ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       37
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
                                                                       Years Ended March 31,
                                                             -----------------------------------------
                                                                2006            2005           2004
                                                             -----------    -----------    -----------
<S>                                                          <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                                     $(4,915,583)   $(4,776,545)   $(5,278,437)
                                                             -----------    -----------    -----------
Adjustments to reconcile net loss to net cash provided by
  operating activities:
Depreciation and amortization                                  3,406,226      3,553,133      3,425,718
Minority interest in loss of subsidiary partnerships             (11,477)       (11,499)       (16,161)
(Increase) decrease in assets:
Cash held in escrow                                               27,034         29,340        (12,713)
Other assets                                                     (31,670)        68,613        149,635
Increase (decrease) in liabilities:
Accounts payable                                                 373,944        (75,604)      (127,451)
Security deposit payable                                         (10,328)         8,626          2,515
Accrued interest                                               1,709,205      1,527,303      1,667,842
Due to local general partners and affiliates                     (12,875)        55,654        267,851
Due to general partner and affiliates                            169,201       (262,743)       713,388
                                                             -----------    -----------    -----------
Total adjustments                                              5,619,260      4,892,823      6,070,624
                                                             -----------    -----------    -----------

Net cash provided by operating activities                        703,677        116,278        792,187
                                                             -----------    -----------    -----------

Cash flows from investing activities:
Improvements to property and equipment                          (308,575)      (548,330)      (356,569)
(Increase) decrease in cash held in escrow                       (18,104)      (186,860)         3,200
Decrease in due to local general partners and affiliates         (73,970)      (174,230)       (38,151)
                                                             -----------    -----------    -----------

Net cash used in investing activities                           (400,649)      (909,420)      (391,520)
                                                             -----------    -----------    -----------

Cash flows from financing activities:
Principal payments of mortgage notes                            (588,804)    (4,738,272)      (493,507)
Proceeds from mortgage notes                                           0      6,900,000              0
Increase in deferred costs                                             0       (175,575)             0
Increase (decrease) in due to local general partners and
  affiliates                                                      12,740              0        (92,053)
Decrease in capitalization of consolidated subsidiaries
  attributable to minority interest                             (485,573)       (88,612)       (91,416)
                                                             -----------    -----------    -----------

Net cash (used in) provided by financing activities           (1,061,637)     1,897,541       (676,976)
                                                             -----------    -----------    -----------

Net (decrease) increase in cash and cash equivalents            (758,609)     1,104,399       (276,309)

Cash and cash equivalents at beginning of year                 1,820,457        716,058        992,367
                                                             -----------    -----------    -----------

Cash and cash equivalents at end of year                     $ 1,061,848    $ 1,820,457    $   716,058
                                                             ===========    ===========    ===========

Supplemental disclosure of cash flows information:
Cash paid during the year for interest                       $ 1,400,974    $ 1,488,710    $ 1,135,516
                                                             ===========    ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       38
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


NOTE 1 - General

Independence  Tax Credit  Plus L.P.  II (a Delaware  limited  partnership)  (the
"Partnership")  was  organized  on February  11, 1992 and  commenced  the public
offering on January 19, 1993. The general  partner of the Partnership is Related
Independence  Associates  L.P., a Delaware  limited  partnership  (the  "General
Partner").  The general partner of the General  Partner is Related  Independence
Associates  Inc.,  a  Delaware  Corporation  ("RIAI")  and  is an  affiliate  of
CharterMac Capital LLC ("CharterMac Capital") (formerly known as Related Capital
Company, LLC).

On November 17,  2003,  CharterMac  acquired  CharterMac  Capital,  which is the
parent  of RCC  Manager  LLC,  the sole  shareholder  of RIAI.  Pursuant  to the
acquisition,  CharterMac acquired controlling  interests in the General Partner.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partner's management team remained unchanged.

On November 8, 2005,  CharterMac announced that Stuart J. Boesky would step down
as Chief  Executive  Officer and trustee of CharterMac.  Upon his stepping down,
which was  effective on November 15, 2005, he also resigned from his position as
Senior  Vice  President  of RIAI.  Mr.  Boesky will stay on as a  consultant  to
CharterMac  for the next year in order to ensure a smooth  transition.  On March
14,  2006,  CharterMac's  Board of Trustees  named Marc D.  Schnitzer  the Chief
Executive  Officer,  effective  immediately.  Mr. Schnitzer  replaced Stephen M.
Ross, who had served as interim Chief  Executive  Officer since Stuart J. Boesky
resigned in November of 2005.  Mr.  Schnitzer also replaced Mr. Boesky as Senior
Vice President of RIAI.

The  Partnership's   business  is  to  invest  in  other  partnerships   ("Local
Partnerships,"  "subsidiaries"  or "subsidiary  partnerships")  owning leveraged
apartment  complexes  that are  eligible for the  low-income  housing tax credit
("Tax Credit")  enacted in the Tax Reform Act of 1986, some of which may also be
eligible for the historic rehabilitation tax credit.

The Partnership  owns interests in fifteen  subsidiary  partnerships as of March
31, 2006.

The  Partnership  was  authorized  to  issue a total of  100,000  ($100,000,000)
Beneficial  Assignment  Certificates  ("BACs")  which were  registered  with the
Securities and Exchange  Commission for sale to the public.  Each BAC represents
all of the economic and virtually all of the ownership rights  attributable to a
limited  partnership  interest.  The  Partnership  raised a total of $58,928,000
representing 58,928 BACs. The offering was terminated on April 7, 1994.

The  terms of the  Partnership's  Amended  and  Restated  Agreement  of  Limited
Partnership (the "Partnership  Agreement") provide, among other things, that net
profits or losses and distributions of cash flow are, in general,  allocated 99%
to the limited partners and BACs holders and 1% to the general partner.


NOTE 2 - Summary of Significant Accounting Policies

a)  Basis of Accounting

For financial reporting purposes the Partnership's fiscal year ends on March 31.
All  subsidiaries  have  fiscal  years  ending  December  31.  Accounts  of  the
subsidiaries  have been adjusted for  intercompany  transactions  from January 1
through March 31. The Partnership's  fiscal year ends March 31 in order to allow
adequate  time for the  subsidiaries'  financial  statements  to be prepared and
consolidated.  The books and records of the  Partnership  are  maintained on the
accrual  basis  of  accounting,  in  accordance  with  U.S.  generally  accepted
accounting principles ("GAAP").

b)  Basis of Consolidation

The consolidated  financial  statements  include the accounts of the Partnership
and fifteen  subsidiary  partnerships  in which the Partnership is the principal
limited partner, with an ownership interest of 98.99%. Through the rights of the
Partnership  and/or an affiliate of the General  Partner,  which affiliate has a
contractual  obligation  to act on behalf  of the  Partnership,  to  remove  the
general partners of the subsidiary local partnerships ("Local General Partners")
and to approve certain major operating and financial decisions,  the Partnership
has a controlling  financial interest in the subsidiary local partnerships.  All
intercompany  accounts and transactions  with the subsidiary  partnerships  have
been eliminated in consolidation.

For financial  reporting purposes,  the Partnership's  fiscal year ends on March
31. All  subsidiaries  have fiscal  years ending  December  31.  Accounts of the
subsidiaries  have been adjusted for  intercompany  transactions  from January 1
through March 31. The Partnership's  fiscal year ends March 31 in order to allow
adequate  time for the  subsidiaries  financial  statements  to be prepared  and
consolidated.  The books and records of the  Partnership  are  maintained on the
accrual basis of accounting, in accordance with GAAP.

Increases  (decreases)  in  the  capitalization  of  consolidated   subsidiaries
attributable  to  minority  interest  arise  from  cash  contributions  and cash
distributions to the minority interest partners.

The  Partnership's  investment  in each  subsidiary  is equal to the  respective
subsidiary's  partners' equity less minority  interest  capital,  if any. Losses
attributable  to  minority   interest  which  exceed  the  minority   interests'
investment  in a subsidiary  partnership  have been charged to the  Partnership.
Such losses aggregated  approximately $30,000, $29,000 and $29,000 for the years
ended March 31,  2006,  2005 and 2004 (the 2005,  2004 and 2003  Fiscal  Years),
respectively.  In consolidation,  all subsidiary partnership losses are included
in the  Partnership's  capital  account except for losses  allocated to minority
interest  capital.  As of March 31,  2006,  distributions  to  several  minority
interests have exceeded their investments.

                                       39
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


c)  Cash and Cash Equivalents

Cash and cash  equivalents  include cash on hand, cash in banks, and investments
in short-term highly liquid  instruments  purchased with original  maturities of
three months or less.  Cash held in escrow has various use  restrictions  and is
not considered a cash equivalent.

d)  Property and Equipment

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price, acquisition fees and expenses,  construction period interest
and any other costs incurred in acquiring the  properties.  The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods.  Expenditures for repairs and maintenance are charged
to expense as incurred;  major renewals and betterments are capitalized.  At the
time property and  equipment are retired or otherwise  disposed of, the cost and
accumulated   depreciation  are  eliminated  from  the  assets  and  accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings.  The  Partnership  complies  with  Statement of  Financial  Accounting
Standards  ("SFAS")  No. 144  "Accounting  for the  Impairment  or  Disposal  of
Long-Lived  Assets".  A loss on impairment of assets is recorded when management
estimates that amounts  recoverable  through  future  operations and sale of the
property on an  undiscounted  basis are below  depreciated  cost.  At that time,
property  investments  themselves are reduced to estimated fair value (generally
using  discounted cash flows) when the property is considered to be impaired and
the depreciated cost exceeds estimated fair value.

Through March 31, 2006, the Partnership has recorded approximately $3,926,000 as
an aggregate loss on impairment of assets.

e)  Revenue Recognition

Rental income is earned  primarily under standard  residential  operating leases
and is typically  due the first day of each month,  but can vary by property due
to the terms of the tenant leases.  Rental income is recognized  when earned and
charged to tenants' accounts  receivable if not received by the due date. Rental
payments  received in advance of the due date are deferred until earned.  Rental
subsidies  are  recognized  as  rental  income  during  the month in which it is
earned.

Other  revenues are  recorded  when earned and consist of the  following  items:
Interest  income  earned on cash and cash  equivalent  balances and cash held in
escrow balances,  income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.

Other revenues  include the following  amounts at both the Partnership and Local
Partnership level:
<TABLE>
<CAPTION>
                              Year Ended March 31,
                         ------------------------------
                           2006       2005*      2004
                         --------   --------   --------
<S>                      <C>        <C>        <C>
Interest                 $ 83,615   $ 45,121   $ 36,944
Other                     175,324    521,798    139,461
                         --------   --------   --------

   Total other revenue   $258,939   $566,919   $176,405
                         ========   ========   ========
</TABLE>

* Reclassified for comparative purposes

f)  Income Taxes

The  Partnership  is not  required to provide  for, or pay,  any federal  income
taxes.  Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The  Partnership may be subject
to state and local taxes in jurisdictions  in which it operates.  For income tax
purposes, the Partnership has a fiscal year ending December 31 (Note 9).

g)  Offering Costs

Costs incurred to sell BACs, including brokerage and the nonaccountable  expense
allowance, are considered selling and offering expenses. These costs are charged
directly to limited partners' capital.

h)  Loss Contingencies

The  Partnership   records  loss  contingencies  as  a  charge  to  income  when
information  becomes available which indicates that it is probable that an asset
has  been  impaired  or a  liability  has  been  incurred  as of the date of the
financial statements and the amount of loss can be reasonably estimated.

i)  Use of Estimates

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management  to make  estimates  and  assumptions  that affect  certain  reported
amounts and  disclosures.  Accordingly,  actual  results could differ from those
estimates.

                                       40
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


j)  New Accounting Pronouncements

In June 2005, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
154,  Accounting  Changes and Error  Corrections  ("FAS 154").  FAS 154 replaces
Accounting  Principles  Board Opinion No. 20,  Accounting  Changes and Financial
Accounting  Standard No. 3, Reporting  Accounting  Changes in Interim  Financial
Statements.  FAS 154 requires that a voluntary change in accounting principle be
applied  retrospectively with all prior period financial statements presented on
the new accounting  principle.  FAS 154 also requires that a change in method of
depreciating  or  amortizing a long-lived  nonfinancial  asset be accounted  for
prospectively  as a change in estimate,  and  correction of errors in previously
issued financial statements should be termed a restatement. FAS 154 is effective
for accounting  changes and correction of errors made in fiscal years  beginning
after December 15, 2005. The implementation of FAS 154 is not expected to have a
material impact on the Partnership's consolidated financial statements.

In June 2005, the FASB issued Emerging  Issues Task Force No. 04-5,  Determining
Whether a General  Partner,  or the  General  Partners  as a Group,  Controls  a
Limited  Partnership  or Similar  Entity When the Limited  Partners Have Certain
Rights ("EITF No. 04-5"). EITF No. 04-5 replaces counterpart requirements in the
Statement  of  Position  78-9,   which  provides   guidance  on  accounting  for
investments in  real-estate  ventures and limited  partnerships.  Under EITF No.
04-5, the general  partner's  control would be overcome if the limited  partners
have  either (i)  "kick-out  rights"-  the right to dissolve  or  liquidate  the
partnership  or otherwise  remove the general  partner  "without  cause" or (ii)
"participating  rights" - the right to  effectively  participate  in significant
decisions  made  in the  ordinary  course  of the  partnership's  business.  The
kick-out  rights and the  participating  rights must be  substantive in order to
overcome the general partner's  control.  EITF No. 04-5 is now effective.  Since
the Partnership's  financial  statements are presented on a consolidated  basis,
the adoption of EITF No. 04-5 has not had a material effect on the Partnership's
consolidated results of operations.


NOTE 3 - Fair Value of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each  class  of  financial  instruments  (all of which  are held for  nontrading
purposes) for which it is practicable to estimate that value:

Cash  and  Cash  Equivalents  and  Cash  Held  in  Escrow
---------------------------------------------------------
The carrying amount approximates fair value.

Mortgage Notes Payable
----------------------
The fair value of mortgage notes payable is estimated, where practicable,  based
on the borrowing rate currently available for similar loans.

The estimated  fair values of the  Partnership's  mortgage  notes payable are as
follows:
<TABLE>
<CAPTION>
                                                March 31, 2006             March 31, 2005
                                          -------------------------   -------------------------
                                            Carrying                   Carrying
                                             Amount     Fair Value      Amount      Fair Value
                                          -----------   -----------   -----------   -----------
<S>                                       <C>           <C>           <C>           <C>
Mortgage notes payable for which it is:
Practicable to estimate fair value        $ 8,332,363   $ 8,683,633   $13,114,579   $13,228,806
Not practicable                           $50,350,530             *   $46,157,118             *
</TABLE>

*  Management  believes it is not  practical  to estimate  the fair value of the
   mortgage notes payable because mortgage programs with similar characteristics
   are not currently available to the Local Partnerships.

The carrying amount of other financial  instruments that require such disclosure
approximates fair value.


NOTE 4 - Property and Equipment

The components of property and equipment and their estimated useful lives are as
follows:
<TABLE>
<CAPTION>
                                              March 31,               Estimated
                                   -----------------------------    Useful Lives
                                       2006             2005           (Years)
                                   -------------    -------------   ------------
<S>                                <C>              <C>                <C>
Land                               $   6,228,836    $   6,228,836
Building and improvements            102,790,427      102,488,853          -
Furniture and fixtures                 1,353,434        1,346,433      10-40
                                   -------------    ------------
                                     110,372,697      110,064,122       5-10
Less:  Accumulated depreciation      (36,905,293)     (33,532,575)
                                   -------------    -------------

                                   $  73,467,404    $  76,531,547
                                   =============    =============
</TABLE>

                                       41
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


Included in property and equipment is $3,501,977 of acquisition fees paid to the
General  Partner and $867,942 of  acquisition  expenses as of March 31, 2006 and
2005, respectively.

In  connection  with  the  rehabilitation  of  the  properties,  the  subsidiary
partnerships  have incurred  developer's fees of $9,282,042 to the Local General
Partners and their affiliates as of March 31, 2006 and 2005. Such fees have been
included in the cost of property and equipment.

Depreciation  expense for the years ended March 31, 2006, 2005 and 2004 amounted
to $3,372,718, $3,472,081 and $3,410,321, respectively. Additionally, $85,404 of
accumulated  depreciation on dispositions was written-off  during the year ended
March 31, 2005.


NOTE 5 - Cash Held in Escrow

Cash held in escrow consists of the following:
<TABLE>
<CAPTION>
                                                 March 31,
                                         -----------------------
                                            2006         2005
                                         ----------   ----------
<S>                                      <C>          <C>
Purchase price payments*                 $   23,683   $   23,683
Real estate taxes, insurance and other      661,411      672,269
Reserve for replacements                  2,084,793    2,066,689
Tenant security deposits                    420,374      436,550
                                         ----------   ----------

                                         $3,190,261   $3,199,191
                                         ==========   ==========
</TABLE>

* Represents  amounts  to be  paid  to  seller  upon  meeting  specified  renta
  achievement criteria.


NOTE 6 - Deferred Costs

The  components  of  deferred  costs and their  periods of  amortization  are as
follows:
<TABLE>
<CAPTION>
                                              March 31,
                                   ----------------------------
                                       2006            2005           Period
                                   ------------    ------------    ------------
<S>                                <C>             <C>                <C>
Financing costs                    $    443,065    $    443,065          *
Other                                    33,703          33,703       various
                                   ------------    ------------
                                        476,768         476,768
Less:  Accumulated amortization        (204,723)       (171,215)
                                   ------------    ------------

                                   $    272,045    $    305,553
                                   ============    ============
</TABLE>

*Over the life of the related mortgages.

Amortization  expense for the years ended March 31, 2006, 2005 and 2004 amounted
to $33,508, $81,052 and $15,397, respectively.


NOTE 7 - Mortgage Notes Payable

The  mortgage   notes  are  payable  in  aggregate   monthly   installments   of
approximately $161,000 including principal and interest at rates ranging from 0%
to 9.65%  per  annum,  through  the year  2052.  Each  subsidiary  partnership's
mortgage  note  payable  is  collateralized  by the  land and  buildings  of the
respective  subsidiary  partnership,  the assignment of each certain  subsidiary
partnership's rents and leases, and is without further recourse.

One mortgage  note with a balance of $3,558,758  and  $3,840,189 at December 31,
2005 and 2004,  respectively,  which bears  interest at 7% per annum is eligible
for an interest rate subsidy.  Accordingly, the subsidiary partnership paid only
that portion of the monthly payments that would be required if the interest rate
was 1%. The balance was  subsidized  under  Section 236 of the National  Housing
Act.

During the year ended March 31, 2005,  Derby Run Associate  L.P.'s ("Derby Run")
mortgage note payable of  $4,325,898  was  refinanced  and paid in full with the
proceeds from a new mortgage note payable of  $6,900,000.  The new mortgage note
payable is secured by the property and a deed of trust on the real estate and is
due in monthly installments of $37,464 including interest at 5.1%.

                                       42
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


Annual  principal  payment  requirements  for  mortgage  notes  payable  by  the
subsidiary  partnerships  for each of the next five years and  thereafter are as
follows:
<TABLE>
<CAPTION>
December 31,                       Amount
-----------------               ------------
<C>                             <C>
2006                            $    651,934
2007                                 695,847
2008                                 751,711
2009                               2,362,595
2010                                 710,532
Thereafter                        53,510,274
                                ------------
                                $ 58,682,893
                                ============
</TABLE>

Accrued  interest  payable  as of March  31,  2006  and  2005 was  approximately
$16,935,000  and  $15,226,000,  respectively.  Interest  accrues on all mortgage
loans,  which include primary and secondary loans.  Certain secondary loans have
provisions  such that  interest is accrued but not payable  until a future date.
The  Partnership  anticipates  the payment of accrued  interest on the secondary
loans (which make up the majority of the accrued  interest  payable amount which
have been  accumulating  since the  Partnership's  investment in the  respective
Local  Partnership)  will be made from future  refinancings or sales proceeds of
the respective Local Partnerships.

The mortgage  agreements  require  monthly  deposits to replacement  reserves of
approximately  $31,000 and monthly  deposits to escrow  accounts for real estate
taxes, hazard insurance and mortgage insurance and other (Note 5).


NOTE 8 - Related Party Transactions

An affiliate  of the General  Partner has a .01%  interest as a special  limited
partner in each of the  subsidiary  partnerships.  An  affiliate  of the General
Partner also has a minority interest in certain local partnerships.

A)  Other Related Party Expenses

The costs incurred to related  parties for the years ended March 31, 2006,  2005
and 2004 were as follows:
<TABLE>
<CAPTION>
                                                     Years Ended March 31,
                                             ------------------------------------
                                                2006         2005*        2004*
                                             ----------   ----------   ----------
<S>                                          <C>          <C>          <C>
Partnership management fees (a)              $  546,000   $  546,000   $  546,000
Expense reimbursement (b)                       200,008      137,585      122,835
Local administrative fees (d)                    32,000       35,000       35,000
                                             ----------   ----------   ----------
Total general and administrative - General
   Partner                                      778,008      718,585      703,835
                                             ----------   ----------   ----------
Property management fees incurred to
   affiliates of the subsidiary
   partnerships' general partners (c)           510,334      469,084      466,817
                                             ----------   ----------   ----------
Total general and administrative - related
   parties                                   $1,288,342   $1,187,669   $1,170,652
                                             ==========   ==========   ==========
</TABLE>
* Reclassified for comparative purposes.

(a) The General  Partner is entitled to receive a  partnership  management  fee,
after payment of all Partnership expenses,  which together with the annual local
administrative  fees  will not  exceed a maximum  of 0.5% per annum of  invested
assets (as defined in the Partnership Agreement),  for administering the affairs
of  the  Partnership.  Subject  to the  foregoing  limitation,  the  partnership
management fee will be determined by the General  Partner in its sole discretion
based  upon its  review of the  Partnership's  investments.  Unpaid  partnership
management  fees for any  year  will be  accrued  without  interest  and will be
payable from working capital  reserves or to the extent of available funds after
the  Partnership  has made  distributions  to the  limited  partners  of sale or
refinancing  proceeds equal to their original capital  contributions  plus a 10%
priority return thereon (to the extent not  theretofore  paid out of cash flow).
Partnership   management  fees  owed  to  the  General   Partner   amounting  to
approximately  $3,755,000 and $3,635,000 were accrued and unpaid as of March 31,
2006 and 2005, respectively.

(b) The Partnership reimburses the General Partner and its affiliates for actual
Partnership   operating  expenses  incurred  by  the  General  Partner  and  its
affiliates on the  Partnership's  behalf.  The amount of reimbursement  from the
Partnership is limited by the provisions of the Partnership  Agreement.  Another
affiliate of the General Partner  performs asset monitoring for the Partnership.
These   services   include  site  visits  and   evaluations  of  the  subsidiary
partnerships' performance. Expense reimbursements and asset monitoring fees owed
to the General Partner and its affiliates  amounting to  approximately  $155,000
and $65,000 were accrued and unpaid as of March 31, 2006 and 2005, respectively.

(c) Property  management  fees incurred by subsidiary  partnerships  amounted to
$695,896,  $681,903 and  $672,734  for the years ended March 31, 2006,  2005 and
2004, respectively. Of these fees $510,334, $469,084 and $466,817 were earned by
affiliates of the Local General Partners,  which include $203,750,  $173,750 and
$179,250 of incentive management fees at one Local Partnership.

(d)  Independence  SLP  L.P.,  a  special  limited  partner  of  the  subsidiary
partnerships,  is entitled to receive a local administrative fee of up to $5,000
per year from each subsidiary partnership.

                                       43
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


B) Due to Local General Partners and Affiliates

Due to local general partners and affiliates at March 31, 2006 and 2005 consists
of the following:
<TABLE>
<CAPTION>
                                                                   March 31,
                                                            -----------------------
                                                               2006         2005
                                                            ----------   ----------
<S>                                                         <C>          <C>
Operating advances                                          $   20,000   $    5,000
Development fee payable                                        383,597      467,750
Construction costs payable                                     649,714      639,531
Management and other operating advances                        272,394      285,269
Loans payable to local general partner and affiliates (a)      236,374      238,634
                                                            ----------   ----------

                                                            $1,562,079   $1,636,184
                                                            ==========   ==========
</TABLE>

(a)  Affordable Green Associates, L.P. ("Affordable Green") borrowed monies from
     affiliates  of the Local  General  Partners  while the  building  was being
     constructed.  Interest  was  accrued  at rates  from 8% to 11%  during  the
     construction  period.  The loans are now due on  demand  and do not  accrue
     interest.

In connection with investments in  development-stage  Apartment  Complexes,  the
General  Partner  generally  required  that the Local General  Partners  provide
completion guarantees and/or undertake to repurchase the Partnership's  interest
in the Local  Partnership if  construction or  rehabilitation  was not completed
substantially  on time or on  budget  ("Development  Deficit  Guarantees").  The
Development Deficit Guarantees generally also required the Local General Partner
to provide  any funds  necessary  to cover net  operating  deficits of the Local
Partnership  until such time as the  Apartment  Complex had achieved  break-even
operations.  The  General  Partner  generally  required  that the Local  General
Partners  undertake  an  obligation  to fund  operating  deficits  of the  Local
Partnership  (up to a stated  maximum  amount)  during a limited  period of time
(typically  three  to  five  years)  following  the  achievement  of  break-even
operations  ("Operating  Deficit  Guarantees").  As of March 31, 2006, the gross
amount of the Operating Deficit Guarantees aggregated approximately  $5,670,000,
of which  $4,840,000 had expired.  Management does not expect that expiration to
have a material  impact on liquidity,  based on prior years'  fundings.  Amounts
funded under such  agreements  are treated as noninterest  bearing loans,  which
will be paid only out of 50% of available cash flow or out of available net sale
or refinancing proceeds. In some instances, the Local General Partners have been
required to undertake an obligation to comply with a Rent-Up Guaranty Agreement,
whereby  the Local  General  Partner  has  agreed to pay  liquidated  damages if
predetermined occupancy rates are not achieved.  These payments are made without
a right of  repayment.  In  cases  where  the  General  Partner  has  deemed  it
appropriate,  the  obligations of a Local General  Partner under the Development
Deficit,  Operating  Deficit  and/or  Rent-Up  Guarantees  have been  secured by
letters of credit and/or cash escrow deposits.


NOTE 9 - Taxable Net Loss

A reconciliation of the financial statement net loss to the taxable net loss for
the Partnership and its consolidated subsidiaries is as follows:
<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                                                 -----------------------------------------
                                                                     2005          2004*           2003
                                                                 -----------    -----------    -----------
<S>                                                              <C>            <C>            <C>
Financial statement net loss                                     $(4,915,583)   $(4,776,545)   $(5,278,437)

Differences between depreciation and amortization expense
  records for financial reporting purposes and the accelerated
  costs recovery system utilized for income tax purposes            (477,230)      (439,502)      (478,109)

Tax exempt interest income                                           (14,976)        (3,100)        (2,100)

Differences resulting from parent company having a different
  fiscal year for income tax and financial reporting purposes         22,335        (10,004)        12,179

Accrual interest not deductible for tax purposes until paid          684,862        625,913        587,546

Other income recognized for financial reporting purposes, not
  included for income tax purposes                                         0       (385,045)             0

Other, including accruals for financial reporting not
  deductible for tax purposes until paid                             375,082       (451,409)        (2,401)
                                                                 -----------    -----------    -----------

Net loss as shown on the income tax return for the calendar
  year ended                                                     $(4,325,510)   $(5,439,692)   $(5,161,322)
                                                                 ===========    ===========    ===========
</TABLE>


* Reclassified for comparative purposes

                                       44
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


NOTE 10 - Selected Quarterly Financial Data (Unaudited)

The following table summarizes the Partnership's quarterly results of operations
for the years ended March 31, 2006 and 2005.
<TABLE>
<CAPTION>
                                                                 Quarter Ended
                                            --------------------------------------------------------

                                             June 30,     September 30,   December 31,    March 31,
              OPERATIONS                       2005            2005           2005          2006
-----------------------------------------   -----------    -----------    -----------    -----------
<S>                                         <C>            <C>            <C>            <C>
Revenues                                    $ 2,511,089    $ 2,502,517    $ 2,515,969    $ 2,494,222

Operating expenses                           (3,746,830)    (3,526,952)    (3,674,587)    (4,002,488)
                                            -----------    -----------    -----------    -----------

Loss before minority interest                (1,235,741)    (1,024,435)    (1,158,618)    (1,508,266)

Minority interest in loss of subsidiaries         3,186          1,619          3,071          3,601
                                            -----------    -----------    -----------    -----------

Net loss                                    $(1,232,555)   $(1,022,816)   $(1,155,547)   $(1,504,665)
                                            ===========    ===========    ===========    ===========

Net loss per weighted average BAC           $    (20.71)   $    (17.18)   $    (19.41)   $    (25.28)
                                            ===========    ===========    ===========    ===========

<CAPTION>
                                                                 Quarter Ended
                                            --------------------------------------------------------

                                             June 30,     September 30,   December 31,    March 31,
              OPERATIONS                       2004            2004           2004          2005
-----------------------------------------   -----------    -----------    -----------    -----------
<S>                                         <C>            <C>            <C>            <C>

Revenues                                    $ 2,379,119    $ 2,390,384    $ 2,416,953    $ 2,886,556

Operating expenses                           (3,479,976)    (3,442,970)    (3,714,100)    (4,224,010)
                                            -----------    -----------    -----------    -----------

Loss before minority interest                (1,100,857)    (1,052,586)    (1,297,147)    (1,337,454)

Minority interest in loss of subsidiaries         2,649          3,519          2,620          2,711
                                            -----------    -----------    -----------    -----------

Net loss                                    $(1,098,208)   $(1,049,067)   $(1,294,527)   $(1,334,743)
                                            ===========    ===========    ===========    ===========

Net loss per weighted average BAC           $    (18.45)   $    (17.62)   $    (21.75)   $    (22.43)
                                            ===========    ===========    ===========    ===========
</TABLE>


NOTE 11 - Commitments and Contingencies

a) Subsidiary Partnerships-Other

Clear Horizons Limited Partnership
----------------------------------
At December 31, 2005, Clear Horizons Limited  Partnership's  ("Clear  Horizons")
current  liabilities  exceeded  its current  assets by $255,020.  Although  this
condition  could  raise  substantial  doubt  about  Clear  Horizons'  ability to
continue as a going concern, such doubt is alleviated as follows:

1.  Included in current  liabilities  at December  31, 2005 is $244,136  owed to
related  parties  who have  advised  Clear  Horizons  that they do not intend to
pursue collection beyond Clear Horizons' ability to pay.

2. The Local  General  Partner of Clear  Horizons  has agreed to fund  operating
deficits up to $250,000.

Accordingly, management believes that Clear Horizons has the ability to continue
as a going concern for at least one year from December 31, 2005.

b)  Uninsured Cash and Cash Equivalents

The Partnership  maintains its cash and cash  equivalents in various banks.  The
accounts  at  each  bank  are  guaranteed  by  the  Federal  Deposit   Insurance
Corporation  up to  $100,000.  At  March  31,  2006,  uninsured  cash  and  cash
equivalents approximated $808,000.

                                       45
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


c)  Cash Distributions

Cash distributions from the Local Partnerships to the Partnership are restricted
by the provisions of the respective limited partnership  agreements of the Local
Partnerships and/or HUD. Such cash distributions are typically made from surplus
cash flow.

d)  Other

The  Partnership  is subject to the risks  incident to potential  losses arising
from the management and ownership of improved real estate.  The  Partnership can
also be affected by poor economic  conditions  generally;  however, no more than
33%  of the  properties  are  located  in  any  single  state.  There  are  also
substantial  risks  associated  with  owning  properties   receiving  government
assistance; for example, the possibility that Congress may not appropriate funds
to enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions  to partners  based on operating  results and a percentage  of the
owner's  equity  contribution.  The  Partnership  cannot  sell or  substantially
liquidate its investments in subsidiary  partnerships during the period that the
subsidy agreements are in existence without HUD's approval.  Furthermore,  there
may not be market  demand for  apartments  at full market  rents when the rental
assistance contracts expire.

The  Partnership and BACs holders began to recognize Tax Credits with respect to
a property when the credit period for such  Property  (generally  ten years from
the date of  investment  or,  if  later,  the date the  Property  is  leased  to
qualified tenants) commenced.  Because of the time required for the acquisition,
completion  and  rent-up  of  Properties,  the  amount  of Tax  Credits  per BAC
gradually  increased over the first three years of the Partnership.  Tax Credits
not  recognized  in the first three years will be recognized in the 11th through
13th years. The Partnership generated  $4,827,456,  $8,384,145 and $8,746,267 of
Tax Credits during each of the 2005, 2004 and 2003 tax years, respectively.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

None

Item 9A. Controls and Procedures

(a)  EVALUATION  OF  DISCLOSURE  CONTROLS AND  PROCEDURES.  The Chief  Executive
Officer and Chief Financial Officer of Related Independence Associates L.P., the
general  partner of the  Partnership,  has  evaluated the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as such term is defined in
Rules  13a-15(e) and  15d-15(e)  under the  Securities  Exchange Act of 1934, as
amended  ("Exchange  Act") as of the end of the period  covered by this  report.
Based on such evaluation, such officer has concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.

(b) INTERNAL CONTROL OVER FINANCIAL  REPORTING.  There have not been any changes
in the Partnership's internal control over financial reporting during the fiscal
year to  which  this  report  relates  that  have  materially  affected,  or are
reasonably likely to materially affect, the Partnership's  internal control over
financial reporting.

Item 9B. Other Information

Not applicable



                                       46
<PAGE>

                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

The Partnership is a limited  partnership which was formed under the laws of the
State of Delaware on February 11, 1992. The general  partner of the  Partnership
is Related  Independence  Associates L.P., a Delaware  limited  partnership (the
"General  Partner").  The  general  partner  of the  General  Partner is Related
Independence  Associates  Inc.,  a  Delaware  corporation  ("RIAI")  and  is  an
affiliate of CharterMac  Capital LLC ("CharterMac  Capital")  (formerly known as
Related  Capital  Company,  LLC). The  Partnership has no directors or executive
officers.  The  Partnership's  affairs are managed and controlled by the General
Partner.

On November 17,  2003,  CharterMac  acquired  CharterMac  Capital,  which is the
parent  of RCC  Manager  LLC,  the sole  shareholder  of RIAI.  Pursuant  to the
acquisition,  CharterMac acquired controlling  interests in the General Partner.
Alan P. Hirmes  replaced  Stephen M. Ross as Director of RIAI effective April 1,
2004 as a result  of this  acquisition.  This  acquisition  did not  affect  the
Partnership  or its  day-to-day  operations  as  the  majority  of  the  General
Partner's management team remained unchanged.  The Partnership has not adopted a
separate code of ethics  because the  Partnership  has no directors or executive
officers.  However, the parent company of CharterMac Capital, which controls the
General Partner, has adopted a code of ethics (see http://www.chartermac.com).

On November 8, 2005,  CharterMac announced that Stuart J. Boesky would step down
as Chief  Executive  Officer and trustee of CharterMac.  Upon his stepping down,
which was  effective on November 15, 2005, he also resigned from his position as
Senior  Vice  President  of RIAI.  Mr.  Boesky will stay on as a  consultant  to
CharterMac  for the next year in order to ensure a smooth  transition.  On March
14,  2006,  CharterMac's  Board of Trustees  named Marc D.  Schnitzer  the Chief
Executive  Officer,  effective  immediately.  Mr. Schnitzer  replaced Stephen M.
Ross, who had served as interim Chief  Executive  Officer since Stuart J. Boesky
resigned in November of 2005.  Mr.  Schnitzer also replaced Mr. Boesky as Senior
Vice President of RIAI.

Certain information  concerning the directors and executive officers of RIAI, is
set forth below. The General Partner is also the general partner of Independence
Tax Credit Plus L.P.

      Name                                                Position
-----------------                            ----------------------------------


Alan P. Hirmes                               Director and Senior Vice President

Marc D. Schnitzer                            Senior Vice President

Glenn F. Hopps                               Treasurer

ALAN P. HIRMES,  51, has been a Certified  Public  Accountant  in New York since
1978.  Prior to  joining  CharterMac  Capital in October  1983,  Mr.  Hirmes was
employed by Weiner & Co.,  Certified  Public  Accountants.  Mr. Hirmes is also a
Vice President of Capital.  Mr. Hirmes graduated from Hofstra  University with a
Bachelor  of Arts  degree.  Mr.  Hirmes  also serves on the Board of Trustees of
CharterMac and American Mortgage Acceptance Company ("AMAC").

MARC D. SCHNITZER,  45, is responsible both for financial restructurings of real
estate properties and directing CharterMac Capital's  acquisitions of properties
generating  Tax  Credits.   Mr.   Schnitzer   received  a  Masters  of  Business
Administration  from The Wharton  School of the  University of  Pennsylvania  in
December 1987 before joining  CharterMac  Capital in January 1988.  From 1983 to
January 1986, he was a financial analyst for the First Boston Corporation in New
York.  Mr.  Schnitzer  graduated  summa cum laude with a Bachelor  of Science in
Business  Administration  from the School of Management at Boston  University in
May 1983. In March 2006, Mr. Schnitzer was appointed Chief Executive Officer and
President of CharterMac.  Mr.  Schnitzer also serves on the Board of Trustees of
CharterMac.

GLENN F.  HOPPS,  43,  was  employed  prior to  joining  CharterMac  Capital  in
December,  1990 by Marks Shron & Company and Weissbarth,  Altman and Michaelson,
certified public accountants. Mr. Hopps graduated from New York State University
at Albany with a Bachelor of Science Degree in Accounting.

Item 11.  Executive Compensation

The  Partnership has no officers or directors.  The Partnership  does not pay or
accrue  any fees,  salaries  or other  forms of  compensation  to  directors  or
officers of the General Partner for their services.  However, under the terms of
the Partnership Agreement, the Partnership has entered into certain arrangements
with the General Partner and its affiliates,  which provide for  compensation to
be paid to the General Partner and its  affiliates.  Such  arrangements  include
(but are not limited to)  agreements  to pay  nonrecurring  Acquisition  Fees, a
nonaccountable   Acquisition   Expense  allowance  and  an  accountable  expense
reimbursement.  In addition,  the General  Partner is entitled to a subordinated
interest in Cash from Sales or Financings  and a 1% interest in Net Income,  Net
Loss,  Distributions  of Adjusted  Cash from  Operations  and Cash from Sales or
Financings.  Certain  directors  and  officers  of the General  Partner  receive
compensation from the General Partner and its affiliates for services  performed
for various  affiliated  entities which may include  services  performed for the
Partnership.  The maximum annual partnership  management fee paid to the General
Partner  is 0.5% of  invested  assets.  See  Note 8 in Item 8  above,  which  is
incorporated herein by reference.

Tabular information concerning salaries, bonuses and other types of compensation
payable to executive  officers has not been included in this annual  report.  As
noted  above,  the  Partnership  has  no  executive  officers.   The  levels  of
compensation  payable to the General Partner and/or its affiliates is limited by
the terms of the Partnership  Agreement and may not be increased  therefrom on a
discretionary basis. See Note 8 in Item 8 above, which is incorporated herein by
reference.

                                       47
<PAGE>

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Security Holder Matters

                       Name and Address of    Amount and Nature of   Percentage
   Title of Class      Beneficial Ownership   Beneficial Ownership   of Class
--------------------   --------------------   --------------------   ----------

General Partnership    Related Independence   $1,000 capital           100%
Interest in the        Associates L.P.        contribution -
Partnership            625 Madison Avenue     directly owned
                       New York, NY 10022


Independence  SLP L.P.,  a limited  partnership  whose  general  partner  is the
general  partner of the General Partner of the Partnership and which acts as the
special  limited  partner  of  each  Local  Partnership,  holds  a .01%  limited
partnership  interest  in each  Local  Partnership.  See Note 8 in Item 8 above,
which information is incorporated herein by reference thereto.

Except as set forth  below,  no  person  is known by the  Partnership  to be the
beneficial  owner  of more  than 5% of the  Limited  Partnership  Interests  and
neither the General Partner nor any director or executive officer of the General
Partner owns any Limited Partnership  Interests.  The following table sets forth
the number of BACs  beneficially  owned,  as of May 18,  2006,  by (i) each BACs
holder known to the Partnership to be a beneficial  owner of more than 5% of the
BACs,  (ii) each  director and executive  officer of the general  partner of the
General  Partner and (iii) the directors  and executive  officers of the general
partner of the General Partner as a group.  Unless otherwise noted, all BACs are
owned directly with sole voting and dispositive powers.
<TABLE>
<CAPTION>
                                               Amount and Nature of    Percent of
Name of Beneficial Owner (1)                   Beneficial Ownership      Class
---------------------------------------------  --------------------  --------------
<S>                                            <C>                        <C>
Lehigh Tax Credit Partners, Inc.               4,453.20 (2) (3)           7.6%

                                               4,453.20 (2) (3) (4)       7.6%
J. Michael Fried

                                               4,453.20 (2) (3) (4)       7.6%

Alan P. Hirmes
                                               4,453.20 (2) (3) (4)       7.6%
Stuart J. Boesky

                                               4,453.20 (2) (3) (4)       7.6%
Marc D. Schnitzer

                                               4,453.20 (2) (3) (4)       7.6%
Denise L. Kiley

Glenn F. Hopps                                           -                 -

Teresa Wicelinski                                        -                 -

All directors and executive officers
of the general partner of the Related          4,453.20 (2) (3) (4)       7.6%
General Partner as a group (eight persons)
</TABLE>

(1) The address for each of the persons in the table is 625 Madison Avenue,  New
York, New York 10022.

(2) As set forth in  Schedule  13D filed by Lehigh  Tax Credit  Partners  L.L.C.
("Lehigh I") and Lehigh Tax Credit  Partners,  Inc., (the "Managing  Member") on
June 10, 1997 with the Securities and Exchange Commission (the "Commission") and
pursuant to a letter  agreement  dated  November 7, 1997 among the  Partnership,
Lehigh I and the General Partner (the "Standstill  Agreement"),  Lehigh I agreed
that, prior to November 7, 2007 (the "Standstill  Expiration Date"), it will not
and it will cause certain  affiliates,  including Lehigh Tax Credit Partners II,
L.L.C. ("Lehigh II"), not to (i) acquire,  attempt to acquire or make a proposal
to acquire,  directly or  indirectly,  more than 45%  (including  BACs  acquired
through all other means) of the outstanding  BACs, (ii) seek to propose to enter
into, directly or indirectly, any merger,  consolidation,  business combination,
sale or  acquisition  of  assets,  liquidation,  dissolution  or  other  similar
transaction  involving the  Partnership,  (iii) make, or in any way participate,
directly or  indirectly,  in any  "solicitation"  of "proxies" or "consents" (as
such  terms are used in the proxy  rules of the  Commission)  to vote any voting
securities of the  Partnership,  (iv) form,  join or otherwise  participate in a
"group"  (within the meaning of Section 13 (d)(3) of the Securities and Exchange
Act of 1934) with respect to any voting  securities of the  Partnership,  except
those  affiliates  bound by the Standstill  Agreement will not be deemed to have
violated  it and  formed a  "group"  solely by  acting  in  accordance  with the
Standstill Agreement,  (v) disclose in writing to any third party any intention,
plan or arrangement  inconsistent with the terms of the Standstill Agreement, or
(vi) loan money to,  advise,  assist or encourage any person in connection  with
any action inconsistent with the terms of the Standstill Agreement. In addition,
Lehigh I agreed that until the Standstill  Expiration  Date it will not sell any
BACs  acquired  by it unless  the  buyer of such BACs  agrees to be bound by the
Standstill  Agreement;  provided,  however,  Lehigh I may make  transfers in the
secondary  market to any purchaser which  represents that following such sale it
will not own three percent (3%) or more of the BACs outstanding. By the terms of
the  Standstill  Agreement,  Lehigh I also  agreed  to vote its BACs in the same
manner as a majority of all voting BACs holders; provided,  however, Lehigh I is
entitled to vote its BACs as it  determines  with regard to any  proposal (i) to
remove the  General  Partner as a general  partner  of the  Partnership  or (ii)
concerning the reduction of any fees, profits,  distributions or allocations for
the benefit of the General Partner or its affiliates. The address of each of the
Partnership,  Lehigh I and the General Partner is 625 Madison Avenue,  New York,
New York 10022.

(3) All of such BACs  represent  BACs owned  directly by Lehigh I and Lehigh II,
for which the Managing  Member  serves as managing  member.  As of May 18, 2006,
Lehigh I held 2,213.60 BACs and Lehigh II held 2,239.60 BACs.

                                       48
<PAGE>

(4) Each such party serves as a director and  executive  officer of the Managing
Member and owns an equity  interest  therein except J. Michael Fried,  Denise L.
Kiley and Stuart J. Boesky who own only an economic interest.

Item 13.  Certain Relationships and Related Transactions

The  Partnership  has and will continue to have certain  relationships  with the
General Partner and its  affiliates,  as discussed in Item 11 and also Note 8 in
Item 8 above, which are incorporated herein by reference thereto. However, there
have been no direct  financial  transactions  between  the  Partnership  and the
directors and officers of the General Partner.

Item 14.  Principal Accountant Fees and Services

Audit Fees
----------
The  aggregate  fees billed by Trien  Rosenberg  Rosenberg  Weinberg  Ciullo and
Fazzari LLP and its affiliates for professional  services rendered for the audit
of the Partnership's  annual financial  statements for the years ended March 31,
2006 and 2005 and for the reviews of the  financial  statements  included in the
Partnership's  quarterly  reports on Form 10-Q for those years were  $54,900 and
$56,200, respectively.

Audit - Related Fees
--------------------
None

Tax Fees
--------
The  aggregate  fees billed by Weiser LLP and its  affiliates  for  professional
services  rendered for the preparation of the  Partnership's  annual tax returns
were $11,500 for both the years ended December 31, 2005 and 2004.

All Other Fees
--------------
None

The Partnership is not required to have, and does not have, a stand-alone  audit
committee.


                                       49
<PAGE>

                                     PART IV
<TABLE>
<CAPTION>
Item 15. Exhibits and Financial Statement Schedules
                                                                                                 Sequential
                                                                                                    Page
                                                                                                 -----------

<S>      <C>                                                                                          <C>
(a) 1.   Consolidated Financial Statements
         ---------------------------------

         Report of Independent Registered Public Accounting Firm                                      12

         Consolidated Balance Sheets at March 31, 2006 and 2005                                       35

         Consolidated Statements of Operations for the Years Ended March 31, 2006, 2005 and
           2004                                                                                       36

         Consolidated Statements of Changes in Partners' Capital (Deficit) for the Years
           Ended March 31, 2006, 2005 and 2004                                                        37

         Consolidated Statements of Cash Flows for the Years Ended March 31, 2006, 2005 and
           2004                                                                                       38

         Notes to Consolidated Financial Statements                                                   39

(a) 2.   Consolidated Financial Statement Schedules
         ------------------------------------------

         Report of Independent Registered Public Accounting Firm                                      56

         Schedule I - Condensed Financial Information of Registrant                                   57

         Schedule III - Real Estate and Accumulated Depreciation                                      60

         All other  schedules  have  been  omitted  because  they are not
           required or because the required  information  is contained in
           the financial statements or notes thereto.

(a) 3.   Exhibits
         --------

(3A)     Agreement of Limited  Partnership of  Independence  Tax Credit
         Plus L.P. II as adopted on February 11, 1992*

(3B)     Form of Amended and Restated Agreement of Limited  Partnership
         of  Independence  Tax Credit  Plus L.P.  II,  attached  to the
         Prospectus as Exhibit A**

(3C)     Certificate of Limited  Partnership of Independence Tax Credit
         Plus L.P. II as filed on February 11, 1992*

(10A)    Form of Subscription  Agreement  attached to the Prospectus as
         Exhibit B**

(10B)    Escrow Agreement between  Independence Tax Credit Plus L.P. II
         and Bankers Trust Company*

(10C)    Form  of  Purchase  and  Sales  Agreement  pertaining  to  the
         Partnership's acquisition of Local Partnership Interests*

(10D)    Form of Amended and Restated Agreement of Limited  Partnership
         of Local Partnerships*

(21)     Subsidiaries of the Registrant                                                               51

(31.1)   Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)                                   54

(32.1)   Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of
           Title 18 of the United States Code (18 U.S.C. 1350)                                        55

         *Incorporated  herein as an exhibit  by  reference  to  exhibits
           filed with Post-Effective  Amendment No. 4 to the Registration
           Statement on Form S-11 (Registration No. 33-37704)

         **Incorporated  herein as an exhibit by  reference  to  exhibits
           filed with Post-Effective  Amendment No. 8 to the Registration
           Statement on Form S-11 (Registration No. 33-37704)
</TABLE>

                                       50
<PAGE>

Item 15. Exhibits and Financial Statement Schedules (continued)

                                                                 Jurisdiction
Subsidiaries of the Registrant (Exhibit 21)                    of Organization
-------------------------------------------                    ---------------


Lincoln Renaissance                                                 PA
United Germano - Millgate Limited Partnership                       IL
Mansion Court Associates                                            PA
Derby Run Associates, L.P.                                          VA
Renaissance Plaza `93 Associates, L.P.                              MD
Tasker Village Associates                                           PA
Martha Bryant Manor, L.P.                                           CA
Colden Oaks Limited Partnership                                     CA
Brynview Terrace, L.P.                                              CA
NLEDC, L.P.                                                         CA
Creative Choice Homes VI, Ltd.                                      FL
P & P Homes for the Elderly, L.P.                                   CA
Clear Horizons Limited Partnership                                  LA
Neptune Venture, L.P.                                               NJ
Affordable Green Associates L.P.                                    NY


                                       51
<PAGE>


                                   SIGNATURES
                                   ----------



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                      ------------------------------------
                                  (Registrant)



                        By:  RELATED INDEPENDENCE ASSOCIATES L.P.,
                             General Partner



                             By:  RELATED INDEPENDENCE ASSOCIATES INC.,
                                  General Partner



Date: June 21, 2006               By: /s/ Alan P. Hirmes
      -------------                   ------------------
                                      Alan P. Hirmes
                                      Director and Senior Vice President
                                      (Chief Executive Officer and
                                       Chief Financial Officer)

Date: June 21, 2006               By: /s/ Glenn F. Hopps
      -------------                   ------------------
                                      Glenn F. Hopps
                                      Treasurer
                                      (Chief Accounting Officer)



<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated:



      Signature                        Title                          Date
------------------    ---------------------------------------    --------------

                      Director and Senior Vice President
/s/ Alan P. Hirmes    (chief executive officer and chief
------------------    financial officer) of Related               June 21, 2006
Alan P. Hirmes        Independence Associates Inc.                -------------


/s/ Glenn F. Hopps
------------------    Treasurer (chief accounting officer)        June 21, 2006
Glenn F. Hopps        of Related Independence Associates Inc.     -------------


<PAGE>
                                                                    Exhibit 31.1


                         CERTIFICATION PURSUANT TO RULE
                           13a-14(a) OR RULE 15d-14(a)


I, Alan P.  Hirmes,  Chief  Executive  Officer  and Chief  Financial  Officer of
Related  Independence  Associates  Inc.  ("RIAI") the general partner of Related
Independence Associates L.P. the General Partner of Independence Tax Credit Plus
L.P. II (the "Partnership"), certify that:

     1.  I have  reviewed  this annual report on Form 10-K for the period ending
         March 31, 2006 of the Partnership;

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

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

     4.  I am responsible for establishing and maintaining  disclosure  controls
         and  procedures  (as  defined  in  Exchange  Act  Rules  13a-15(e)  and
         15d-15(e)) and internal control over financial reporting (as defined in
         Exchange Act Rules  13a-15(f) and  15d-15(f)) for the  Partnership  and
         have:

         a) designed such  disclosure  controls and  procedures,  or caused such
         disclosure controls and procedures to be designed under my supervision,
         to  ensure  that  material  information  relating  to the  Partnership,
         including its consolidated subsidiaries,  is made known to me by others
         within  those  entities,  particularly  during the period in which this
         report is being prepared;

         b) designed such internal control over financial  reporting,  or caused
         such internal control over financial  reporting to be designed under my
         supervision,  to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles;

         c) evaluated the effectiveness of the Partnership's disclosure controls
         and procedures  and presented in this report my  conclusions  about the
         effectiveness of the disclosure controls and procedures,  as of the end
         of the period covered by this report based on such evaluation; and

         d)  disclosed in this report any change in the  Partnership's  internal
         control over financial reporting that occurred during the Partnership's
         fourth fiscal  quarter that has materially  affected,  or is reasonably
         likely to materially  affect,  the Partnership's  internal control over
         financial reporting; and

     5.  I have  disclosed,  based  on my most  recent  evaluation  of  internal
         control over financial reporting,  to the Partnership's auditors and to
         the controlling entities of RIAI:

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

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in the  Partnership's
         internal control over financial reporting.



         Date: June 21, 2006
               -------------

                                                By:  /s/ Alan P. Hirmes
                                                     ------------------
                                                     Alan P. Hirmes
                                                     Chief Executive Officer and
                                                     Chief Financial Officer



<PAGE>


                                                                    Exhibit 32.1


                             CERTIFICATION PURSUANT
                       TO RULE 13a-14(b) OR RULE 15d-14(b)
                          AND SECTION 1350 OF TITLE 18
                   OF THE UNITED STATES CODE (18 U.S.C. 1350)


In  connection  with the Annual Report of  Independence  Tax Credit Plus L.P. II
(the  "Partnership")  on Form 10-K for the period ending March 31, 2006 as filed
with the  Securities  and  Exchange  Commission  ("SEC") on the date hereof (the
"Report"),  I, Alan P.  Hirmes,  Chief  Executive  Officer  and Chief  Financial
Officer of Related  Independence  Associates Inc. the general partner of Related
Independence  Associates L.P., the General Partner of the Partnership,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:


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


       (2) The  information  contained  in the Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Partnership.

A signed  original of this  written  statement  required by Section 906 has been
provided  to the  Partnership  and  will  be  retained  by the  Partnership  and
furnished to the SEC or its staff upon request.



By:  /s/ Alan P. Hirmes
     ------------------
     Alan P. Hirmes
     Chief Executive Officer and
     Chief Financial Officer
     June 21, 2006



<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------

To the Partners of
Independence Tax Credit Plus L.P. II and Subsidiaries
(A Delaware Limited Partnership)

In  connection  with our  audits of the  consolidated  financial  statements  of
Independence  Tax Credit  Plus L.P.  II and  Subsidiaries  (A  Delaware  Limited
Partnership)  included in this Form 10-K as presented in our opinion  dated June
20,  2006 on page 12, and based on the reports of other  auditors,  we have also
audited  supporting  Schedule I for the 2005,  2004,  and 2003 Fiscal  Years and
Schedule III at March 31, 2006. In our opinion,  and based on the reports of the
other  auditors,  these  consolidated  schedules  present  fairly,  when read in
conjunction with the related consolidated  financial  statements,  the financial
data required to be set forth therein.




/s/TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 20, 2006


<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              (NOT INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)


                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                     ASSETS


                                                              March 31,
                                                      -------------------------
                                                         2006           2005
                                                      -----------   -----------
<S>                                                   <C>           <C>
Cash and cash equivalents                             $   556,171   $ 1,044,867
Cash held in escrow                                        23,683        23,683
Investment in subsidiary partnerships                  13,701,380    15,459,113
Other assets                                               35,594        35,333
                                                      -----------   -----------

Total assets                                          $14,316,828   $16,562,996
                                                      ===========   ===========


                        LIABILITIES AND PARTNERS' CAPITAL


Due to general partner and affiliates                 $ 3,820,653   $ 3,692,952

Other liabilities                                          16,883        10,907
                                                      -----------   -----------

Total liabilities                                       3,837,536     3,703,859

Partners' capital                                      10,479,292    12,859,137
                                                      -----------   -----------

Total liabilities and partners' capital               $14,316,828   $16,562,996
                                                      ===========   ===========
</TABLE>


Investments  in  Subsidiary  Partnerships  are recorded in  accordance  with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly,  partners'  capital on the  consolidated  balance sheet will differ
from partners' capital shown above.

                                       57
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              (NOT INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)


                       CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                          Years Ended March 31,
                                                -----------------------------------------
                                                   2006            2005           2004
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
Revenues

Other income                                    $    15,581    $     7,990    $     1,775
                                                -----------    -----------    -----------

Expenses

Administrative and management                       106,883        103,129        112,406
Administrative and management-related parties       746,008        683,585        668,835
                                                -----------    -----------    -----------

Total expenses                                      852,891        786,714        781,241
                                                -----------    -----------    -----------

Loss from operations                               (837,310)      (778,724)      (779,466)

Equity in loss of subsidiary partnerships        (1,542,535)    (1,442,729)    (2,614,320)
                                                -----------    -----------    -----------

Net loss                                        $(2,379,845)   $(2,221,453)   $(3,393,786)
                                                ===========    ===========    ===========
</TABLE>

                                       58
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              (NOT INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)


                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                 Years Ended March 31,
                                                       -----------------------------------------
                                                          2006            2005           2004
                                                       -----------    -----------    -----------
<S>                                                    <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                               $(2,379,845)   $(2,221,453)   $(3,393,786)
                                                       -----------    -----------    -----------

Adjustments to reconcile net loss to net cash
  used in operating activities:

Equity in loss of subsidiary partnerships                1,542,535      1,442,729      2,614,320

(Increase) decrease in assets:

Other assets                                                  (261)        (1,629)           589

Increase (decrease) in liabilities:

Due to general partners and affiliates                     127,701       (290,243)       668,388
Other liabilities                                            5,976         (1,613)         5,161
                                                       -----------    -----------    -----------

Total adjustments                                        1,675,951      1,149,244      3,288,458
                                                       -----------    -----------    -----------

Net cash used in operating activities                     (703,894)    (1,072,209)      (105,328)
                                                       -----------    -----------    -----------

Net cash from financing activities:

Distributions from subsidiary partnerships                 215,198      1,722,582         87,833
                                                       -----------    -----------    -----------

Net cash provided by financing activities                  215,198      1,722,582         87,833
                                                       -----------    -----------    -----------

Net (decrease) increase in cash and cash equivalents      (488,696)       650,373        (17,495)

Cash and cash equivalents, beginning of year             1,044,867        394,494        411,989
                                                       -----------    -----------    -----------

Cash and cash equivalents, end of year                 $   556,171    $ 1,044,867    $   394,494
                                                       ===========    ===========    ===========
</TABLE>

                                       59
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2006
<TABLE>
<CAPTION>
                                                               Initial Cost to Partnership
                                                               ----------------------------
                                                                                                   Cost
                                                                                                Capitalized
                                                                                               Subsequent to
                                                                              Buildings and     Acquistion:
              Description                      Encumbrances       Land        Improvements     Improvements
-------------------------------------------    ------------    -----------    -------------    -------------
<S>                                            <C>             <C>             <C>             <C>
Apartment Complexes

United Germano Millgate Limited Partnership
  Chicago, IL                                  $  8,671,870    $   580,000    $   6,070,477    $  11,526,777
Lincoln Renaissance
  Reading, PA                                     2,553,000              0        5,240,173          238,372
Mansion Court Associates
  Philadelphia, PA                                1,505,862         19,072        3,224,984          233,492
Derby Run Associates L.P.
  Hampton, VA                                     6,812,488        407,410        3,069,628        4,996,857
Renaissance Plaza Assoc.
  Baltimore, MD                                   6,646,869        684,255        9,840,170        4,445,748
Tasker Village
  Philadelphia, PA                                1,784,881         18,235                0        3,935,436
Martha Bryant Manor, L.P.
  Los Angeles, CA                                 7,589,533        966,577                0       10,761,700
Colden Oaks Limited Partnership
  Los Angeles, CA                                 5,387,884        922,790                0        2,090,771
Brynview Terrace Limited Partnership
  Los Angeles, CA                                   993,815        175,943                0        1,450,181
NLEDC, L.P.
  Los Angeles, CA                                 4,240,795        624,000                0        5,884,672
Creative Choice Homes VI Ltd.
  Miami, FL                                       3,497,280        650,072           13,134        5,593,277
P&P Homes for the Elderly, L.P.
  Los Angeles, CA                                 6,245,036              0                0       10,023,464
Clear Horizons Limited Partnership
  Shreveport, LA                                    590,000         15,304        2,058,729          226,889
Neptune Venture L.P.
  Neptune Township, NJ                                    0        460,631       10,151,873          200,562
Affordable Green Associates L.P.
  New York, NY                                    2,163,580         20,500        3,506,961           43,581
                                               ------------    -----------    -------------    -------------

                                               $ 58,682,893    $ 5,544,789    $  43,176,129    $  61,651,779
                                               ============    ===========    =============    =============


<CAPTION>

                                               Gross Amount at which Carried at Close of Period
                                               ------------------------------------------------



                                                               Buildings and                        Accumulated
              Description                         Land         Improvements         Total           Depreciation
-------------------------------------------    -----------     -------------     --------------     ------------
<S>                                            <C>             <C>               <C>                <C>
Apartment Complexes

United Germano Millgate Limited Partnership
  Chicago, IL                                  $   585,374     $  17,591,880     $ 18,177,254       $  9,608,909
Lincoln Renaissance
  Reading, PA                                        5,373         5,473,172        5,478,545          1,696,615
Mansion Court Associates
  Philadelphia, PA                                  25,095         3,452,453        3,477,548          1,063,569
Derby Run Associates L.P.
  Hampton, VA                                      409,771         8,064,124        8,473,895          2,288,063
Renaissance Plaza Assoc.
  Baltimore, MD                                    686,616        14,283,557       14,970,173          3,939,712
Tasker Village
  Philadelphia, PA                                  20,596         3,933,075        3,953,671          1,150,200
Martha Bryant Manor, L.P.
  Los Angeles, CA                                  968,938        10,759,339       11,728,277          3,716,552
Colden Oaks Limited Partnership
  Los Angeles, CA                                  925,151         2,088,410        3,013,561          1,115,516
Brynview Terrace Limited Partnership
  Los Angeles, CA                                  178,304         1,447,820        1,626,124            503,697
NLEDC, L.P.
  Los Angeles, CA                                  626,361         5,882,311        6,508,672          2,091,038
Creative Choice Homes VI Ltd.
  Miami, FL                                        652,433         5,604,050        6,256,483          2,011,888
P&P Homes for the Elderly, L.P.
  Los Angeles, CA                                  642,360         9,381,104       10,023,464          2,687,723
Clear Horizons Limited Partnership
  Shreveport, LA                                    17,665         2,283,257        2,300,922          1,023,089
Neptune Venture L.P.
  Neptune Township, NJ                             462,465        10,350,601       10,813,066          2,639,772
Affordable Green Associates L.P.
  New York, NY                                      22,334         3,548,708        3,571,042          1,368,950
                                               -----------     -------------     ------------       ------------

                                               $ 6,228,836     $ 104,143,861     $110,372,697       $ 36,905,293
                                               ===========     =============     ============       ============


<CAPTION>

                                                                                   Life on which
                                                                                  Depreciation in
                                                 Year of                           Latest Income
                                               Construction          Date          Statements is
              Description                       Renovation         Acquired        Computed(a)(b)
-------------------------------------------    ------------      ------------     ---------------
<S>                                              <C>               <C>                 <C>
Apartment Complexes

United Germano Millgate Limited Partnership
  Chicago, IL                                    1993-94           Oct. 1993           10-25
Lincoln Renaissance
  Reading, PA                                    1993-94           Apr. 1993           20-40
Mansion Court Associates
  Philadelphia, PA                               1993-94           Nov. 1993           20-40
Derby Run Associates L.P.
  Hampton, VA                                    1994-95           Feb. 1994              40
Renaissance Plaza Assoc.
  Baltimore, MD                                  1994-95           Feb. 1994            27.5
Tasker Village
  Philadelphia, PA                               1994-95            May 1994              40
Martha Bryant Manor, L.P.
  Los Angeles, CA                                1994-95          Sept. 1994            27.5
Colden Oaks Limited Partnership
  Los Angeles, CA                                1994-95          Sept. 1994              31
Brynview Terrace Limited Partnership
  Los Angeles, CA                                1994-95          Sept. 1994            27.5
NLEDC, L.P.
  Los Angeles, CA                                1994-95          Sept. 1994            27.5
Creative Choice Homes VI Ltd.
  Miami, FL                                      1994-95          Sept. 1994              40
P&P Homes for the Elderly, L.P.
  Los Angeles, CA                                1994-95          Sept. 1994              30
Clear Horizons Limited Partnership
  Shreveport, LA                                 1994-95           Dec. 1994            27.5
Neptune Venture L.P.
  Neptune Township, NJ                           1995-96           Apr. 1995              40
Affordable Green Associates L.P.
  New York, NY                                   1995-96            May 1995              27
</TABLE>


(a)  Depreciation is computed using primarily the straight-line  method over the
     estimated useful lives determined by the Partnership date of acquisition.
(b)  Personal property is depreciated primarily by the straight-line method over
     the estimated useful lives ranging from 5 to 10 years.


                                       60
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. II
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2006
                                   (continued)
<TABLE>
<CAPTION>
                                          Cost of Property and Equipment                      Accumulated Depreciation
                                 ----------------------------------------------    ----------------------------------------------
                                                                                                       Years Ended March 31,
                                 ------------------------------------------------------------------------------------------------
                                      2006            2005             2004            2006            2005              2004
                                 -------------   -------------    -------------    -------------   -------------    -------------
<S>                              <C>             <C>              <C>              <C>             <C>              <C>
Balance at beginning of period   $ 110,064,122   $ 109,601,196    $ 109,245,116    $  33,532,575   $  30,145,898    $  26,736,066
Additions during period:
Improvements                           308,575         548,330          356,569
Depreciation expense                                                                   3,372,718       3,472,081        3,410,321

Deductions during period:
Dispositions                                 0         (85,404)            (489)               0         (85,404)            (489)
                                 -------------   -------------    -------------    -------------   -------------    -------------

Balance at close of period       $ 110,372,697   $ 110,064,122    $ 109,601,196    $  36,905,293   $  33,532,575    $  30,145,898
                                 =============   =============    =============    =============   =============    =============
</TABLE>

At the time the Local Partnerships were acquired by Independence Tax Credit Plus
II Limited  Partnership,  the entire  purchase  price paid by  Independence  Tax
Credit Plus II Limited  Partnership was pushed down to the Local Partnerships as
property and equipment with an offsetting credit to capital.  Since the projects
were in the construction phase at the time of acquisition,  the capital accounts
were  insignificant  at the time of purchase.  Therefore,  there are no material
differences between the original cost basis for tax and GAAP.

                                       61