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 0-24652

                          FREEDOM TAX CREDIT PLUS L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    Delaware                                      13-3533987
------------------------------------------------             -------------------
(State or other jurisdiction of incorporation or               (I.R.S. Employer
                 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) 317-5700

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

     None

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

     Title of Class
     Beneficial Assignment Certificates and Limited Partnership Interests

     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
$(4,113,000) based on Limited Partner equity (deficit) as of such date.

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

                       DOCUMENTS I6NCORPORATED BY REFERENCE

     None


<PAGE>

                                     PART I


Item 1.  Business

General
-------

Freedom Tax Credit Plus L.P. (the  "Partnership") is a limited partnership which
was  formed  under the laws of the State of  Delaware  on August 28,  1989.  The
General  Partners of the  Partnership  are Related  Freedom  Associates  L.P., a
Delaware limited  partnership (the "Related  General  Partner"),  and Freedom GP
Inc., a Delaware  corporation  (the "Freedom  General Partner" and together with
the Related General Partner, the "General Partners"). The general partner of the
Related  General  Partner  is  Related  Freedom   Associates  Inc.,  a  Delaware
corporation.  The General Partners are both affiliates of CharterMac Capital LLC
("CharterMac  Capital")  (formerly  known as Related  Capital  Company  LLC). On
November 25, 1997, an affiliate of the Related General Partner purchased 100% of
the stock of the Freedom  General  Partner.  On November  17,  2003,  CharterMac
acquired  CharterMac  Capital,  which is the parent of RCC Manager LLC, the sole
shareholder of Related  Freedom  Associates,  Inc.,  the general  partner of the
Related  General  Partner.  Pursuant  to the  acquisition,  CharterMac  acquired
controlling  interests in the General Partners.  This acquisition did not affect
the  Partnership  or its day-to-day  operations,  as the majority of the General
Partners' 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  resignation,
which was  effective on November 15, 2005, he also resigned from his position as
Senior Vice President of the general  partner of the Related General Partner and
Executive Vice President of the Freedom General Partner. 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 the  general  partner of the  Related
General Partner and Executive Vice President of the Freedom General Partner.

On  February  9,  1990,  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"),  pursuant to a prospectus  dated  February 9, 1990, as
supplemented by supplements thereto,  dated December 7, 1990, May 10, 1991, July
10, 1991 and July 23, 1991 (as so supplemented, the "Prospectus").

The Partnership  received $72,896,000 of the gross proceeds of the Offering from
4,780 investors, and the Offering was terminated on August 8, 1991. (See Item 8,
"Financial  Statements and Supplementary  Data," Note 1 of Notes to Consolidated
Financial Statements.)

The  Partnership  was  formed to invest as a limited  partner  in other  limited
partnerships  ("Local  Partnerships"),  each of which owns one or more leveraged
low-income   multi-family   residential  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,  and 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% to 99% of the
partnership  interests  in the  Local  Partnership.  As of March 31,  2006,  the
Partnership has acquired interests in forty-two Local Partnerships.  As of March
31, 2006, approximately $58,000,000 of the net proceeds of the Offering had been
invested in such Local  Partnerships,  representing all of the Partnership's net
proceeds available for investment.
 Subsequent to March 31, 2006 and as of the date of this filing, there have been
no additional  investments,  nor are any other investments expected. See Item 2,
"Properties," below.

The  Partnership  is currently  in the process of disposing of its  investments.
During  the  fiscal  year  ended  March  31,  2006,  the  Partnership's  limited
partnership interest in seven Local Partnerships had been sold. Through the year
ended  March 31, 2006 the  Partnership  has  disposed of seven of its  forty-two
original investments.  In addition,  the Partnership has entered into agreements
for the sale of eleven Local Partnerships (see below). No assurance can be given
as to whether or when these sales will actually  occur.  All gains and losses on
sales are included in discontinued operations.

The investment objectives of the Partnership are described below.

1. Entitle  qualified  BACs  holders to Tax Credits  over the Credit  Period (as
defined below) 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 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"). Each of the Local Partnerships in which the Partnership
has an interest  has been  allocated by the  relevant  state  credit  agency 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 the 15-year
compliance period (the "Compliance 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.

Tax Credits  with respect to a given  Apartment  Complex are  available  for the
Credit Period.  However,  the annual Tax Credits  available in the year in which

                                       2
<PAGE>

the Apartment Complex is leased to qualified tenants must be prorated based upon
the months  remaining  in the year.  The amount of the  annual Tax  Credits  not
available in the first year will be available  in the  eleventh  year.  Internal
Revenue  Code  Section 42  regulates  the use of the  Apartment  Complexes as to
occupancy,  eligibility,  and unit gross rent,  among other  requirements.  Each
Apartment  Complex  must meet the  provisions  of these  regulations  during the
Compliance  Period in order to remain qualified to receive the credits.  Certain
Apartment Complexes have extended compliance periods of up to fifty years.

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
discounted cash flow valuation method).  Through March 31, 2006, the Partnership
has  recorded  $4,220,000  as a 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.

As of December 31, 2002, all the Local  Partnerships have completed their Credit
Periods and the  Partnership  has met its primary  objective of  generating  Tax
Credits  for  qualified  BACs  holders.  However,  each Local  Partnership  must
continue  to  comply  with  the Tax  Credit  requirements  until  the end of the
Compliance Period in order to avoid recapture of the Tax Credits. The Compliance
Period began to end on December 31, 2004 and will continue  through December 31,
2007 with  respect  to the  Properties  depending  upon when the  Credit  Period
commenced.

The Partnership  continues to meet its objective of allocating passive losses to
individual  BACs  holders to offset  passive  income that they may realize  from
rental real estate  investments  and other passive  activities,  and  allocating
passive losses to corporate BACs holders to offset business income.

As of March 31, 2006,  distributions  from  operations  received  from the Local
Partnerships  have been immaterial.  Management  expects that the  distributions
from operations received from the Local Partnerships will increase, although not
to a  level  sufficient  to  permit  cash  distributions  to BACs  holders.  The
Partnership does not anticipate  providing cash distributions to BACs holders in
circumstances other than refinancings or sales.

Sale of Properties
------------------

The  Partnership  is currently  in the process of disposing of its  investments.
During  the  fiscal  year  ended  March  31,  2006,  the  Partnership's  limited
partnership interest in seven Local Partnerships had been sold. Through the year
ended  March 31, 2006 the  Partnership  has  disposed of seven of its  forty-two
original investments.  In addition,  the Partnership has entered into agreements
for the sale of eleven Local Partnerships (see below). No assurance can be given
as to whether or when these sales will actually  occur.  All gains and losses on
sales are included in discontinued operations.  Subsequently,  on April 20, 2006
and May 31,  2006,  two Local  Partnerships  entered  into a  purchase  and sale
agreement to sell their property and related assets and liabilities,  on June 5,
2006 and June 20, 2006, the property and related  assets and  liabilities of one
and two Local Partnerships, respectively, were sold. See Note 14 in Item 8.

On March 31, 2006, the Partnership's  limited  partnership  interest in Davidson
Court  Limited  Partnership  ("Davidson  Court") was sold to an affiliate of the
general  partner of the Local  Partnership  (the "Local General  Partner") for a
purchase price of $1,100,000,  resulting in a Local General Partner contribution
of  approximately  $42,000 and a net loss to the  Partnership  of  approximately
$21,000,  which will be recognized in the Partnership's Form 10-Q dated June 30,
2006. The sale resulted in the liquidation of Davidson Court. As of December 31,
2005,  Davidson  Court had property and  equipment,  at cost,  of  approximately
$873,000 and accumulated depreciation of approximately $350,000.

On March  31,  2006,  the  Partnership's  limited  partnership  interest  in CLM
Equities  Limited  Partnership  ("Morris  Avenue") was sold to the Local General
Partner and its affiliate for a purchase price of $265,000, resulting in a Local
General  Partner  distribution of  approximately  $439,000 and a net loss to the
Partnership  of  approximately   $21,000,   which  will  be  recognized  in  the
Partnership's  Form  10-Q  dated  June  30,  2006.  The  sale  resulted  in  the
liquidation  of Morris  Avenue.  As of  December  31,  2005,  Morris  Avenue had
property  and  equipment,  at cost,  of  approximately  $5,332,000,  accumulated
depreciation  of  approximately  $2,646,000  and mortgage debt of  approximately
$2,079,000.

On February 1, 2006, the Partnership's  limited partnership  interest in Ivanhoe
Apartments Limited Partnership ("Ivanhoe") was sold to the Local General Partner
for  a  purchase  price  of  $150,000,  resulting  in a  Local  General  Partner
distribution  of  approximately  $51,000  and a net loss to the  Partnership  of
approximately  $21,000,  which will be recognized in the Partnership's Form 10-Q
dated June 30, 2006.  The sale  resulted in the  liquidation  of Ivanhoe.  As of
December 31, 2005, Ivanhoe had property and equipment, at cost, of approximately
$1,178,000, accumulated depreciation of approximately $587,000 and mortgage debt
of approximately $323,000.

On January 19, 2006, the Partnership's  limited  partnership  interest in Nelson
Anderson Affordable Housing Limited Partners ("Nelson Anderson") was sold to the
Local  General  Partner for a purchase  price of $490,000,  resulting in a Local
General  Partner  distribution of  approximately  $177,000 and a net loss to the
Partnership  of  approximately   $21,000,   which  will  be  recognized  in  the
Partnership's  Form  10-Q  dated  June  30,  2006.  The  sale  resulted  in  the
liquidation of Nelson  Anderson.  As of December 31, 2005,  Nelson  Anderson had
property  and  equipment,  at cost,  of  approximately  $6,732,000,  accumulated
depreciation  of  approximately  $3,411,000  and mortgage debt of  approximately
$3,163,000.

On January 1, 2006, the Partnership's  limited partnership  interest in The Oaks
Village  Limited  Partnership  ("Oaks  Village")  was sold to the Local  General
Partner for a purchase  price of $75,000,  resulting in a Local General  Partner
contribution  of  approximately  $407,000 and a net loss to the  Partnership  of
approximately  $21,000. The sale resulted in the liquidation of Oaks Village. As
of the sale  date,  Oaks  Village  had  property  and  equipment,  at  cost,  of
approximately  $2,024,000,  accumulated depreciation of approximately $1,083,000
and mortgage debt of approximately $1,440,000.

On January 1, 2006, the Partnership's limited partnership interest in Greenfield
Village Limited  Partners  ("Greenfield  Village") was sold to the Local General
Partner for a purchase  price of $75,000,  resulting in a Local General  Partner
contribution  of  approximately  $461,000  and net  loss to the  Partnership  of
approximately  $21,000.  The sale  resulted  in the  liquidation  of  Greenfield
Village. As of the sale date, Greenfield Village had property and equipment,  at
cost, of  approximately  $2,010,000,  accumulated  depreciation of approximately
$1,059,000 and mortgage debt of approximately $1,448,000.

                                       3
<PAGE>

On June 20, 2005, the  Partnership's  limited  partnership  interest in Parkside
Townhomes  Associates  ("Parkside")  was sold to the Local General Partner for a
purchase price of $650,000 resulting in a Local General Partner net distribution
of  approximately  $32,000 and a net loss to the  Partnership  of  approximately
$39,000. The purchase price consisted of approximately  $161,000 paid in cash at
closing and $450,000  pursuant to a promissory note payable to the  Partnership.
During  the  quarter  ended June 30,  2005,  in  accordance  with  Statement  of
Financial  Accounting  Standards  No.  144  "Accounting  for the  Impairment  of
Disposal of  Long-Lived  Asset"  ("SFAS No. 144"),  the  Partnership  deemed the
building  impaired and wrote it down to its fair value which  resulted in a loss
on impairment of $555,000.  The sale resulted in the liquidation of Parkside. As
of the sale date, Parkside had property and equipment, recorded at a fair value,
of   approximately   $4,162,000,   accumulated   depreciation  of  approximately
$2,386,000 and mortgage debt of approximately $1,461,000.

Assets Held for Sale
--------------------

On March 22, 2006, Eagle Ridge Limited  Partnership ("Eagle Ridge") entered into
a purchase and sale  agreement  to sell the property and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$2,000,000. The sales documents have been executed and the initial deposit funds
are being held in  escrow.  A closing  is  expected  to take place in the fourth
calendar  quarter of 2006. No assurance can be given that the sale will actually
occur. Eagle Ridge is being held as an asset held for sale as of March 31, 2006.
As of December 31, 2005,  Eagle Ridge had property and  equipment,  at cost,  of
approximately  $3,100,000,  accumulated depreciation of approximately $1,837,000
and mortgage debt of approximately $1,496,000.

On January 30, 2006,  Lauderdale Lakes  Associates,  Ltd.  ("Lauderdale  Lakes")
entered into a purchase and sale  agreement to sell the property and the related
assets and  liabilities  to an  affiliate  of the Local  General  Partner  for a
purchase  price of  $5,900,000.  The sales  documents have been executed and the
initial  deposit funds are being held in escrow.  A closing is expected to occur
in the first  calendar  quarter of 2007. No assurance can be given that the sale
will actually occur. Lauderdale Lakes is being held as an asset held for sale as
of March 31, 2006.  As of December 31, 2005,  Lauderdale  Lakes had property and
equipment, at cost, of approximately  $10,634,000,  accumulated  depreciation of
approximately $3,584,000 and mortgage debt of approximately $4,645,000.

On January  26,  2006 Bethel Park  Apartments,  a Limited  Partnership  ("Bethel
Park")  entered into a purchase and sale  agreement to sell the property and the
related assets and  liabilities to an  unaffiliated  third party purchaser for a
purchase  price of  $2,500,000.  The sales  documents have been executed and the
initial  deposit funds are being held in escrow.  A closing is expected to occur
in June  2006.  No  assurance  can be given that the sale will  actually  occur.
Bethel Park is being held as an asset held for sale as of March 31, 2006.  As of
December  31,  2005,  Bethel  Park had  property  and  equipment,  at  cost,  of
approximately  $5,099,000,  accumulated depreciation of approximately $3,084,000
and mortgage debt of approximately $1,758,000.  Subsequently,  on June 20, 2006,
the property  and the related  assets and  liabilities  of Bethel Park were sold
(see Note 14 in Item 8).

On January 26, 2006, Northwood Apartments of Georgia  ("Northwood") entered into
a purchase and sale  agreement  to sell the property and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$6,050,000. The sales documents have been executed and the initial deposit funds
are being  held in  escrow.  A closing is  expected  to occur in June  2006.  No
assurance  can be given that the sale will  actually  occur.  Northwood is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Northwood  had property and  equipment,  at cost, of  approximately  $7,398,000,
accumulated  depreciation  of  approximately  $4,116,000  and  mortgage  debt of
approximately  $2,545,000.  Subsequently,  on June 5, 2006, the property and the
related assets and liabilities of Northwood were sold (see Note 14 in Item 8).

On January 26, 2006,  Hunters Chase Apartments  ("Hunters Chase") entered into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$2,730,000. The sales documents have been executed and the initial deposit funds
are being  held in  escrow.  A closing is  expected  to occur in June  2006.  No
assurance can be given that the sale will actually occur. Hunters Chase is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Hunters Chase had property and equipment, at cost, of approximately  $3,913,000,
accumulated  depreciation  of  approximately  $2,618,000  and  mortgage  debt of
approximately $2,296,000.

On January  26,  2006,  Bennion  Park  Apartments  ("Mulberry")  entered  into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$4,900,000. The sales documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance can be given that the sale will actually occur. Mulberry is being held
as an asset  held for  sale as of March  31,  2006.  As of  December  31,  2005,
Mulberry had property  and  equipment,  at cost,  of  approximately  $5,954,000,
accumulated  depreciation  of  approximately  $3,417,000  and  mortgage  debt of
approximately $1,994,000.

On January 26, 2006,  Oxford Trace  Apartments  ("Oxford  Trace") entered into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$725,000.  The sales  documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance can be given that the sale will actually occur.  Oxford Trace is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Oxford Trace had property and equipment,  at cost, of approximately  $1,099,000,
accumulated   depreciation  of  approximately  $833,000  and  mortgage  debt  of
approximately $658,000.

On January 26, 2006,  Tivoli Place  Apartments  ("Tivoli  Place") entered into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$3,050,000. The sales documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance can be given that the sale will actually occur.  Tivoli Place is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Tivoli Place had property and equipment,  at cost, of approximately  $4,566,000,
accumulated  depreciation  of  approximately  $2,590,000  and  mortgage  debt of
approximately $1,409,000.

On January  26,  2006,  Twin Trees  Apartments  ("Twin  Trees")  entered  into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$2,300,000. The sales documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance  can be given that the sale will actually  occur.  Twin Trees is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,

                                       4
<PAGE>

Twin Trees had property and  equipment,  at cost, of  approximately  $2,925,000,
accumulated  depreciation  of  approximately  $1,657,000  and  mortgage  debt of
approximately $1,047,000.

On January 26, 2006,  Wilshire Apartments  ("Wilshire")  entered into a purchase
and sale agreement to sell the property and the related  assets and  liabilities
to an unaffiliated third party purchaser for a purchase price of $1,700,000. The
sales  documents have been executed and the initial deposit funds are being held
in escrow.  A closing is expected  to occur in June 2006.  No  assurance  can be
given that the sale will actually occur. Wilshire is being held as an asset held
for sale as of March 31, 2006.  As of December  31, 2005,  Wilshire had property
and equipment, at cost, of approximately $2,914,000, accumulated depreciation of
approximately $1,846,000 and mortgage debt of approximately $1,574,000.

On January 26, 2006, Zebulon Park Apartments ("Zebulon") entered into a purchase
and sale agreement to sell the property and the related  assets and  liabilities
to an unaffiliated third party purchaser for a purchase price of $2,000,000. The
sales  documents have been executed and the initial deposit funds are being held
in escrow.  A closing is expected  to occur in June 2006.  No  assurance  can be
given that the sale will actually occur.  Zebulon is being held as an asset held
for sale as of March 31, 2006. As of December 31, 2005, Zebulon had property and
equipment,  at cost, of approximately  $4,193,000,  accumulated  depreciation of
approximately   $2,460,000  and  mortgage  debt  of  approximately   $1,478,000.
Subsequently,  on June  20,  2006,  the  property  and the  related  assets  and
liabilities of Zebulon were sold (see Note 14 in Item 8).

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 are subject to active competition from similar properties in
their respective  vicinities.  In addition,  various other limited  partnerships
may, in the future, be formed by the General Partners and/or their affiliates to
engage in businesses which may compete with the Partnership.

Employees
---------
The Partnership does not have any direct  employees.  All services are performed
for the Partnership by its General  Partners and their  affiliates.  The General
Partners receive compensation in connection with such activities as set forth in
Items 11 and 13. In addition,  the Partnership  reimburses the General  Partners
and certain of their  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 and Certificate of Limited
Partnership (the "Partnership Agreement").

Item 1A.  Risk Factors

The  Partnership is subject to 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 23% 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  U.S.
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 owners'  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 contract expires.

Item 1B.  Unresolved Staff Comments

Not applicable

                                       5
<PAGE>

Item 2.  Properties

The Partnership holds a 99%, 98.99% and 98% limited partnership interest in six,
ten and nineteen Local Partnerships, respectively. Set forth below is a schedule
of  these  Local  Partnerships  including  certain  information  concerning  the
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 (a) 2; Schedule
III.
<TABLE>
<CAPTION>
                           Local Partnership Schedule
                           --------------------------

                                                                       % of Units Occupied at May 1,
      Name of Location                                ---------------------------------------------------------------
      (Number of Units)             Date Acquired         2006         2005         2004        2003         2002
---------------------------------  ---------------    ------------  ----------  ----------  -----------   -----------
<S>                                <C>                    <C>          <C>         <C>          <C>          <C>
Parkside Townhomes
York, PA (53)                      September 1990          (b)          92%         98%          89%          87%

Twin Trees
Layton, UT (43)                      October 1990          98%          93%         95%          95%          98%

Bennion (Mulberry)
Taylorsville, UT (80)                October 1990          95%          95%         93%          88%          96%

Hunters Chase
Madison, AL (91)                     October 1990          90%          80%         80%          95%          93%

Wilshire Park
Huntsville, AL (65)                  October 1990          95%          85%         91%          88%          94%

Bethel Park
Bethel, OH (84)                      October 1990          94%          83%         96%          89%          80%

Zebulon Park
Owensville, OH (66)                  October 1990          84%          86%         94%          94%          95%

Tivoli Place
Murphreesboro, TN (61)               October 1990          90%          95%         90%          92%          89%

Northwood (Hartwood)
Jacksonville, FL (110)               October 1990          91%          93%         97%          92%         100%

Oxford Trace
Aiken, SC (29)                       October 1990          93%          90%         96%          97%          79%

Ivanhoe Apts.
Salt Lake City, UT (19)              January 1991          (b)          95%        100%          79%          95%

Washington Brooklyn
Brooklyn, NY (24)                    January 1991         100%         100%        100%         100%         100%

Manhattan B (C.H. Development)
New York, NY (35)                    January 1991         100%         100%         97%         100%         100%

Davidson Court
Staten Island, NY (38)                 March 1991          (b)         100%         97%         100%         100%

Magnolia Mews
Philadelphia, PA (63)                  March 1991          95%          97%         95%          98%         100%

Oaks Village
Whiteville, NC (40)                    March 1991          (b)         100%        100%          98%         100%

Greenfield Village
Dunn, NC (40)                          March 1991          (b)          98%         98%          98%         100%

Morris Avenue (CLM Equities)
Bronx, NY (58)                         April 1991          (b)         100%        100%         100%         100%

Victoria Manor
Riverside, CA (112)                    April 1991          99%          98%        100%         100%         100%

Ogontz Hall
Philadelphia, PA (35)                  April 1991          96%          97%         90%         100%          65%(a)
</TABLE>

                                       6
<PAGE>
<TABLE>
<CAPTION>
                           Local Partnership Schedule
                           --------------------------

                                                                       % of Units Occupied at May 1,
      Name of Location                                ---------------------------------------------------------------
      (Number of Units)             Date Acquired         2006         2005         2004        2003         2002
---------------------------------  ---------------    ------------  ----------  ----------  -----------   -----------
<S>                                <C>                    <C>          <C>         <C>          <C>          <C>
Eagle Ridge
Stoughton, WI (54)                       May 1991          83%          83%         87%          89%          93%

Nelson Anderson
Bronx, NY (81)                          June 1991          (b)          93%         98%          98%          96%

Abraham Lincoln Apts.
Irondequoit, NY (69)               September 1991          93%          88%         86%          83%          94%

Wilson Stree
(Middletown)t Apts.
Middletown, PA (44)                September 1991          93%          89%         98%          98%          95%

Lauderdale Lakes
Lauderdale Lakes, FL (172)           October 1991          99%         100%         99%          97%          96%

Flipper Temple
Atlanta, GA (163)                    October 1991          99%         100%        100%          97%         100%

220 Cooper Street
Camden, NJ (29)                     December 1991          93%          90%        100%         100%          93%

Pecan Creek
Tulsa, OK (47)                      December 1991          92%          85%         96%          92%          94%

Vendome
Brooklyn, NY (24)                   December 1991         100%         100%        100%         100%         100%

Rainer Villas
New Augusta, MS (20)                December 1991          75%          90%        100%          85%         100%

Pine Shadow Apts.
Waveland, MS (48)                   December 1991           0%         100%        100%          98%         100%

Windsor Place
Wedowee, AL (24)                    December 1991         100%         100%        100%         100%         100%

Brookwood Apts.
Foley, AL (38)                      December 1991          92%          95%         84%          95%          98%

Heflin Hills Apts.
Heflin, AL (24)                     December 1991         100%         100%        100%         100%         100%

Shadowood Apts.
Stevenson, AL (24)                  December 1991         100%          96%        100%         100%         100%

Brittany Apts.
DeKalb, MS (25)                     December 1991         100%          96%        100%         100%         100%

Hidden Valley Apts.
Brewton, AL (40)                    December 1991         100%         100%        100%         100%          99%

Westbrook Square
Carthage, MS (32)                   December 1991          78%          94%         97%          97%          88%

Royal Pines Apts.(Warsaw Elderly)
Warsaw, KY (36)                     December 1991         100%          97%        100%         100%         100%

West Hill Square
Gordo, AL (24)                      December 1991         100%          96%        100%         100%         100%

Elmwood Manor
Picayune, MS (24)                   December 1991          96%         100%        100%         100%         100%

Harmony Gate Apts.
Los Angeles, CA (70)                 January 1992         100%          93%         97%          99%          97%
</TABLE>

                                       7
<PAGE>

(a)  Property undergoing renovations
(b)  The Partnership's  limited partnership  interest was sold during the fiscal
     year ended March 31, 2006 (see Note 9 in Item 8)

None of the Local Partnerships'  assets or revenue balances are greater than 10%
of the Partnership's total assets or revenue balances.

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

Commercial  tenants (to which average  rental per square foot applies)  comprise
less than 5% of the rental  revenues  of the Local  Partnerships.  Rents for the
residential units are determined annually by HUD and reflect increases,  if any,
in consumer price indices in various geographic areas.

Management of the General  Partners  periodically  reviews the physical state of
the  Properties  and suggests to the respective  Local General  Partners  budget
improvements  which are  generally  funded  from cash  flow from  operations  or
release of replacement reserve escrows.

Management of the General Partners  periodically  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.

The  General  Partners  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").  Under the  terms of the  Operating  Deficit  Guarantees,
amounts  funded are treated as operating  loans,  which do not bear interest and
which will be repaid only out of 50% of available  cash flow or out of available
net sale or refinancing  proceeds.  As of March 31, 2006, all Operating  Deficit
Guarantees have expired.


Item 3. Legal Proceedings

Washington Brooklyn
-------------------
In or about  September  2003,  two  putative  mortgagees  commenced  a  mortgage
foreclosure  action in the Supreme Court of the State of New York,  Kings County
(the  "Court"),  entitled  150 Beach 120th  Street Inc. v.  Washington  Brooklyn
Limited  Partnership,  Index No. 35255/2003,  seeking to foreclose on an alleged
$100,000  loan and mortgage  against the  Apartment  Complex owned by Washington
Brooklyn  Limited  Partnership  ("Washington").  Apparently,  the former general
partner of  Washington,  BUFNY Houses of  Brooklyn,  Inc.  ("BUFNY"),  allegedly
granted two  mortgages in the amounts of $225,000  and  $100,000  secured by the
Apartment  Complex.  Each of the  foregoing  mortgages  was granted  without the
knowledge  of  Freedom  SLP,  L.P.  (the  "Special  Limited   Partner")  or  the
Partnership  (collectively  the  "Freedom  LPs") or the  consent of the  Special
Limited Partner,  as required by Washington's  Amended and Restated Agreement of
Limited Partnership (the "Washington  Partnership  Agreement").  The Freedom LPs
believe  that BUFNY did not use the  alleged  loan  proceeds  for the benefit of
Washington or the Apartment  Complex.  For these and other reasons,  the Freedom
LPs contend that the alleged mortgages are invalid.

In addition, BUFNY allegedly failed to comply with the terms of either mortgage,
which resulted in the holders of the alleged  $100,000  mortgage  commencing the
foreclosure  proceedings.  BUFNY did not appear in or  otherwise  respond to the
foreclosure  proceedings.  The holders of the alleged $225,000 mortgage have not
yet, to the knowledge of the Freedom LPs, commenced any foreclosure proceedings.

Shortly  after the Freedom LPs became  aware of these  foreclosure  proceedings,
their counsel  contacted  counsel for the plaintiffs and mortgagees in an effort
to learn more about the alleged  mortgages and to resolve the disputes  relating
to the mortgages.  When those efforts failed,  the Freedom LPs filed a motion to
intervene  in the  foreclosure  action  and for  leave to file a late  answer on
behalf of themselves and Washington.  The Freedom LPs contend that the mortgages
are  invalid  and that  Washington  is not  liable  for  them or the  underlying
indebtedness. In an order dated September 7, 2004, the Court granted the Freedom
LPs' motion to intervene and to file a late answer on behalf of the Partnership.

On or about September 21, 2004, the Freedom LPs, on behalf of themselves and the
Partnership,  served an  answer,  counterclaims  and  crossclaims  in  defending
against the action. The answer denied the material  allegations of the complaint
and asserted certain affirmative defenses,  counterclaims and crossclaims. Among
other  things,  the Freedom LPs, on behalf of  themselves  and the  Partnership,
added  The  Levites  Organization,  one of the two  co-holders  of the  $225,000
mortgage for which the  plaintiffs'  complaint did not seek  foreclosure,  as an
additional  counterclaim  defendant,  and the Freedom LPs asserted that both the
$100,000 and $225,000 mortgages are invalid and void ab initio.

After obtaining discovery from the putative mortgagees,  the Partnership and the
Freedom LPs, on July 12, 2005, made a motion for summary judgment dismissing the
complaint and declaring the mortgages  invalid and void ab initio.  The putative
mortgagees  cross-moved for summary  judgment  declaring the mortgages valid and
enforceable.  Subsequently,  by decision dated January 3, 2006, the Court denied
both  motions,  finding  that  questions  of  fact  exist  for  trial  as to the
reasonableness of the putative mortgagees' reliance on BUFNY.

On February 14, 2006,  the Freedom LPs filed a notice of appeal from the January
3, 2006  decision.  The appeal has not yet been fully  briefed.  The Freedom LPs
intend  to  pursue  their  appeal,   defend  the  action,  and  prosecute  their
counterclaims  and  crossclaims  vigorously.  The final  outcome  of this  case,
however,  cannot be  determined  at this  time.  If the Court were to reject the
Freedom LPs defenses and  counterclaims,  then it is possible that the Apartment
Complex might be foreclosed upon and the Partnership might lose its title to and
interests in the Apartment Complex. Even if Washington were foreclosed,  it will
not be subject to Tax Credit recapture  because its Compliance Period expired on
December 31, 2005.

In  addition,  due to BUFNY's  breach of  fiduciary  duties and  breaches of the
Washington  Partnership  Agreement,  the Special Limited  Partner  exercised its
rights  under  the   Washington   Partnership   Agreement  to  remove  BUFNY  as
Washington's  general  partner and to substitute  itself as the new  replacement
general partner, effective April 26, 2004.

                                       8
<PAGE>

Subsequently,  on April 20, 2006,  the  Partnership  entered into a purchase and
sale  agreement  to sell  property  and the related  assets and  liabilities  of
Washington Brooklyn to an unaffiliated third party purchaser.

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

None


                                     PART II


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

As of March 31, 2006,  the  Partnership  had issued and has  outstanding  72,896
Limited Partnership  Interests,  each representing a $1,000 capital contribution
to the Partnership, or an aggregate capital contribution of $72,896,000.  All of
the issued and  outstanding  Limited  Partnership  Interests have been issued to
Freedom Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued
72,896  BACs to the  purchasers  thereof  for an  aggregate  purchase  price  of
$72,896,000.  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. As of May 4, 2006, the Partnership has 4,139
registered holders of an aggregate of 72,896 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   Partners   have  imposed
restrictions   limiting  the   transferability  of  the  BACs  and  the  Limited
Partnership  Interests  in secondary  market  transactions.  These  restrictions
should  prevent a public  trading market from  developing  that would  adversely
affect the ability of an investor to liquidate his or her investment quickly. It
is expected that such 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.

All  of  the  Partnership's  general  partnership  interests,   representing  an
aggregate capital contribution of $2,000, are held by the two General Partners.

There are no material  restrictions in the Partnership  Agreement on the ability
of  the  Partnership  to  make  distributions.   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
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 Partners.

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
     Partners) 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  Partners)  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  Partners,  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.

                                       9
<PAGE>

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                            $   7,939,756    $   7,807,858    $    7,661,964   $    7,246,296   $  7,191,373

Operating expenses                    (11,221,083)     (10,401,751)      (10,143,216)      (9,691,558)    (9,675,155)
                                    -------------    -------------    --------------   --------------   ------------

Loss from operations before
 minority
 interest                              (3,281,327)      (2,593,893)       (2,481,252)      (2,445,262)    (2,483,782)

Minority interest in loss of
 subsidiaries from operations              34,827           22,781            21,358           21,892         23,547
                                    -------------    -------------    --------------   --------------   ------------

Loss from operations                   (3,246,500)      (2,571,112)       (2,459,894)      (2,423,370)    (2,460,235)

Loss from discontinued operations
 (including minority interest)
 (Note 12)                               (545,544)      (1,648,526)       (1,295,070)      (1,330,377)    (1,290,935)
                                    -------------    -------------    --------------   --------------   ------------

Net loss                            $  (3,792,044)   $  (4,219,638)   $   (3,754,964)  $   (3,753,747)  $ (3,751,170)
                                    =============    =============    ==============   ==============   ============

Loss from operations per BAC        $      (44.09)   $      (34.92)   $       (33.41)  $       (32.91)  $     (33.41)

Loss from discontinued operations
 per BAC                                    (7.41)          (22.39)           (17.59)          (18.07)        (17.53)
                                    -------------    -------------    --------------   --------------   ------------

Net loss per BAC                    $      (51.50)   $      (57.31)   $       (51.00)  $       (50.98)  $     (50.94)
                                    =============    =============    ==============   ==============   ============
<CAPTION>
                                                                  Year Ended March 31,
                                    --------------------------------------------------------------------------------
        FINANCIAL POSITION               2006             2005             2004             2003           2002*
---------------------------------   -------------    -------------    --------------   --------------   ------------
<S>                                 <C>              <C>              <C>              <C>              <C>
Total assets                        $  79,514,396    $  85,974,318    $   89,939,866   $   93,667,833   $ 97,175,105
                                    =============    =============    ==============   ==============   ============

Mortgage notes payable (including
 assets held for sale)              $  59,865,761    $  65,119,347    $   66,285,158   $   67,366,819   $ 68,063,227
                                    =============    =============    ==============   ==============   ============

Total liabilities                   $  82,460,679    $  80,056,413    $   79,841,161   $   79,736,876   $ 79,553,880
                                    =============    =============    ==============   ==============   ============

Total partners' (deficit) capital   $  (5,914,946)   $  (2,122,902)   $    2,096,736   $    5,851,700   $  9,605,982
                                    =============    =============    ==============   ==============   ============
</TABLE>

* Reclassified for comparative purposes.


During the years ended March 31 2002, 2003, 2004 and 2005 total assets decreased
primarily due to depreciation, partially offset by net additions to property and
equipment.  During  the year  ended  March  31,  2006,  total  assets  decreased
primarily  due to the sale of Local  Partnerships  and  depreciation  and  total
liabilities  increased  primarily due to deferred revenue from the sale of Local
Partnership interests being accrued in other liabilities.

                                       10
<PAGE>

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

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

General
-------

The  Partnership's  capital has been  invested in 42 Local  Partnerships.  As of
March 31, 2006, the limited partnership interest in seven Local Partnerships had
been sold. In addition,  as of March 31, 2006, the  Partnership has entered into
agreements for the sales of eleven Local  Partnerships  (see Note 10 in Item 8).
For a discussion of these sales of the Local Partnerships, see Note 9 in Item 8.

During the year ended March 31, 2006, the primary sources of liquidity  included
working capital,  interest earned on working capital, and distributions received
from the Local Partnerships. None of these sources generated substantial amounts
of funds.

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

The  Partnership's  primary  sources  of funds  included:  (i)  working  capital
reserves;  (ii)  interest  earned on the working  capital  reserves;  (iii) cash
distributions from operations of the Local Partnerships; and (iv) sales proceeds
and  distributions.  Such funds are  available  to meet the  obligations  of the
Partnership. The Partnership does not anticipate providing cash distributions to
BACs holders in circumstances  other than refinancing or sales. During the years
ended March 31, 2006, 2005 and 2004,  distributions  from the Local Partnerships
amounted  to  approximately   $24,000,   $138,000  and  $16,000,   respectively.
Additionally,  during  the years  ended  March  31,  2006,  2005 and  2004,  the
Partnership  received  approximately  $2,379,000,  $0 and $0,  respectively,  of
proceeds from the sale of investments.

Certain fees and expense  reimbursements  owed to the General Partners amounting
to  approximately  $9,051,000 and $8,138,000 were accrued and unpaid as of March
31, 2006 and 2005, respectively. In particular, partnership management fees owed
to the General  Partners  amounting to  approximately  $7,555,000 and $6,884,000
were  accrued  and  unpaid  as  of  March  31,  2006  and  2005,   respectively.
Furthermore,  expense  reimbursements  and  asset  monitoring  fees  owed to the
General  Partners  amounting to  approximately  $1,496,000 and  $1,254,000  were
accrued  and unpaid as of March 31,  2006 and 2005,  respectively.  Without  the
General   Partners'   continued  accrual  without  payment  of  the  partnership
management  fees,  the  Partnership  will  not be in the  position  to meet  its
obligations. The General Partners and certain of its affiliates have allowed for
the accrual without payment of the partnership  management fees but are under no
obligation to continue to do so.

During  the  year  ended  March  31,  2006,  cash and  cash  equivalents  of the
Partnership  and  its  forty-two  Local  Partnerships  increased   approximately
$2,522,000  due to  cash  provided  by  operating  activities  ($3,349,000)  and
proceeds  from  sale  of  investments   ($2,379,000)   which  exceeded   capital
improvements  ($628,000),  a net decrease in due to local  general  partners and
affiliates relating to investing and finance activities ($1,535,000), repayments
of mortgage loans  ($905,000) and a decrease in  capitalization  of consolidated
subsidiaries  attributable  to  minority  interest  ($138,000).  Included in the
adjustments  to reconcile the net loss to cash provided by operating  activities
is  depreciation  and  amortization  ($4,903,000),  loss on sale of  investments
($81,000) and loss on impairment of fixed assets ($555,000).

Total  expenses  for the years ended March 31,  2006,  2005 and 2004,  excluding
depreciation and amortization, interest and general and administrative - related
parties,  totaled  $5,480,822,  $4,660,101 and $4,484,984.  Accounts payable and
other liabilities  totaled $5,291,827 and $2,455,386,  which is comprised of the
following amounts:
<TABLE>
<CAPTION>
                                                           March 31,
                                                 ------------------------------
                                                     2006              2005
                                                 ------------      ------------
<S>                                              <C>               <C>
                                                 $  1,888,040      $          0
Deferred revenue from sale of properties
Accounts payable                                    1,488,252           234,182
Accrued interest payable                            1,555,015         1,484,260
Security deposits payable                             360,520           736,944
                                                 ------------      ------------
Total accounts payable and other liabilities     $  5,291,827      $  2,455,386
                                                 ============      ============
</TABLE>


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. Included in accounts payable and
other  liabilities  as of March  31,  2006 and  2005  are  $1,888,040  and $0 of
deferred revenue from sales, respectively.

As  indicated  in  the  above  table,   accrued   interest   payable   comprised
approximately  46% and 60% of the total accounts  payable and other  liabilities
amount,  excluding  deferred  revenue  from  sales,  at March 31, 2006 and 2005,
respectively. Such amount 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
indicated  in the  above  table  and  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.

Security  deposits payable are offset by cash held in security  deposits,  which
are included in "Cash held in escrow" on the consolidated financial statements.

                                       11
<PAGE>

Working capital of approximately  $2,282,000,  exclusive of Local  Partnerships'
working  capital,  remains  as of March 31,  2006.  It is used to pay  operating
expenses of the Partnership,  including  Partnership  management fees payable to
the General Partners and advances to Local Partnerships if warranted.

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

Effective January 1, 1999 the State of California  requires owners of a property
benefiting from the Federal  Housing  Administration  ("FHA") insured  mortgages
under  Section  236 or  221(a)(3)  to  provide a nine month  notice of  contract
termination or prepayment of the FHA insured loan. In addition,  with respect to
the Partnership's  California  investments,  the owner must offer the Properties
for sale to those  entities  who agree to maintain  the  Property as  affordable
housing.

On October 20, 1999 President  Clinton signed the Fiscal Year 2000 Department of
Veteran  Affairs,   HUD  and  Independent   Agencies   Appropriations  Act  (the
"Appropriations   Act").  The  Appropriations  Act  contains  revisions  to  HUD
Mark-to-Market Program and other HUD programs concerning the preservation of the
HUD housing  stock.  On December 29, 1999 HUD issued  Notice  H99-36  addressing
"Project Based Section 8 Contracts Expiring in Fiscal Year 2000," reflecting the
changes in the  Appropriations  Act and  superceding  earlier HUD Notices 98-34,
99-08,  99-15,  99-21 and 99-32.  Notice  99-36  clarifies  many of the  earlier
uncertainties with respect to the earlier HUD Section 8 Mark-to-Market  Programs
and  continued  the  Mark-to-Market  Program  which allows owners with Section 8
contracts  to  increase  the rents to market  levels  where  contract  rents are
currently below market. As of March 31, 2006, none of the Local Partnerships has
opted to enter the  Mark-to-Market  Program and therefore  this has no impact on
the Partnership.

For a discussion of contingencies affecting certain Local Partnerships, see Note
11 in Item 8. Since the maximum loss the Partnership  would be liable for is its
net  investment in the  respective  Local  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  may  result  in
recapture of Tax Credits if the  investment is lost before the expiration of the
applicable Compliance Period.

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  not  be  affected.  However,  the
geographic  diversification  of the portfolio may not protect  against a general
downturn in the national economy.

Sale of Underlying Properties/Local Partnership Interests
---------------------------------------------------------

For a discussion of the sale of properties in which the Partnership  owns direct
and indirect interests, see Note 9 in Item 8.

Discontinued Operations
-----------------------

The Partnership is currently in the process of disposing of its investments. The
disposals  meet the  criteria  established  for  recognition  as a  discontinued
operation  under SFAS No.  144.  SFAS No. 144  specifically  requires  that such
amounts must differentiate a component of a business comprised of operations and
cash flows that can be clearly  distinguished  operationally  and for  financial
reporting  purposes,  from  the rest of the  entity.  See Note 9 in Item 8 for a
discussion of the sale of  properties  and Note 10 in Item 8 for a discussion of
assets held for sale.

Tabular Disclosure of Contractual Obligations
---------------------------------------------

The following table summarizes the Partnership's  commitments from operations 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)  $33,397,400   $   487,836   $ 2,542,470   $ 1,097,180   $29,269,914
</TABLE>

(a)  The  mortgage  notes are  payable  in  aggregate  monthly  installments  of
     approximately  $220,000 including principal and interest with rates varying
     from 0% to 13.50%  per  annum and have  maturity  dates  ranging  from 2007
     through 2042. The loans are collateralized by the land and buildings of the
     subsidiary partnerships, the assignment of certain subsidiary partnerships'
     rents, leases, and replacement reserves, and are without further recourse.

The following table summarizes the  Partnership's  commitments from discontinued
operations  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)  $26,468,361   $ 1,471,795   $18,728,172   $   576,592   $ 5,691,802
</TABLE>

(a)  The  mortgage  notes are  payable  in  aggregate  monthly  installments  of
     approximately  $219,000 including principal and interest with rates varying
     from 1% to 10.45%  per  annum and have  maturity  dates  ranging  from 2007
     through 2040. The loans are collateralized by the land and buildings of the
     subsidiary partnerships, the assignment of certain subsidiary partnerships'
     rents, leases, and replacement reserves, and are without further recourse.

                                       12
<PAGE>

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

The Partnership has no off-balance sheet arrangements.

Critical Accounting Estimates
-----------------------------

In  preparing  the  consolidated  financial  statements,   management  has  made
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  at the  date  of the  consolidated  financial  statements  and  the
reported amounts of revenues and expenses during the reporting  periods.  Actual
results could differ from those  estimates.  Set forth below is a summary of the
accounting  policies that management believes are critical to the preparation of
the consolidated financial statements.

Property and Equipment/Valuation of Long-Lived Assets
-----------------------------------------------------

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price,  acquisition fees and expenses, 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 SFAS No. 144. 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 estimated fair value.

In  accordance  with SFAS No. 144, the results of  discontinued  operations  are
reported as a separate  component of income  before  extraordinary  items on the
consolidated  statements  of  operations.  Discontinued  operations  include the
results of operations  and any gain or loss  recognized  for Local  Partnerships
that have been  disposed of or are held for sale. A gain or loss  recognized  on
the disposal is disclosed in the notes to the consolidated financial statements.
Adjustments  to amounts  previously  reported in  operations  that are  directly
related to the disposal of a Local  Partnership are  reclassified in the current
period  as  discontinued  operations  for  comparability  purposes.  Assets  and
liabilities  of a Local  Partnership  that are  classified  as held for sale are
presented separately in the asset and liability sections,  respectively,  of the
consolidated balance sheets.

Through March 31, 2006,  the  Partnership  has recorded  $4,220,000 as a loss on
impairment of assets or reductions to estimated fair value.

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
as rents become due 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.   The   Partnership   received   rental   subsidies  which  amounted  to
approximately  $3,430,948,  $3,488,027  and $3,326,225 for the years ended March
31, 2006, 2005 and 2004, respectively.  The related rental subsidy programs have
expiration  dates that  terminate  upon  total  disbursement  of the  assistance
obligation.

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  from  operations  include  the  following  amounts  at both the
Partnership and Local Partnership level:
<TABLE>
<CAPTION>
                                          March 31,
                            ------------------------------------
                               2006         2005*        2004*
                            ----------   ----------   ----------
<S>                         <C>          <C>          <C>
Interest                    $   74,161   $   29,802   $   19,975
Other                        1,093,650      948,744    1,045,073
                            ----------   ----------   ----------

   Total other revenue      $1,167,811   $  978,546   $1,065,048
                            ==========   ==========   ==========
</TABLE>
*Reclassified   for  comparative purposes

Other revenues from  discontinued  operations  include the following  amounts at
both the Partnership and Local Partnership level:
<TABLE>
<CAPTION>
                                          March 31,
                            ------------------------------------
                               2006         2005         2004
                            ----------   ----------   ----------
<S>                         <C>          <C>          <C>
Interest                    $   30,940   $  117,053   $  122,248
Other                          525,088      452,325      389,147
                            ----------   ----------   ----------

   Total other revenue      $  556,028   $  569,378   $  511,395
                            ==========   ==========   ==========
</TABLE>


Related Parties
---------------

Under the terms of the  Partnership  Agreement,  the General  Partners and their
affiliates  are  entitled  to  receive  compensation  from  the  Partnership  in

                                       13
<PAGE>

consideration of certain  services  rendered to the Partnership by such parties.
In  addition,  the  General  Partners  collectively  hold a 1%  interest  in all
profits, losses and distributions  attributable to operations and a subordinated
15%  interest  in such items  attributable  to sales and  refinancings.  Certain
directors and officers of the General  Partners  receive  compensation  from the
General  Partners  and their  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  Partners is
0.5% of invested assets.  See Note 7 in Item 8, which is incorporated  herein by
reference.

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

In June 2005, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  No.  154,  Accounting  Changes  and  Error
Corrections  ("FAS 154"). FAS 154 replaces  Accounting  Principles Board Opinion
No. 20, Accounting Changes and Statement of Financial  Accounting  Standards 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 was
effective for  accounting  changes and correction of errors made in fiscal years
beginning  after  December  15,  2005.  The  adoption  of FAS  154 has not had 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
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  consolidated
financial statements.

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

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.  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
estimated  future cash flows) when the Property is considered to be impaired and
the carrying value exceeds estimated fair value.

During the years  ended  March 31,  2006,  2005 and 2004,  the  Partnership  has
recorded $555,000,  $0 and $0, respectively,  as a loss on impairment of assets.
Through March 31, 2006, the  Partnership has recorded an aggregate of $4,220,000
of losses on impairment of assets.

The  Partnership's  primary source of income  continues to be rental income with
the  corresponding  expenses being divided among  operations,  depreciation  and
mortgage interest.

2006 vs. 2005
-------------

Rental  income  decreased  less than 1% for the year  ended  March  31,  2006 as
compared to 2005, primarily due to a reduction of rental rates to help alleviate
an ongoing vacancy problem at one Local Partnership and an increase in vacancies
due to damage from  Hurricane  Katrina at a second Local  Partnership  partially
offset by an increase in rental rates at the remaining Local Partnerships.

Other income increased  approximately $189,000 for the year ended March 31, 2006
as  compared  to  2005,  primarily  due  to a  management  fee  received  at the
Partnership level from the sale of one Local Partnership.

Total  expenses,  excluding  repairs and  maintenance,  operating  and other and
general and  administrative,  remained fairly consistent with a decrease of less
than 1% for the year ended March 31, 2006 as compared to 2005.

Repairs and maintenance expenses increased  approximately  $206,000 for the year
ended March 31, 2006 as compared to 2005, primarily due to property and building
improvements  at one Local  Partnership,  fire damage  repairs at a second Local
Partnership  and  increases in repair  contracts and  maintenance  salaries at a
third Local Partnership.

Operating and other expenses increased approximately $182,000 for the year ended
March 31,  2006 as  compared  to 2005,  primarily  due to an increase in utility
expense at two Local  Partnerships  and an increase in water  expense at a third
Local Partnership.

General and administrative  increased  approximately $475,000 for the year ended
March 31, 2006 as compared to 2005,  primarily due to the write-off of an amount
due from the  former  Local  General  Partner  at one Local  Partnership  and an
increase in legal fees relating to the Washington Brooklyn legal proceedings and
an increase in sales activity at the Partnership level (see Note 11 in Item 8).

2005 vs. 2004
-------------

Rental income  increased  approximately  4% for the year ended March 31, 2005 as
compared  to  2004,  primarily  due  to  rental  rate  increases  at  the  Local
Partnerships.

                                       14
<PAGE>

Total  expenses,  excluding  real estate  taxes and general and  administrative,
remained  fairly  consistent with an increase of less than 1% for the year ended
March 31, 2005, as compared to 2004.

Real estate taxes increased  approximately  $47,000 for the year ended March 31,
2005 as compared  to 2004,  primarily  due to  increases  in  property  taxes at
several Local Partnerships.

General and administrative  increased  approximately $173,000 for the year ended
March 31, 2005 as compared to 2004,  primarily due to the write-off of an amount
due from the former Local General Partner at one Local Partnership.

Other
-----

As of  December  31,  2002,  the  Credit  Period for all of the  Properties  has
expired,  although each Local  Partnership  must continue to comply with the Tax
Credit  requirements  until the end of the  Compliance  Period in order to avoid
recapture of the Tax Credits. During the years ended March 31, 2003, the Housing
Tax  Credits  received  by the  Partnership  for  income  tax  purposes  totaled
$1,710,233.  The  Compliance  Period  began to end on December 31, 2004 and will
continue through December 31, 2007 with respect to the Properties depending upon
when the Credit Period commenced.

The Partnership's  investments as limited partners in the Local Partnerships are
subject to the risks  incident to the  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,  rental
payment defaults and operating expenses,  any or all of which could threaten the
financial viability of one or more of the Local Partnerships.

There are also  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 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
generally  allows for  increases in rental rates to reflect the impact of higher
operating and replacement  costs.  Inflation also affects the Local Partnerships
adversely  by  increasing  operating  costs as a result of higher  costs of such
items as fuel, utilities and labor.  However,  continued inflation may result in
appreciated values of the Local Partnerships'  Apartment Complexes over a period
of time as rental revenues and replacement costs continue to increase.

The  Partnership  does not anticipate that it will be in a position to make cash
distributions  at any  time  prior  to the  disposition  of the  Properties.  If
distributions  of operating cash flow are made, it is expected that they will be
limited. As of March 31, 2006, no such distributions have been made.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

The  Partnership  has  mortgage  notes  that are  payable in  aggregate  monthly
installments including principal and interest at rates varying from 0% to 13.50%
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 of the Notes to Consolidated
Financial  Statements,  the  fair  value  of the  mortgage  notes  payable.  The
Partnership does not have any other market sensitive instruments.

                                       15
<PAGE>
<TABLE>
<CAPTION>
Item 8.Financial Statements and Supplementary Data
                                                                                Sequential
                                                                                   Page
                                                                                ------------
       <S>                                                                           <C>
       Consolidated Financial Statements

       Report of Independent Registered Public Accounting Firm                       17

       Consolidated Balance Sheets as of March 31, 2006 and 2005                     60

       Consolidated Statements of Operations for the years ended March 31,
         2006, 2005 and 2004                                                         61

       Consolidated Statements of Changes in Partners' Capital (Deficit) for
         the years ended March 31, 2006, 2005 and 2004                               62

       Consolidated Statements of Cash Flows for the years ended March 31,
         2006, 2005 and 2004                                                         63

       Notes to Consolidated Financial Statements                                    64
</TABLE>

                                       16
<PAGE>

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





TO THE PARTNERS OF FREEDOM TAX CREDIT PLUS L.P.



         We have audited the accompanying consolidated balance sheets of FREEDOM
TAX CREDIT PLUS L.P.  AND  SUBSIDIARIES  as of March 31, 2006 and 2005,  and the
related  consolidated  statements of  operations,  changes in partners'  capital
(deficit)  and cash flows for each of the years in the  three-year  period ended
March 31, 2006. These consolidated  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
consolidated  financial statements of forty-two subsidiary  partnerships,  whose
losses aggregated $2,809,693 for the year ended March 31, 2004, and whose assets
constituted 99% of consolidated  assets at March 31, 2004. Those statements were
audited by other  auditors  whose  reports  have been  furnished  to us, and our
opinion,  insofar as it relates to the  amounts  included  for these  subsidiary
partnerships, is based solely on 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 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 and the reports of the other auditors  provide a reasonable basis for our
opinion.

         In our  opinion,  based on our  audits  and the  reports  of the  other
auditors,  the  consolidated  financial  statements  referred  to above  present
fairly, in all material  respects,  the financial position of FREEDOM TAX CREDIT
PLUS L.P.  AND  SUBSIDIRAIES  as of March 31, 2006 and 2005,  and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended March 31, 2006, in conformity with accounting  principles generally
accepted in the United States of America.



/s/ Friedman LLP
New York, New York
June 23, 2006

                                       17
<PAGE>

[Letterhead of McKonly & Asbury LLP]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Parkside Townhomes Associates                Pennsylvania Housing Finance Agency
Lancaster, Pennsylvania                                 Harrisburg, Pennsylvania

We have audited the accompanying Balance Sheets of Parkside Townhomes Associates
(a limited partnership), PHFA Project No. 0-90 as of December 31, 2003 and 2002,
and the related statements of profit and loss, 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 auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller  General of the 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,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Parkside Townhomes  Associates
at December 31, 2003 and 2002, and its profits and loss,  partners' equity,  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 and  Pennsylvania  Housing
Finance Agency's Financial  Reporting Manual, we have also issued a report dated
January 27, 2004 on our consideration of Parkside Townhomes Associates' internal
control over financial  reporting and our tests of its  compliance  with certain
provisions of laws, PHFA regulations, contracts and grants and have rendered our
reports  thereon on pages 25 and 26.  Those  reports are an integral  part of an
audit performed in accordance with Government  Auditing  Standards and should be
considered in assessing the results of our audits.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplementary information on pages 18
through 24 is  presented  for the purpose 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.


/s/ McKonly & Asbury LLP
Harrisburg, Pennsylvania
January 27, 2004

                                       18
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Twin Trees Apartments, A Limited Partnership:

We have audited the  accompanying  balance  sheets of Twin Trees  Apartments,  A
Limited  Partnership (the Partnership) as of December 31, 2003 and 2002, and the
related statements of loss, partners' capital, 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.  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
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 Twin Trees  Apartments,  A
Limited  Partnership  as of December  31, 2003 and 2002,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       19
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Bennion Park Apartments, A Limited Partnership:

We have audited the accompanying  balance sheets of Bennion Park  Apartments,  A
Limited Partnership as of December 31, 2003 and 2002, and the related statements
of loss,  partners'  capital,  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.  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
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 Bennion Park  Apartments,  A
Limited  Partnership  as of December  31, 2003 and 2002,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.




/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       20
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Hunters Chase Apartments, A Limited Partnership:

We have audited the accompanying  balance sheets of Hunters Chase Apartments,  A
Limited  Partnership as of December 31, 2003 and 2002 and the related statements
of loss,  partners' capital (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.  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
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 Hunters Chase Apartments,  A
Limited  Partnership  as of  December  31,  2003 and 2002 and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       21
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Wilshire Apartments, A Limited Partnership:

We have  audited  the  accompanying  balance  sheets of Wilshire  Apartments,  A
Limited Partnership as of December 31, 2003 and 2002, and the related statements
of loss,  partners'  capital,  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.  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
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 Wilshire Apartments,  A Limited
Partnership  as of December 31, 2003 and 2002, and the results of its operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       22
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Bethel Park Apartments, A Limited Partnership:

We have audited the  accompanying  balance sheets of Bethel Park  Apartments,  A
Limited  Partnership (the Partnership) as of December 31, 2003 and 2002, and the
related statements of loss, partners' capital (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.  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
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 Bethel Park  Apartments,  A
Limited  Partnership  as of December  31, 2003 and 2002,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       23
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Zebulon Park Apartments, A Limited Partnership:

We have audited the  accompanying  balance sheet of Zebulon Park  Apartments,  A
Limited Partnership (the Partnership) as of December 31, 2003, and 2002, and the
related statements of loss, partners' capital, 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.  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
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 Zebulon Park  Apartments,  A
Limited  Partnership  as of December  31, 2003 and 2002,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       24
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Tivoli Place Apartments, A Limited Partnership:

We have audited the accompanying  balance sheets of Tivoli Place  Apartments,  A
Limited  Partnership (the  Partnership) as of December 31, 2003 and 2002 and the
related statements of loss, partners' capital, 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.  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
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 Tivoli Place  Apartments,  A
Limited  Partnership  as of December  31, 2003 and 2002,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       25
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Northwood Apartments of Georgia,
    A Limited Partnership:

We have  audited the  accompanying  balance  sheets of Northwood  Apartments  of
Georgia, A Limited Partnership as of December 31, 2003 and 2002, and the related
statements of loss,  partners' capital, 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.  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
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  Northwood  Apartments  of
Georgia, A Limited Partnership as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       26
<PAGE>

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Oxford Trace Apartments,
    A Limited Partnership:

We have audited the accompanying  balance sheets of Oxford Trace  Apartments,  A
Limited  Partnership (the  Partnership) as of December 31, 2003 and 2002 and the
related statements of loss, partners' capital (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.  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
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 Oxford Trace  Apartments,  A
Limited  Partnership  as of December  31, 2003 and 2002,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP
Atlanta, Georgia
February 6, 2004

                                       27
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Partners of
  Ivanhoe Apartments Limited Partnership

We have audited the  accompanying  balance sheet of Ivanhoe  Apartments  Limited
Partnership  (a Limited  Partnership)  as of December  31, 2003 and 2002 and the
related  statements of operations,  changes in partners'  capital 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.  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 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 Ivanhoe  Apartments  Limited
Partnership at December 31, 2003 and 2002, and the results of its operations and
cash flows for the years then ended, in conformity  with  accounting  principles
generally accepted in the United States of America.



/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 13, 2004

                                       28
<PAGE>

[Letterhead of AGBIMSON & CO., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Washington Brooklyn Limited Partnership
(A State of Delaware Limited Partnership)

We have audited the  accompanying  balance sheet of Washington  Brooklyn Limited
Partnership (A State of Delaware  Limited  Partnership) 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 the 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 a 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  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to in the first  paragraph,
present fairly in all material  respects,  the financial  position of Washington
Brooklyn  Limited  Partnership  as of December 31, 2003,  and the results of its
operations  and its cash  flows  for the year then  ended,  in  conformity  with
accounting principles generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  information  in Schedule I is
presented for purposes of additional  analysis and is not a required part of the
basic financial statement. Such information has been subjected to the 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 financial  statements
taken as a whole.


/s/ AGBIMSON & CO., PLLC
Rockville Centre, New York
March 31, 2004

                                       29
<PAGE>

[Letterhead of Richard J. Klinkowitz]

To the Partners C-H DEVELOPMENT  GROUP  ASSOCIATES (A LIMITED  PARTNERSHIP)  625
Madison Avenue New York, New York 10022

Gentlemen:

I  have  audited  the  accompanying  balance  sheet  of  C-H  DEVELOPMENT  GROUP
ASSOCIATES  (a New York  Limited  Partnership)  as of December  31, 2003 and the
related  statement of operations,  partners'  equity and cash flows for the year
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 the audit.

I conducted the audit in accordance with generally accepted auditing  standards.
Those standards require that I plan and perform the audit to obtain a 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 the 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 C-H DEVELOPMENT GROUP ASSOCIATES as
of December  31, 2003 and the results of its  operations  and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Richard J. Klinkowitz
Far Rockaway, New York
February 18, 2004

                                       30
<PAGE>

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS'REPORT

To the Partners
Davidson Court, L.P.

We have audited the  accompanying  balance sheets of Davidson Court,  L.P. as of
December  31, 2003 and 2002,  and the related  statements  of income,  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.  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  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 Davidson Court,  L.P., 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.


/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 23, 2004

                                       31
<PAGE>

[Letterhead of Haefele, Flanagan & Co., p.c.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mews Limited Partnership
Philadelphia, Pennsylvania

We have  audited  the  accompanying  balance  sheet  of  MAGNOLIA  MEWS  LIMITED
PARTNERSHIP (a  Pennsylvania  Limited  Partnership) 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  MAGNOLIA  MEWS  LIMITED
PARTNERSHIP as of December 31, 2003, and the results of its operations,  changes
in  partners'  equity and its cash  flows for the year then ended in  conformity
with accounting principles generally accepted in the United States of America.

/s/ Haefele, Flanagan & Co., p.c.
Moorestown, New Jersey
February 9, 2004

                                       32
<PAGE>

[Letterhead of Snipes, Gower & Associates, P.A.]

To the Partners
The Oaks Village Limited Partnership

We have audited the  accompanying  balance  sheets of The Oaks  Village  Limited
Partnership,  RHS Project No. 38-024-561572445 as of December 31, 2003 and 2002,
and the related statements of operations,  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 The Oaks  Village  Limited
Partnership,  RHS Project No. 38-024-561572445 as of December 31, 2003 and 2002,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on Page  14 is  presented  for  purposes  of  additional  analysis  and is not a
required  part  of the  basic  financial  statements  of the  partnership.  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.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  28,  2004  on our  consideration  of The  Oaks  Village  Limited
Partnership's  internal  control over  financial  reporting and our tests 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.


/s/ Snipes, Gower & Assoc., P.A.
Dunn, North Carolina
January 28, 2004

                                       33
<PAGE>

[Letterhead of Snipes, Gower & Associates, P.A.]

To the Partners
Greenfield Village Limited Partnership

We have audited the  accompanying  balance sheets of Greenfield  Village Limited
Partnership,  RHS Project  No.:  38-043-561614646,  as of December  31, 2003 and
2002, and the related statements of operations,  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 audit  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 Greenfield  Village  Limited
Partnership, RHS Project No.: 38-043-561614646 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.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying  supplement  information
on Page  14 is  presented  for  purposes  of  additional  analysis  and is not a
required  part  of the  basic  financial  statements  of the  partnership.  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.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January 20,  2004 on our  consideration  of  Greenfield  Village  Limited
Partnership's  internal  control over  financial  reporting and our tests of its
compliance with certain provisions of laws,  regulations,  contracts and grants.
This  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.

/s/ Snipes, Gower & Associates, P.A.
Dunn, North Carolina
January 20, 2004

                                       34
<PAGE>

[Letterhead of KOCH GROUP & CO., LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners
CLM Equities

We have  audited  the  accompanying  balance  sheet of CLM  Equities  (A Limited
Partnership)  as of December 31, 2003 and the related  statements of operations,
changes  in  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 CLM  Equities  (A Limited
Partnership) as of December 31, 2003 and the results of its operations,  changes
in its partners' equity and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.


/s/ Koch Geringer & Co., LLP
Certified Public Accountants
New York, New York
January 23, 2004

                                       35
<PAGE>

[Letterhead of NSBN LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Los Angeles, California

We have audited the  accompanying  balance sheet of Victoria Manor Associates (a
California  limited  partnership),  as of  December  31,  2003,  and the related
statements  of  partners'  equity,  operations  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 Victoria Manor Associates as of
December 31, 2003,  and the results of its operations and its cash flows for the
year then ended in conformity with accounting  principles  generally accepted in
the United States of America.


/s/ NSBN LLP
March 19, 2004
Beverly Hills, California

                                       36
<PAGE>

[Letterhead of Joyce Miller & Associates, P.C.]

INDEPENDENT AUDITOR'S REPORT


To The Partners
Ogontz Hall Investors
Philadelphia, Pennsylvania

We have  audited the  accompanying  balance  sheets of Ogontz Hall  Investors (A
Limited  Partnership),  PHFA changes in Project #O-116,  as of December 31, 2003
and 2002,  and the related  statements of profit and loss,  changes in partners'
capital 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 generally accepted auditing standards
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 Ogontz Hall  Investors  (A
Limited  Partnership)  as of December 31, 2003 and 2002,  and the results of its
operations,  changes in partners' capital, and its cash flows for the years then
ended in conformity with accounting  principles generally accepted in the United
States of America.

Our audit was made for the  purpose  of  forming  an  opinion  on the  financial
statements  taken as a whole.  The supporting data included in the report (shown
on pages 23 to 26) is presented for the purposes of  additional  analysis and is
not a required part of the basic  financial  statements of Ogontz Hall Investors
(A 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.

In accordance  with  Government  Auditing  Standards,  we have issued a separate
report dated February 15, 2004, on our  consideration  of Ogontz Hall Investors'
internal  control over financial  reporting and 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.



/s/ Joyce Miller & Associates, P.C.
Glenside, Pennsylvania
February 15, 2004

                                       37
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

We  have  audited  the  accompanying  balance  sheets  of  Eagle  Ridge  Limited
Partnership  as of  December  31, 2003 and 2002 and the  related  statements  of
operations, partners' capital (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.  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 Eagle Ridge Limited Partnership
as of December  31, 2003 and 2002,  and the results of its  operations  and cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information provided, as
identified  in the table of contents,  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 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/ Virchow, Krause & Company, LLP
Madison, Wisconsin
January 21, 2004

                                       38
<PAGE>

[Regen, Benz, MacKenzie & Anopolsky, C.P.A.'s, P.C. Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Nelson Anderson Affordable Housing
Limited Partnership

We have audited the  accompanying  balance sheet of Nelson  Anderson  Affordable
Housing Limited  Partnership as of December 31, 2003, 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 generally  accepted auditing standards
used 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 Nelson  Anderson  Affordable
Housing  Limited  Partnership  as of December 31,  2003,  and the results of its
operations,  the changes in  partners'  capital and cash flows for the year then
ended, in conformity with generally accepted  accounting  principles used in the
United States of America.


/s/ Regen, Benz, MacKenzie & Anopolsky, C.P.A.'s, P.C.
New York, New York
February 25, 2004

                                       39
<PAGE>

[Letterhead of Insero, Kasperski, Ciaccia & Co., P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Conifer Irondequoit Associates
(A Limited Partnership)
Irondequoit, New York

We  have  audited  the  accompanying   balance  sheets  of  Conifer  Irondequoit
Associates  (A Limited  Partnership),  as of December  31, 2003 and 2002 and the
related statements of changes in partners' equity, operations 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.  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 Conifer Irondequoit Associates
(A Limited Partnership) as of December 31, 2003 and 2002, and the results of its
operations and cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Rochester, New York
January 28, 2004

                                       40
<PAGE>

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates

We have audited the accompanying  balance sheets of Middletown  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 Middletown  Associates as of
December  31,  2003 and 2002,  and the  results  of its  operations,  changes in
partners'  equity  (deficit)  and its cash  flows  for the year 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  Middletown  Associates' internal control over financial reporting
and on our tests of it 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 the report in considering the results of our audit.

Our audits was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 25 through 28
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.



/s/ REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
January 16, 2004

                                       41
<PAGE>

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Lauderdale Lakes Associates, Ltd.

We have audited the accompanying  balance sheets of Lauderdale Lakes Associates,
Ltd.,  as of  December  31,  2003  and  2002,  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 audits.

We  conducted  our audit in  accordance  with the 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  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 Lauderdale Lakes Associates,
Ltd. at December 31, 2003 and 2002,  and the results of its  operations  and its
cash flows for the years then ended, in conformity  with  accounting  principles
generally accepted in the United States of America.


/s/ Reznick Fedder & Silverman
Atlanta, Georgia
January 27, 2004

                                       42
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Flipper Temple Associates, L.P.

We have audited the  accompanying  balance sheet of Flipper  Temple  Associates,
L.P.,  as of December  31,  2003,  and the  related  statements  of  operations,
partners'  equity  (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 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 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 Flipper  Temple  Associates,
L.P., as of December 31, 2003, and the results of its operations, the changes in
partners' equity (deficit) and cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States of America.

In accordance with Government  Auditing  Standards and the  "Consolidated  Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 22,
2004 on our consideration of Flipper Temple Associates,  L.P.'s internal control
and on its  compliance  with  specific  requirements  applicable  to  major  HUD
programs and fair housing and non-discrimination.  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 audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 24 through 37 is presented for purposes of  additional  analysis and is
not a required part of the basic financial  statements of the partnership.  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.



/s/ Reznick Fedder & Silverman
Taxpayer Identification Number: 52-1088612
Bethesda, Maryland
January 22, 2004
Lead Auditor: James P. Martinko

                                       43
<PAGE>

[Letterhead of Heffler, Radetich & Saitta L.L.P]

INDEPENDENT AUDITORS' REPORT

To the Partners of
220 Cooper Street, L.P.

We have audited the accompanying  balance sheets of 220 Cooper Street,  L.P., 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 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 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 220 Cooper Street,  L.P. as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended,  in conformity with  accounting  principles  generally
accepted in the United States of America.

/s/ Heffler, Radetich & Saitta L.L.P.
Mount Laurel, NJ
January 26, 2004

                                       44
<PAGE>

[ARCHAMBO, MUEGGENBORG & DICK, INC. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pecan Creek Limited Partnership
Bartlesville, Oklahoma

We  have  audited  the  accompanying  balance  sheets  of  Pecan  Creek  Limited
Partnership,  HUD  Project  No. FHA  118-35121  (a limited  partnership),  as of
December  31, 2003 and 2002 and the  related  statements  of income,  changes in
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 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  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 Pecan Creek Limited Partnership
as of December 31, 2003 and 2002, and the results of its operations,  changes in
its 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 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 January 30, 2004 on our
consideration  of Pecan Creek Limited  Partnership's  internal  control,  on its
compliance with specific requirements applicable to major HUD programs, specific
requirements  applicable  to non-major  HUD program  transactions,  and specific
requirements  applicable to Fair Housing and  Non-Discrimination.  Those reports
are an integral  part of an audit  performed in accordance  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  financial
statements taken as a whole. The supplemental  information  shown on pages 15-17
and  the  information  transmitted  to  the  Department  of  Housing  and  Urban
Development (HUD) is prepared for the purpose of additional  analysis and is not
a required part of the financial  statements of Pecan Creek 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 presented
in all material respects in relation to the basic financial  statements taken as
a whole.


/s/ Archambo, Mueggenborg & Dick, Inc.
Deborah E. Mueggenborg, Audit Partner
Certified Public Accountants
73-1439902
Bartsville, Oklahoma
January 30, 2004

                                       45
<PAGE>

[Letterhead of AGBIMSON & CO., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
363 Grand Vendome Associates, Limited Partnership

We have audited the accompanying  balance sheet of 363 Grand Vendome Associates,
Limited  Partnership,  as of December 31, 2003,  and the related  statements  of
Loss,  Partners' Capital and Cash Flows for the year then ended. These financial
statements   are  the   responsibility   of  the   Company'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  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 363 Grand Vendome  Associates,
Limited Partnership,  as of December 31, 2003, and the results of its operations
and its cash  flows for the year  then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.

/s/ Agbimson & Co., PLLC
Rockville Centre, New York
January 30, 2004

                                       46
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
New Augusta Associates, Ltd.
New Augusta, Mississippi

We have audited the accompanying balance sheets of New Augusta Associates, Ltd.,
a limited partnership, RHS Project No.: 28-056-640665470 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 New Augusta Associates,  Ltd.,
RHS Project  No.:  28-056-640665470  as of December  31, 2003 and 2002,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  12 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 8, 2004 on our  consideration of New Augusta  Associates,  Ltd.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 8, 2004

                                       47
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Pine Shadow, Ltd.
Waveland, Mississippi

We have audited the accompanying  balance sheets of Pine Shadow,  Ltd. a limited
partnership, RHS Project No.: 28-023-640661063 as of December 31, 2003 and 2002,
and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Pine Shadow, Ltd., RHS Project
No.:  28-023-640661063  as of December 31, 2003 and 2002, and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  12 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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  January 27, 2004 on our  consideration  of Pine Shadow,  Ltd.'s  internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations.  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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 27, 2004

                                       48
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Windsor Place, L.P.
Wedowee, Alabama

We have audited the accompanying balance sheets of Windsor Place, L.P. a limited
partnership, RHS Project No.: 01-056-631024917 as of December 31, 2003 and 2002,
and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Windsor  Place,  L.P.,  RHS
Project No.:  01-056-631024917 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 11
through  14 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 January 26, 2004 on our  consideration  of Windsor Place,  L.P.'s internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations.  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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 26, 2004

                                       49
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Brookwood Associates, Ltd.
Foley, Alabama

We have audited the accompanying balance sheets of Brookwood Associates, Ltd., a
limited partnership,  RHS Project No.:  01-002-621394754 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Brookwood Associates, Ltd., RHS
Project No.:  01-002-621394754 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 21, 2004 on our  consideration  of Brookwood  Associates,  Ltd.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 21, 2004

                                       50
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Heflin Hills Apartments, Ltd.
Heflin, Alabama

We have audited the  accompanying  balance  sheets of Heflin  Hills  Apartments,
Ltd., a limited  partnership,  RHS Project No.:  01-015-631039371 as of December
31, 2003 and 2002, and the related  statements of operations,  partners' 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Heflin Hills Apartments,  Ltd.,
RHS Project  No.:  01-015-631039371  as of December  31, 2003 and 2002,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 8, 2004 on our consideration of Heflin Hills  Apartments,  Ltd.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 8, 2004

                                       51
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Shadowood Apartments, Ltd.
Stevenson, Alabama

We have audited the accompanying balance sheets of Shadowood Apartments, Ltd., a
limited partnership,  RHS Project No.:  01-036-631030182 as of December 31, 2003
and 2002,  and the  related  statements  of  operations,  partners'  deficit and
capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Shadowood Apartments, Ltd., RHS
Project No.:  01-036-631030182 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 20, 2004 on our  consideration of Shadowood  Apartments,  Ltd's.,
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2004

                                       52
<PAGE>

[Letterhead of Donald W. Causey & Associates, P.C.

INDEPENDENT AUDITORS' REPORT

To the Partners
Brittany Associates, L.P.
Dekalb, Mississippi.

We have audited the accompanying balance sheets of Brittany Associates,  L.P., a
limited partnership,  RHS Project No.:  28-035-581896085 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Brittany Associates,  L.P. RHS
Project No.:  28-035-581896085 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  12 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 20, 2004 on our  consideration  of Brittany  Associates,  L.P.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2004

                                       53
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Hidden Valley Apartments, Ltd.
Brewton, Alabama

We have audited the  accompanying  balance  sheets of Hidden Valley  Apartments,
Ltd. a limited partnership, RHS Project No.: 01-027-631025600 as of December 31,
2003 and 2002, and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Hidden Valley Apartments,  Ltd.
RHS Project  No.:  01-027-631025600  as of December  31, 2003 and 2002,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 11
through  14 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 23, 2004 on our consideration of Hidden Valley Apartments, Ltd.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 23, 2004

                                       54
<PAGE>

[Letterhead of Matthews, Cutrer & Lindsay, P.A.]

To the Partners of
Westbrook Square, LP

INDEPENDENT AUDITOR'S REPORT

We have  audited the  accompanying  balance  sheet of  Westbrook  Square,  LP (a
Mississippi  limited  partnership),  RHS  Project  No.  28-040-640770978  as  of
December 31, 2003, and the related  statements of operations,  partners' capital
(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  audit.  The
financial  statements  of Westbrook  Square,  LP, as of December 31, 2002,  were
audited by other  auditors  whose report dated  February 14, 2003,  expressed an
unqualified opinion.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States of America 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 Westbrook  Square,  LP as of
December 31, 2003 and the results of its  operations  and its cash flows for the
years then ended in conformity with accounting  principles generally accepted in
the United States of America.

Our audit was made for the  purpose  of  forming  an  opinion  on the  financial
statements taken as a whole.  The supplemental  information is presented for the
purposes  of  additional  analysis  and  is not a  required  part  of the  basic
financial  statements.  We have prepared the Multiple  Family  Housing  Borrower
Balance  Sheet (RHS Form RD 18930-8) and the  Multiple  Family  Housing  Project
Budget (RHS Form RD 1930-7).  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.


/s/ Matthews, Cutrer & Lindsay, P.A.
Ridgeland, Mississippi
February 27, 2004

                                       55
<PAGE>

[Letterhead of DONALD W. CAUSEY, CPA, P.C.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Warsaw Elderly Housing, Ltd.
Warsaw, Kentucky

I have audited the accompanying balance sheets of Warsaw Elderly Housing,  Ltd.,
a limited partnership, RHS Project No.: 20-039-621409235 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards  generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. Those standards require
that I 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.  I believe that the
audits provide 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 Warsaw Elderly Housing,  Ltd., RHS
Project No.:  20-039-621409235 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole. The supplemental  information on pages 9
through  12 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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 my  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,  I have also issued a report
dated February 25, 2004 on my  consideration  of Warsaw Elderly  Housing,  Ltd.,
internal control over financial reporting and on my tests of its compliance with
certain  provisions of laws and regulations.  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.

Donald W. Causey, CPA, P.C.
Gadsden, Alabama
February 25, 2004

                                       56
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
West Hill Square, Ltd.
Gordo, Alabama

We have audited the  accompanying  balance  sheets of West Hill Square,  Ltd., a
limited partnership,  RHS Project No.:  01-054-631010865 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 West Hill Square,  Ltd., RHS
Project No.:  01-054-631010865 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 11
through  14 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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  12,  2004 on our  consideration  of West  Hill  Square,  Ltd.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 12, 2004

                                       57
<PAGE>

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Elmwood Associates, L.P.
Picayune, Mississippi

We have audited the accompanying  balance sheets of Elmwood Associates,  L.P., a
limited partnership,  RHS Project No.:  28-055-640804193 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' capital 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 the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. 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 the
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 Elmwood Associates,  L.P., RHS
Project No.:  28-055-640804193 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  12 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also 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  21, 2004 on our  consideration  of Elmwood  Associates,  L.P.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. 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.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 21, 2004

                                       58
<PAGE>

[Letterhead of Grant Thornton LLP]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Harmony Associates, L.P.

We have audited the accompanying balance sheet of Harmony Associates, L.P. 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 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  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 Harmony Associates,  L.P. as of
December 31, 2003,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.



/s/ Grant Thornton LLP
Los Angeles, California
January 14, 2004

                                       59
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                              March 31,
                                                                                  ----------------------------
                                                                                      2006            2005
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
ASSETS

Operating assets:
 Property and equipment, at cost, less accumulated depreciation (Note 4)          $ 36,462,734    $ 76,216,658
 Cash and cash equivalents                                                           3,404,395       2,150,450
 Cash held in escrow                                                                 3,734,746       5,549,963
 Deferred costs - net of accumulated amortization (Note 5)                             259,582         727,764
 Other assets                                                                          851,970       1,329,483
                                                                                  ------------    ------------

Total operating assets                                                              44,713,427      85,974,318
                                                                                  ------------    ------------

Assets related to held for sale (Note 12):
 Property and equipment held for sale, net of accumulated depreciation (Note 4)     31,269,354               0
 Assets held for sale                                                                3,531,615               0
                                                                                  ------------    ------------
 Total assets - held for sale                                                       34,800,969               0
                                                                                  ------------    ------------

Total assets                                                                      $ 79,514,396    $ 85,974,318
                                                                                  ============    ============

LIABILITIES AND PARTNERS' DEFICIT

Operating Liabilities:
 Mortgage notes payable (Note 6)                                                  $ 33,397,400    $ 65,119,347
 Accounts payable and other liabilities                                              5,291,827       2,455,386
 Due to local general partners and affiliates (Note 7)                               1,181,186       3,628,588
 Due to general partners and affiliates (Note 7)                                     9,666,054       8,853,092
                                                                                  ------------    ------------

Total operating liabilities                                                         49,536,467      80,056,413
                                                                                  ------------    ------------

Liabilities related to held for sale (Note 12):
 Mortgage notes payable of assets held for sale (Note 6)                            26,468,361               0
 Liabilities held for sale including minority interest                               6,455,851               0
                                                                                  ------------    ------------
Total liabilities - related to assets held for sale                                 32,924,212               0
                                                                                  ------------    ------------

Total liabilities                                                                   82,460,679      80,056,413
                                                                                  ------------    ------------

Minority interests (Note 2)                                                          2,968,663       8,040,807
                                                                                  ------------    ------------

Commitments and contingencies (Notes 7 and 11)

Partners' deficit:
 Limited partners (72,896 BACs issued and outstanding) (Note 1)                     (5,175,151)     (1,421,027)
General partners                                                                      (739,795)       (701,875)
                                                                                  ------------    ------------

Total partners' deficit                                                             (5,914,946)     (2,122,902)
                                                                                  ------------    ------------

Total liabilities and partners' deficit                                           $ 79,514,396    $ 85,974,318
                                                                                  ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       60
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                       Years ended March 31,
                                                            --------------------------------------------
                                                                2006            2005*           2004*
                                                            ------------    ------------    ------------
<S>                                                         <C>             <C>             <C>
Operations:

Revenues
Rental income                                               $  6,771,945    $  6,829,312    $  6,596,916
Other (Note 2)                                                 1,167,811         978,546       1,065,048
                                                            ------------    ------------    ------------

Total Revenues                                                 7,939,756       7,807,858       7,661,964
                                                            ------------    ------------    ------------

Expenses:

Repairs and maintenance                                        1,710,325       1,504,753       1,585,124
Operating and other                                            1,302,744       1,120,527       1,084,692
Real estate taxes                                                426,185         468,040         421,184
Interest                                                       1,874,838       1,927,520       1,964,700
Depreciation and amortization (Notes 4 and 5)                  2,328,467       2,398,099       2,307,470
General and administrative                                     2,041,568       1,566,781       1,393,984
General and administrative-related parties (Note 7)            1,536,956       1,416,031       1,386,062
                                                            ------------    ------------    ------------

Total Expenses                                                11,221,083      10,401,751      10,143,216
                                                            ------------    ------------    ------------

Loss from continuing operations before minority interest      (3,281,327)     (2,593,893)     (2,481,252)

Minority interest in loss of subsidiaries from operations         34,827          22,781          21,358
                                                            ------------    ------------    ------------

Loss from continuing operations                               (3,246,500)     (2,571,112)     (2,459,894)

Discontinued operations:

 Loss from discontinued operations (including minority
   interest)(Note 12)                                           (545,544)     (1,648,526)     (1,295,070)
                                                            ------------    ------------    ------------

Net loss                                                    $ (3,792,044)   $ (4,219,638)   $ (3,754,964)
                                                            ============    ============    ============

Loss from operations - limited partners                     $ (3,214,035)   $ (2,545,401)   $ (2,435,295)
Loss from discontinued operations (including minority
   interest) - limited partners                                 (540,089)     (1,632,041)     (1,282,119)
                                                            ------------    ------------    ------------


Net loss - limited partners                                 $ (3,754,124)   $ (4,177,442)   $ (3,717,414)
                                                            ============    ============    ============

Number of BACs outstanding                                        72,896          72,896          72,896
                                                            ============    ============    ============

Loss from operations per BAC                                $     (44.09)   $     (34.92)   $     (33.41)
Loss from discontinued operations per BAC                          (7.41)         (22.39)         (17.59)
                                                            ------------    ------------    ------------

Net loss per BAC                                            $     (51.50)   $     (57.31)   $     (51.00)
                                                            ============    ============    ============
</TABLE>
* Reclassified for comparative purposes.


          See accompanying notes to consolidated financial statements.

                                       61
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
                    YEARS ENDED MARCH 31, 2006, 2005 and 2004
<TABLE>
<CAPTION>
                                                                                    Accumulated
                                                                                       Other
                                                    Limited          General       Comprehensive     Comprehensive
                                   Total            Partners         Partners       Income (Loss)        Loss
                               -------------     -------------    -------------    -------------     -------------
<S>                            <C>               <C>              <C>              <C>               <C>
Partners' capital (deficit) -
  April 1, 2003                $   5,851,700     $   6,470,255    $    (622,165)   $       3,610

Comprehensive Loss:
Net Loss                          (3,754,964)       (3,717,414)         (37,550)               0        (3,751,426)

Other Comprehensive Loss:
Net unrealized loss on
  marketable securities                    0             3,574               36           (3,610)            3,610
                               -------------     -------------    -------------    -------------     -------------

Total Comprehensive Loss                                                                             $  (3,747,816)
                                                                                                     =============

Partners' capital
  (deficit) - March 31,
  2004                             2,096,736         2,756,415         (659,679)               0

Comprehensive Loss:
Net Loss                          (4,219,638)       (4,177,442)         (42,196)               0        (4,219,638)
                               -------------     -------------    -------------    -------------     -------------

Total Comprehensive Loss                                                                            $  (4,219,638)
                                                                                                     =============

Partners' deficit -
  March 31, 2005                  (2,122,902)       (1,421,027)        (701,875)               0

Comprehensive Loss:
Net Loss                          (3,792,044)       (3,754,124)         (37,920)               0        (3,792,044)
                               -------------     -------------    -------------    -------------     -------------

Total Comprehensive Loss                                                                             $  (3,792,044)
                                                                                                     =============

Partner's deficit -
  March 31, 2006               $  (5,914,946)    $  (5,175,151)   $    (739,795)   $           0
                               =============     =============    =============    =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       62
<PAGE>

                                           FREEDOM TAX CREDIT PLUS L.P.
                                           AND CONSOLIDATED PARTNERSHIPS
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     YEARS ENDED MARCH 31, 2006, 2005 and 2004
<TABLE>
<CAPTION>
                                                                 2006           2005           2004
                                                             -----------    -----------    -----------
<S>                                                          <C>            <C>            <C>
 Cash flows from operating activities:
 Net loss                                                    $(3,792,044)   $(4,219,638)   $(3,754,964)

 Adjustments to reconcile net loss to net cash provided by
  operating activities:

  Loss on sale of investments                                     81,351              0              0
  Loss on impairment of fixed assets                             555,000              0              0
  Depreciation and amortization                                4,902,705      5,074,408      4,978,566
  Minority interest in loss of subsidiaries                   (1,580,663)       (43,525)       (36,960)
  Increase in other assets                                        31,691        (81,783)        (7,012)
  Increase in deferred revenue from sale of properties         1,888,040              0              0
  Increase in accounts payable and other liabilities             344,774        683,812        360,497
  Increase in cash held in escrow                                (38,852)      (806,472)       (88,879)
  Increase in due to general partners and affiliates           1,122,812        991,218        928,343
  Increase in due to local general partners and affiliates        69,352        119,303        247,420
  Decrease in due to local general partners and affiliates      (235,137)       (91,390)       (26,314)
                                                             -----------    -----------    -----------

Net cash provided by operating activities                      3,349,029      1,625,933      2,600,697
                                                             -----------    -----------    -----------

Cash flows from investing activities:

  Additions to property and equipment                           (627,560)      (567,870)    (1,013,627)
  Proceeds from sale of investments                            2,378,602              0              0
  Decrease in marketable securities                                    0              0        109,498
  Decrease in due to local general partners and affiliates             0       (662,425)      (213,462)
                                                             -----------    -----------    -----------

Net cash provided by (used in) investing activities            1,751,042     (1,230,295)    (1,117,591)
                                                             -----------    -----------    -----------

Cash flows from financing activities:
  Decrease (increase) in deferred costs                                0          5,079         (5,071)
  Repayments of mortgage loans                                  (904,942)    (1,165,811)    (1,081,661)
  Increase in due to local general partners and affiliates       405,955        418,782        140,400
  Decrease in due to local general partners and affiliates    (1,940,801)       (78,237)      (250,938)
  (Decrease) increase in capitalization of consolidated
   subsidiaries attributable to minority interest               (138,467)        82,363        (40,328)
                                                             -----------    -----------    -----------

 Net cash used in financing activities                        (2,578,255)      (737,824)    (1,237,598)
                                                             -----------    -----------    -----------


 Net increase (decrease) in cash and cash equivalents          2,521,816       (342,186)       245,508

 Cash and cash equivalents at beginning of year                2,150,450      2,492,636      2,247,128
                                                             -----------    -----------    -----------

 Cash and cash equivalents at end of year                    $ 4,672,266    $ 2,150,450    $ 2,492,636
                                                             ===========    ===========    ===========

 Supplemental disclosure of cash flow information:
 Cash paid during the year for interest                      $ 2,701,196    $ 2,879,716    $ 2,992,620
                                                             ===========    ===========    ===========

 Summarized below are the components of the gain on sale
  of investments:

  Decrease in property and equipment, net of accumulated
   depreciation                                              $ 3,833,788    $         0    $         0
  Decrease in cash held in escrow                                634,479              0              0
  Increase in other assets                                      (260,828)             0              0
  Decrease in mortgage notes payable                          (4,348,645)             0              0
  Increase in accounts payable and other liabilities           1,943,361              0              0
  Decrease in due to general partners and affiliates             (39,850)             0              0
  Decrease in due to local general partners and affiliate        (90,228)             0              0
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       63
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


NOTE 1 - General

Freedom   Tax  Credit   Plus  L.P.,   a  Delaware   limited   partnership   (the
"Partnership"),  was  organized  on August  28,  1989 and  commenced  its public
offering  on  February 9, 1990 (the  "Offering").  The  general  partners of the
Partnership are Related Freedom Associates L.P. (the "Related General Partner"),
a Delaware limited partnership, and its affiliate, Freedom GP Inc. (the "Freedom
General Partner"), a Delaware corporation (and together with the Related General
Partner,  the "General  Partners").  On November 17, 2003,  CharterMac  acquired
CharterMac Capital LLC ("CharterMac Capital") (formerly known as Related Capital
Company LLC),  which is the parent of RCC Manager LLC, the sole  shareholder  of
Related  Freedom  Associates,  Inc., the general  partner of the Related General
Partner. Pursuant to the acquisition,  CharterMac acquired controlling interests
in the General Partners.  This acquisition did not affect the Partnership or its
day-to-day operations,  as the majority of the General Partners' management team
remained unchanged.  The Partnership will terminate on December 31, 2030, unless
terminated sooner under the provisions of the limited  partnership  agreement of
the Partnership (the "Partnership Agreement").

On November 8, 2005,  CharterMac announced that Stuart J. Boesky would step down
as Chief  Executive  Officer and trustee of  CharterMac.  Upon his  resignation,
which was  effective on November 15, 2005, he also resigned from his position as
Senior Vice President of the general  partner of the Related General Partner and
Executive Vice President of the Freedom General Partner. 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 the  general  partner of the  Related
General Partner and Executive Vice President of the Freedom General Partner.

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 and to 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").  Each of the Local  Partnerships in
which the  Partnership  has an interest has been allocated by the relevant state
credit agency 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 the 15-year compliance period (the "Compliance Period").

As of December 31, 2002, the Credit  Periods for all of the apartment  complexes
have expired,  although each Local  Partnership must continue to comply with the
Tax Credit requirements until the end of the Compliance Period in order to avoid
recapture  of the Tax  Credits.  The  Compliance  Period  began  to end  between
December 31, 2004 and will  continue  through  December 31, 2007 with respect to
the Properties depending upon when the Credit Period commenced.

The Partnership was authorized to issue a total of 200,000 Beneficial Assignment
Certificates  ("BACs"),  which  had  been  registered  with the  Securities  and
Exchange  Commission  for sale to the public.  As of August 8, 1991 (the date on
which the  Partnership  held the final  closing of the sale of BACs and on which
the Offering was terminated),  the Partnership had received $72,896,000 of gross
proceeds of the Offering from 4,780 investors.

The terms of 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 Partners.


NOTE 2 - Summary of Significant Accounting Policies

a)  Basis of Accounting and Presentation

The  Partnership's  fiscal year ends on March 31. All subsidiaries have calendar
year ends.  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
accounting principles generally accepted in the United States.

b)  Basis of Consolidation

The consolidated  financial  statements  include the accounts of the Partnership
and 42 subsidiary  partnerships,  in which the Partnership is a limited partner,
with  an  ownership   interest  ranging  from  approximately  98%  to  99%.  All
intercompany  accounts and transactions  with the subsidiary  partnerships  have
been eliminated in consolidation.  Through the rights of the Partnership  and/or
an  affiliate  of  the  General  Partners,  which  affiliate  has a  contractual
obligation to act on behalf of the Partnership, to remove the general partner of
the subsidiary partnerships and to approve certain major operating and financial
decisions,   the  Partnership  has  a  controlling  financial  interest  in  the
subsidiary partnerships.

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.

                                       64
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


c)  Cash and Cash Equivalents

For  purposes  of the  consolidated  statements  of cash  flows,  cash  and cash
equivalents  include cash on hand, cash in banks,  and investments in short-term
money market  accounts  (which were purchased with original  maturities of three
months or less).

d)  Investment in Marketable Securities

Available-for-sale  securities  were  carried at fair value with net  unrealized
gain (loss) reported as a separate component of other comprehensive income until
realized. A decline in the market value of any available-for-sale security below
cost, that is deemed other than temporary,  was charged to earnings resulting in
the establishment of a new cost basis for the security. In 2004, the Partnership
sold its marketable securities.

e)  Cash Held in Escrow

Cash held in escrow  includes  cash held in  escrow,  replacement  reserves  and
tenant security deposits.

f)  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  No. 144  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets"  ("SFAS No.  144").  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  estimated  future  discounted  net  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  $4,220,000 as a loss on
impairment of assets or reductions to estimated fair value.

In  accordance  with SFAS No. 144, the results of  discontinued  operations  are
reported as a separate  component of income  before  extraordinary  items on the
consolidated  statements  of  operations.  Discontinued  operations  include the
results of operations and any gain or loss recognized for Local Partnership that
have been  disposed of or are held for sale.  A gain or loss  recognized  on the
disposal is disclosed  in the notes to the  consolidated  financial  statements.
Adjustments  to amounts  previously  reported in  operations  that are  directly
related to the disposal of a Local  Partnership are  reclassified in the current
period  as  discontinued  operations  for  comparability  purposes.  Assets  and
liabilities  of a Local  Partnership  that are  classified  as held for sale are
presented separately in the asset and liability sections,  respectively,  of the
consolidated balance sheets.

At the time management  commits to a plan to dispose of assets,  said assets are
adjusted to the lower of carrying  amount or fair value less costs to sell. Such
assets would be classified as property and  equipment-held  for sale and are not
depreciated.  There were eleven assets classified as property and equipment-held
for sale at March 31, 2006.  See Notes 10 and 12 regarding  assets held for sale
and discontinued operations.

g)  Revenue Recognition

Rental  income is earned  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.   The   Partnership   received   rental   subsidies  which  amounted  to
approximately  $3,430,948,  $3,488,027  and $3,326,225 for the years ended March
31, 2006, 2005 and 2004, respectively.  The related rental subsidy programs have
expiration  dates that  terminate  upon  total  disbursement  of the  assistance
obligation.

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  from  operations  include  the  following  amounts  at both the
Partnership and Local Partnership level:
<TABLE>
<CAPTION>
                                          March 31,
                            ------------------------------------
                               2006         2005*        2004*
                            ----------   ----------   ----------
<S>                         <C>          <C>          <C>
Interest                    $   74,161   $   29,802   $   19,975
Other                        1,093,650      948,744    1,045,073
                            ----------   ----------   ----------

   Total other revenue      $1,167,811   $  978,546   $1,065,048
                            ==========   ==========   ==========
</TABLE>
*Reclassified   for  comparative purposes

                                       65
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


Other revenues from  discontinued  operations  include the following  amounts at
both the Partnership and Local Partnership level:
<TABLE>
<CAPTION>
                                          March 31,
                            ------------------------------------
                               2006         2005         2004
                            ----------   ----------   ----------
<S>                         <C>          <C>          <C>
Interest                    $   30,940   $  117,053   $  122,248
Other                          525,088      452,325      389,147
                            ----------   ----------   ----------

   Total other revenue      $  556,028   $  569,378   $  511,395
                            ==========   ==========   ==========
</TABLE>

h)  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 (see Note 8).

i)  Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United  States  requires  management  to make certain
estimates and assumptions relating to reporting of assets, liabilities, revenues
and expenses disclosed in the consolidated  financial  statements.  Accordingly,
actual results could differ from those estimates.

j) Net Loss per BAC

Net loss per BAC is computed based on the net loss for the period  attributed to
BACs holders, divided by the number of BACs outstanding for the period.

k)  New Accounting Pronouncements

In June 2005, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  No.  154,  Accounting  Changes  and  Error
Corrections  ("FAS 154"). FAS 154 replaces  Accounting  Principles Board Opinion
No. 20, Accounting Changes and Statement of Financial  Accounting  Standards 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 was
effective for  accounting  changes and correction of errors made in fiscal years
beginning  after  December  15,  2005.  The  adoption  of FAS  154 has not had 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
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.  The
adoption  of EITF No.  04-5 has not had a  material  effect on the  consolidated
financial statements.


NOTE 3 - Fair Value of Financial Instruments

In  accordance  with SFAS No. 107  "Disclosures  about  Fair Value of  Financial
Instruments,"  the following  methods and assumptions  were used to estimate the
fair value of each class of financial instruments for which it is practicable to
estimate that value:

Cash and Cash  Equivalents,  Cash Held in  Escrow,  Accounts  Payable  and Other
--------------------------------------------------------------------------------
Liabilities,  Due to Local General  Partners and Affiliates,  and Due to General
--------------------------------------------------------------------------------
Partners and Affiliates
-----------------------
The carrying amount of cash and cash equivalents,  cash held in escrow, accounts
payable and other liabilities approximates fair value. The fair values of Due to
Local General Partners and Affiliates and Due to General Partners and Affiliates
are not readily determinable because no market exists for these instruments.

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

                                       66
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


The  estimated  fair values of the  Partnership's  mortgage  notes  payable from
operations 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       $  25,259,584    $  25,259,584    $   48,409,326    $  49,519,246
Not Practicable                              $   8,137,816               (*)   $   16,710,021               (*)
</TABLE>

The  estimated  fair values of the  Partnership's  mortgage  notes  payable from
discontinued operations 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                                        $  22,675,897    $  22,707,650    $            0    $           0
Not practicable                              $   3,792,464               (*)   $            0               (*)
</TABLE>

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


NOTE 4 - Property and Equipment

The components of property and equipment from operating assets are as follows:
<TABLE>
<CAPTION>
                                            March 31,
                                  ------------------------------
                                      2006             2005
                                  -------------    -------------
<S>                               <C>              <C>
Land                              $   1,751,865    $   5,720,520
Buildings and improvements           66,026,433      130,972,585
Other                                 2,068,795        8,084,226
                                  -------------    -------------

                                     69,847,093      144,777,331

Less:  Accumulated depreciation     (33,384,359)     (68,560,673)
                                  -------------    -------------
                                  $  36,462,734    $  76,216,658
                                  =============    =============
</TABLE>

Depreciation  expense for the years ended March 31, 2006, 2005 and 2004 amounted
to $2,313,025, $2,299,458 and $2,287,484, respectively.

During  the years  ended  March 31,  2006 and 2005,  there  were  write-offs  of
accumulated  depreciation  in the amounts of $4,617,863 and $706,  respectively,
and $4,614,956 and $0 of these write-offs were related to discontinued assets.

The components of property and equipment held for sale are as follows:
<TABLE>
<CAPTION>
                                            March 31,
                                  ------------------------------
                                      2006             2005
                                  -------------    -------------
<S>                               <C>              <C>
Land                              $   3,550,953    $           0
Buildings and improvements           56,704,419                0
Other                                 6,188,293                0
                                  -------------    -------------

                                     66,443,665                0
                                    (35,174,311)               0
                                  -------------    -------------
                                  $  31,269,354    $           0
                                  =============    =============
</TABLE>

                                       67
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


Depreciation  expense for the discontinued  assets for the years ended March 31,
2006,  2005  and  2004  amounted  to  $2,410,317,   $2,528,405  and  $2,523,903,
respectively.


NOTE 5 - Deferred Costs

The  components  of  deferred  costs  and their  periods  of  amortization  from
operating assets are as follows:
<TABLE>
<CAPTION>
                                           March 31,
                                  --------------------------
                                      2006          2005
                                  -----------    -----------
<S>                               <C>            <C>
Financing expenses                $   448,927    $ 2,826,425
Less:  Accumulated amortization      (189,345)    (2,098,661)
                                  -----------    -----------

                                  $   259,582    $   727,764
                                  ===========    ===========
</TABLE>

Amortization of deferred costs for the years ended March 31, 2006, 2005 and 2004
amounted to $15,442, $98,641 and $19,986, respectively. In addition, $136,385 of
accumulated amortization has been written-off due to the mortgage refinancing of
Abraham Lincoln (as defined herein) in the year ended March 31, 2005.

The  components  of  deferred  costs  and their  periods  of  amortization  from
discontinued assets are as follows:
<TABLE>
<CAPTION>
                                           March 31,
                                  --------------------------
                                      2006          2005
                                  -----------    -----------
<S>                               <C>            <C>
Financing expenses                $ 2,377,498    $         0
Less:  Accumulated amortization    (2,088,679)             0
                                  -----------    -----------

                                  $   288,819    $         0
                                  ===========    ===========
</TABLE>

Amortization expense from discontinued  operations for the years ended March 31,
2006, 2005 and 2004 amounted to $163,921, $147,904 and $147,193, respectively.

Financing  expenses are being amortized over the life of the related  mortgages,
ranging from 15 to 50 years, using a method approximating the interest method.


NOTE 6 - Mortgage Notes Payable

The  mortgage   notes  are  payable  in  aggregate   monthly   installments   of
approximately  $220,000 including principal and interest with rates varying from
0% to 13.50% per annum and have  maturity  dates ranging from 2007 through 2042.
The  loans  are  collateralized  by the land  and  buildings  of the  subsidiary
partnerships,  the assignment of certain subsidiary partnerships' rents, leases,
and replacement reserves, and are without further recourse.

Annual principal  payments on the permanent debt requirements for mortgage notes
payable for each of the next five fiscal years and  thereafter for the operating
liabilities are as follows:
<TABLE>
<CAPTION>
Year Ending March 31,           Amount
--------------------------   -----------
<C>                          <C>
2006                         $   487,836
2007                           1,820,723
2008                             721,747
2009                             533,299
2010                             563,881
Thereafter                    29,269,914
                             -----------

Total                        $33,397,400
                             ===========
</TABLE>

On June 17, 2004, the Abraham Lincoln property modified its original mortgage to
reduce the principal balance to $1,945,000. The new mortgage payable to New York
State  Housing  Finance  Agency in  monthly  installments  of  $15,382,  with an
interest rate of 6.64% per annum, will mature in June 2022.

                                       68
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


Accrued  interest  payable  as of March  31,  2006  and  2005 was  approximately
$1,555,000 and $1,484,000, 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 and
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 notes for discontinued  operations are payable in aggregate monthly
installments of  approximately  $219,000  including  principal and interest with
rates varying from 1% to 10.45% per annum and have  maturity  dates ranging from
2007 through 2040. The loans are collateralized by the land and buildings of the
subsidiary  partnerships,  the  assignment of certain  subsidiary  partnerships'
rents, leases, and replacement reserves, and are without further recourse.

Annual principal  payments on the permanent debt requirements for mortgage notes
payable  for  each  of the  next  five  fiscal  years  and  thereafter  for  the
discontinued liabilities are as follows:
<TABLE>
<CAPTION>
Year Ending March 31,           Amount
--------------------------   -----------
<C>                          <C>
2006                         $ 1,471,795
2007                          18,454,981
2008                             273,191
2009                             282,991
2010                             293,601
Thereafter                     5,691,802
                             -----------

                             $26,468,361
                             ===========
</TABLE>

Accrued interest payable for the discontinued  liabilities at March 31, 2006 and
2005 was approximately  $338,000 and $0,  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 and 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.


NOTE 7 - Related Party  Transactions and Transactions  with General Partners and
Affiliates

Freedom SLP L.P., an affiliate of the General Partners,  has either a .01% or 1%
interest, as a special limited partner, in each of the Local Partnerships.

The General  Partners and their affiliates and the general partners of the Local
Partnerships  ("Local General  Partners") and their affiliates  perform services
for the Partnership and the Local Partnerships, respectively. The costs incurred
are as follows:

a)  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             $  323,357   $1,963,493
Development fees (i)              610,024      610,024
Operating deficit loans (ii)        6,490      297,172
Long-term note payable             49,884       98,615
Management and other fees         191,431      659,284
                               ----------   ----------

                               $1,181,186   $3,628,588
                               ==========   ==========
</TABLE>

(i) Development  fees were incurred in connection  with the  development  of the
    property and have been included in the basis of the property.

                                       69
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


(ii) Operating deficit loans consist of the following:
<TABLE>
<CAPTION>
                                                          March 31,
                                               --------------------------------
                                                   2006               2005
                                               -------------     --------------
<S>                                            <C>               <C>
Parkside Townhomes                             $           0     $       87,035
Ogontz Hall                                    $       6,490     $       18,362
</TABLE>

These loans to fund operating deficits are unsecured,  non-interest  bearing and
are subordinate to the second mortgage and are payable out of available  surplus
cash  of the  respective  subsidiary  partnership,  or at the  time  of  sale or
refinancing.
<TABLE>
<CAPTION>
                                                          March 31,
                                               --------------------------------
                                                   2006               2005
                                               -------------     --------------
<S>                                            <C>               <C>
Wilshire                                       $           0     $      191,775
</TABLE>

This loan to fund operating deficits is unsecured,  non-interest  bearing and is
payable out of available surplus cash of the respective subsidiary  partnership,
or at the  time of sale or  refinancing.  Wilshire  Apartments  ("Wilshire")  is
currently classified as a discontinued operation (see below).

Due to Local General Partners and affiliates at March 31, 2006 and 2005 included
in the discontinued liabilities consists of the following:
<TABLE>
<CAPTION>
                                                          March 31,
                                               --------------------------------
                                                   2006               2005
                                               -------------     --------------
<S>                                            <C>               <C>
Operating advances                             $     252,928     $            0
Operating deficit loan (i)                           191,775                  0
Management and other fees                            211,840                  0
                                               -------------     --------------

                                               $     656,543     $            0
                                               =============     ==============
</TABLE>

(i) Operating deficit loan consists of the following:
<TABLE>
<CAPTION>
                                                          March 31,
                                               --------------------------------
                                                   2006               2005
                                               -------------     --------------
<S>                                            <C>               <C>
Wilshire                                       $     191,775     $            0
</TABLE>

This loan to fund operating deficits is unsecured,  non-interest  bearing and is
payable out of available surplus cash of the respective subsidiary  partnership,
or at the time of sale or refinancing.

b)  Other Expenses

The costs from operations  incurred to related parties for the years ended March
31, 2006, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>
                                                     Year Ended March 31,
                                              ------------------------------------
                                                 2006         2005*        2004*
                                              ----------   ----------   ----------
<S>                                           <C>          <C>          <C>
Partnership management fees (a)               $  670,875   $  676,000   $  676,000
Expense reimbursement (b)                        353,440      223,042      178,723
Local administrative fee (d)                      32,500       29,500       34,500
                                              ----------   ----------   ----------
Total general and administrative - General
 Partners                                      1,056,815      928,542      889,223
                                              ----------   ----------   ----------
Property management fees incurred to
 affiliates of the subsidiary partnerships'
 general partners (c)                            480,141      487,489      496,839
                                              ----------   ----------   ----------
Total general and administrative - related
 parties                                      $1,536,956   $1,416,031   $1,386,062
                                              ==========   ==========   ==========
</TABLE>

* Reclassified for comparative purposes.

                                       70
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


The costs from discontinued operations 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>
Local administrative fee (d)                 $ 17,350   $ 21,693   $ 18,500
                                             --------   --------   --------
Total general and administrative-General
  Partners                                     17,350     21,693     18,500s
                                             --------   --------   --------
Property management fees incurred to
  affiliates of the Local General Partners
  (c)                                         374,338    409,593    412,504
                                             --------   --------   --------

Total general and administrative-related
  parties                                    $391,688   $431,286   $431,004
                                             ========   ========   ========
</TABLE>

(a) The General  Partners are 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  Partners  in  their  sole
discretion  based upon their  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 and
BACs holders 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 General  Partners
amounting to approximately  $7,555,000 and $6,884,000 were accrued and unpaid as
of  March  31,  2006 and  2005,  respectively.  Without  the  General  Partners'
continued accrual without payment,  the Partnership will not be in a position to
meet its obligations.  The General Partners have continued  allowing the accrual
without payment of these amounts,  but are under no obligation to continue to do
so.

(b) The  Partnership  reimburses the General  Partners and their  affiliates for
actual Partnership operating expenses incurred by the General Partners and their
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 Partners performs asset monitoring for the Partnership.
These   services   include  site  visits  and   evaluations  of  the  subsidiary
partnerships' performance.

(c) Property  management  fees incurred by subsidiary  partnerships  amounted to
$1,063,422,  $1,076,574 and $1,108,295 for the years ended March 31, 2006,  2005
and 2004,  respectively.  Of these fees,  $854,479,  $897,082 and $909,343  were
incurred to affiliates of the subsidiary  partnerships,  which include $374,338,
$409,593  and  $412,504,   respectively,   of  fees  relating  to   discontinued
operations.

(d) Freedom SLP L.P., a special limited partner of the subsidiary  partnerships,
is entitled to receive an annual local  administrative  fee of up to $2,500 from
each Local Partnership.

NOTE 8 - Income Taxes

A reconciliation of the financial  statement net loss to the income tax loss for
the Partnership and its consolidated subsidiaries follows:
<TABLE>
<CAPTION>
                                                 2005          2004            2003
                                             -----------    -----------    -----------
<S>                                          <C>            <C>            <C>
Financial statement

Net loss                                     $(3,792,044)   $(4,219,638)   $(3,754,964)

 Difference  resulting from parent company
  having a different  fiscal year for
  income tax and financial reporting
  purposes                                      (369,620)       376,180        (17,957)

 Difference between depreciation and
  amortization expense recorded for
  financial statement and income tax
  reporting purposes                            (554,379)       468,213        386,864

 Provisions for loss on impairment               555,000              0              0

 Tax-exempt interest income                       (1,326)           (40)           (25)

 Other                                           496,704       (154,830)        48,724
                                             -----------    -----------    -----------

 Net loss as shown on the Partnership's
  income tax returns                         $(3,665,665)   $(3,530,115)   $(3,337,358)
                                             ===========    ===========    ===========
</TABLE>

                                       71
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


NOTE 9 - Sale of Properties

The  Partnership  is currently  in the process of disposing of its  investments.
During  the  fiscal  year  ended  March  31,  2006,  the  Partnership's  limited
partnership interest in seven Local Partnerships had been sold. Through the year
ended  March 31, 2006 the  Partnership  has  disposed of seven of its  forty-two
original investments.  In addition,  the Partnership has entered into agreements
for the sale of eleven Local Partnerships (see below). No assurance can be given
as to whether or when these sales will actually  occur.  All gains and losses on
sales are included in discontinued operations.  Subsequently,  on April 20, 2006
and May 31,  2006,  two Local  Partnerships  entered  into a  purchase  and sale
agreement to sell their property and related assets and liabilities,  on June 5,
2006 and June 20, 2006, the property and related  assets and  liabilities of one
and two Local Partnerships, respectively, were sold. See Note 14.

On March 31, 2006, the Partnership's  limited  partnership  interest in Davidson
Court  Limited  Partnership  ("Davidson  Court") was sold to an affiliate of the
general  partner of the Local  Partnership  (the "Local General  Partner") for a
purchase price of $1,100,000,  resulting in a Local General Partner contribution
of  approximately  $42,000 and a net loss to the  Partnership  of  approximately
$21,000,  which will be recognized in the Partnership's Form 10-Q dated June 30,
2006. The sale resulted in the liquidation of Davidson Court. As of December 31,
2005,  Davidson  Court had property and  equipment,  at cost,  of  approximately
$873,000 and accumulated depreciation of approximately $350,000.

On March  31,  2006,  the  Partnership's  limited  partnership  interest  in CLM
Equities  Limited  Partnership  ("Morris  Avenue") was sold to the Local General
Partner and its affiliate for a purchase price of $265,000, resulting in a Local
General  Partner  distribution of  approximately  $439,000 and a net loss to the
Partnership  of  approximately   $21,000,   which  will  be  recognized  in  the
Partnership's  Form  10-Q  dated  June  30,  2006.  The  sale  resulted  in  the
liquidation  of Morris  Avenue.  As of  December  31,  2005,  Morris  Avenue had
property  and  equipment,  at cost,  of  approximately  $5,332,000,  accumulated
depreciation  of  approximately  $2,646,000  and mortgage debt of  approximately
$2,079,000.

On February 1, 2006, the Partnership's  limited partnership  interest in Ivanhoe
Apartments Limited Partnership ("Ivanhoe") was sold to the Local General Partner
for  a  purchase  price  of  $150,000,  resulting  in a  Local  General  Partner
distribution  of  approximately  $51,000  and a net loss to the  Partnership  of
approximately  $21,000,  which will be recognized in the Partnership's Form 10-Q
dated June 30, 2006.  The sale  resulted in the  liquidation  of Ivanhoe.  As of
December 31, 2005, Ivanhoe had property and equipment, at cost, of approximately
$1,178,000, accumulated depreciation of approximately $587,000 and mortgage debt
of approximately $323,000.

On January 19, 2006, the Partnership's  limited  partnership  interest in Nelson
Anderson Affordable Housing Limited Partners ("Nelson Anderson") was sold to the
Local  General  Partner for a purchase  price of $490,000,  resulting in a Local
General  Partner  distribution of  approximately  $177,000 and a net loss to the
Partnership  of  approximately   $21,000,   which  will  be  recognized  in  the
Partnership's  Form  10-Q  dated  June  30,  2006.  The  sale  resulted  in  the
liquidation of Nelson  Anderson.  As of December 31, 2005,  Nelson  Anderson had
property  and  equipment,  at cost,  of  approximately  $6,732,000,  accumulated
depreciation  of  approximately  $3,411,000  and mortgage debt of  approximately
$3,163,000.

On January 1, 2006, the Partnership's  limited partnership  interest in The Oaks
Village  Limited  Partnership  ("Oaks  Village")  was sold to the Local  General
Partner for a purchase  price of $75,000,  resulting in a Local General  Partner
contribution  of  approximately  $407,000 and a net loss to the  Partnership  of
approximately  $21,000. The sale resulted in the liquidation of Oaks Village. As
of the sale  date,  Oaks  Village  had  property  and  equipment,  at  cost,  of
approximately  $2,024,000,  accumulated depreciation of approximately $1,083,000
and mortgage debt of approximately $1,440,000.

On January 1, 2006, the Partnership's limited partnership interest in Greenfield
Village Limited  Partners  ("Greenfield  Village") was sold to the Local General
Partner for a purchase  price of $75,000,  resulting in a Local General  Partner
contribution  of  approximately  $461,000  and net  loss to the  Partnership  of
approximately  $21,000.  The sale  resulted  in the  liquidation  of  Greenfield
Village. As of the sale date, Greenfield Village had property and equipment,  at
cost, of  approximately  $2,010,000,  accumulated  depreciation of approximately
$1,059,000 and mortgage debt of approximately $1,448,000.

On June 20, 2005, the  Partnership's  limited  partnership  interest in Parkside
Townhomes  Associates  ("Parkside")  was sold to the Local General Partner for a
purchase price of $650,000 resulting in a Local General Partner net distribution
of  approximately  $32,000 and a net loss to the  Partnership  of  approximately
$39,000. The purchase price consisted of approximately  $161,000 paid in cash at
closing and $450,000  pursuant to a promissory note payable to the  Partnership.
During  the  quarter  ended June 30,  2005,  in  accordance  with  Statement  of
Financial  Accounting  Standards  No.  144  "Accounting  for the  Impairment  of
Disposal of  Long-Lived  Asset"  ("SFAS No. 144"),  the  Partnership  deemed the
building  impaired and wrote it down to its fair value which  resulted in a loss
on impairment of $555,000.  The sale resulted in the liquidation of Parkside. As
of the sale date, Parkside had property and equipment, recorded at a fair value,
of   approximately   $4,162,000,   accumulated   depreciation  of  approximately
$2,386,000 and mortgage debt of approximately $1,461,000.


NOTE 10 - Assets Held for Sale

On March 22, 2006, Eagle Ridge Limited  Partnership ("Eagle Ridge") entered into
a purchase and sale  agreement  to sell the property and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$2,000,000. The sales documents have been executed and the initial deposit funds
are being held in  escrow.  A closing  is  expected  to take place in the fourth
calendar  quarter of 2006. No assurance can be given that the sale will actually
occur. Eagle Ridge is being held as an asset held for sale as of March 31, 2006.
As of December 31, 2005,  Eagle Ridge had property and  equipment,  at cost,  of
approximately  $3,100,000,  accumulated depreciation of approximately $1,837,000
and mortgage debt of approximately $1,496,000.

                                       72
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


On January 30, 2006,  Lauderdale Lakes  Associates,  Ltd.  ("Lauderdale  Lakes")
entered into a purchase and sale  agreement to sell the property and the related
assets and  liabilities  to an  affiliate  of the Local  General  Partner  for a
purchase  price of  $5,900,000.  The sales  documents have been executed and the
initial  deposit funds are being held in escrow.  A closing is expected to occur
in the first  calendar  quarter of 2007. No assurance can be given that the sale
will actually occur. Lauderdale Lakes is being held as an asset held for sale as
of March 31, 2006.  As of December 31, 2005,  Lauderdale  Lakes had property and
equipment, at cost, of approximately  $10,634,000,  accumulated  depreciation of
approximately $3,584,000 and mortgage debt of approximately $4,645,000.

On January  26,  2006 Bethel Park  Apartments,  a Limited  Partnership  ("Bethel
Park")  entered into a purchase and sale  agreement to sell the property and the
related assets and  liabilities to an  unaffiliated  third party purchaser for a
purchase  price of  $2,500,000.  The sales  documents have been executed and the
initial  deposit funds are being held in escrow.  A closing is expected to occur
in June  2006.  No  assurance  can be given that the sale will  actually  occur.
Bethel Park is being held as an asset held for sale as of March 31, 2006.  As of
December  31,  2005,  Bethel  Park had  property  and  equipment,  at  cost,  of
approximately  $5,099,000,  accumulated depreciation of approximately $3,084,000
and mortgage debt of approximately $1,758,000.  Subsequently,  on June 20, 2006,
the property  and the related  assets and  liabilities  of Bethel Park were sold
(see Note 14).

On January 26, 2006, Northwood Apartments of Georgia  ("Northwood") entered into
a purchase and sale  agreement  to sell the property and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$6,050,000. The sales documents have been executed and the initial deposit funds
are being  held in  escrow.  A closing is  expected  to occur in June  2006.  No
assurance  can be given that the sale will  actually  occur.  Northwood is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Northwood  had property and  equipment,  at cost, of  approximately  $7,398,000,
accumulated  depreciation  of  approximately  $4,116,000  and  mortgage  debt of
approximately  $2,545,000.  Subsequently,  on June 5, 2006, the property and the
related assets and liabilities of Northwood were sold (see Note 14).

On January 26, 2006,  Hunters Chase Apartments  ("Hunters Chase") entered into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$2,730,000. The sales documents have been executed and the initial deposit funds
are being  held in  escrow.  A closing is  expected  to occur in June  2006.  No
assurance can be given that the sale will actually occur. Hunters Chase is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Hunters Chase had property and equipment, at cost, of approximately  $3,913,000,
accumulated  depreciation  of  approximately  $2,618,000  and  mortgage  debt of
approximately $2,296,000.

On January  26,  2006,  Bennion  Park  Apartments  ("Mulberry")  entered  into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$4,900,000. The sales documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance can be given that the sale will actually occur. Mulberry is being held
as an asset  held for  sale as of March  31,  2006.  As of  December  31,  2005,
Mulberry had property  and  equipment,  at cost,  of  approximately  $5,954,000,
accumulated  depreciation  of  approximately  $3,417,000  and  mortgage  debt of
approximately $1,994,000.

On January 26, 2006,  Oxford Trace  Apartments  ("Oxford  Trace") entered into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$725,000.  The sales  documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance can be given that the sale will actually occur.  Oxford Trace is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Oxford Trace had property and equipment,  at cost, of approximately  $1,099,000,
accumulated   depreciation  of  approximately  $833,000  and  mortgage  debt  of
approximately $658,000.

On January 26, 2006,  Tivoli Place  Apartments  ("Tivoli  Place") entered into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$3,050,000. The sales documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance can be given that the sale will actually occur.  Tivoli Place is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Tivoli Place had property and equipment,  at cost, of approximately  $4,566,000,
accumulated  depreciation  of  approximately  $2,590,000  and  mortgage  debt of
approximately $1,409,000.

On January  26,  2006,  Twin Trees  Apartments  ("Twin  Trees")  entered  into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$2,300,000. The sales documents have been executed and the initial deposit funds
are being held in escrow.  A closing is  expected  to occur in August  2006.  No
assurance  can be given that the sale will actually  occur.  Twin Trees is being
held as an asset held for sale as of March 31,  2006.  As of December  31, 2005,
Twin Trees had property and  equipment,  at cost, of  approximately  $2,925,000,
accumulated  depreciation  of  approximately  $1,657,000  and  mortgage  debt of
approximately $1,047,000.

On January 26, 2006,  Wilshire Apartments  ("Wilshire")  entered into a purchase
and sale agreement to sell the property and the related  assets and  liabilities
to an unaffiliated third party purchaser for a purchase price of $1,700,000. The
sales  documents have been executed and the initial deposit funds are being held
in escrow.  A closing is expected  to occur in June 2006.  No  assurance  can be
given that the sale will actually occur. Wilshire is being held as an asset held
for sale as of March 31, 2006.  As of December  31, 2005,  Wilshire had property
and equipment, at cost, of approximately $2,914,000, accumulated depreciation of
approximately $1,846,000 and mortgage debt of approximately $1,574,000.

On January 26, 2006, Zebulon Park Apartments ("Zebulon") entered into a purchase
and sale agreement to sell the property and the related  assets and  liabilities
to an unaffiliated third party purchaser for a purchase price of $2,000,000. The

                                       73
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


sales  documents have been executed and the initial deposit funds are being held
in escrow.  A closing is expected  to occur in June 2006.  No  assurance  can be
given that the sale will actually occur.  Zebulon is being held as an asset held
for sale as of March 31, 2006. As of December 31, 2005, Zebulon had property and
equipment,  at cost, of approximately  $4,193,000,  accumulated  depreciation of
approximately   $2,460,000  and  mortgage  debt  of  approximately   $1,478,000.
Subsequently,  on June  20,  2006,  the  property  and the  related  assets  and
liabilities of Zebulon were sold (see Note 14).


NOTE 11 - Commitments and Contingencies

Washington Brooklyn
-------------------
In or about  September  2003,  two  putative  mortgagees  commenced  a  mortgage
foreclosure  action in the Supreme Court of the State of New York,  Kings County
(the  "Court"),  entitled  150 Beach 120th  Street Inc. v.  Washington  Brooklyn
Limited  Partnership,  Index No. 35255/2003,  seeking to foreclose on an alleged
$100,000 loan and mortgage  against the real property (the "Apartment  Complex")
owned by Washington Brooklyn Limited Partnership ("Washington"). Apparently, the
former general partner of Washington,  BUFNY Houses of Brooklyn, Inc. ("BUFNY"),
allegedly  granted two mortgages in the amounts of $225,000 and $100,000 secured
by the Apartment  Complex.  Each of the foregoing  mortgages was granted without
the  knowledge of Freedom  SLP,  L.P.  (the  "Special  Limited  Partner") or the
Partnership  (collectively  the  "Freedom  LPs") or the  consent of the  Special
Limited Partner,  as required by Washington's  Amended and Restated Agreement of
Limited Partnership (the "Washington  Partnership  Agreement").  The Freedom LPs
believe  that BUFNY did not use the  alleged  loan  proceeds  for the benefit of
Washington or the Apartment  Complex.  For these and other reasons,  the Freedom
LPs contend that the alleged mortgages are invalid.

In addition, BUFNY allegedly failed to comply with the terms of either mortgage,
which resulted in the holders of the alleged  $100,000  mortgage  commencing the
foreclosure  proceedings.  BUFNY did not appear in or  otherwise  respond to the
foreclosure  proceedings.  The holders of the alleged $225,000 mortgage have not
yet, to the knowledge of the Freedom LPs, commenced any foreclosure proceedings.

Shortly  after the Freedom LPs became  aware of these  foreclosure  proceedings,
their counsel  contacted  counsel for the plaintiffs and mortgagees in an effort
to learn more about the alleged  mortgages and to resolve the disputes  relating
to the mortgages.  When those efforts failed,  the Freedom LPs filed a motion to
intervene  in the  foreclosure  action  and for  leave to file a late  answer on
behalf of themselves and Washington.  The Freedom LPs contend that the mortgages
are  invalid  and that  Washington  is not  liable  for  them or the  underlying
indebtedness. In an order dated September 7, 2004, the Court granted the Freedom
LPs' motion to intervene and to file a late answer on behalf of the Partnership.

On or about September 21, 2004, the Freedom LPs, on behalf of themselves and the
Partnership,  served an  answer,  counterclaims  and  crossclaims  in  defending
against the action. The answer denied the material  allegations of the complaint
and asserted certain affirmative defenses,  counterclaims and crossclaims. Among
other  things,  the Freedom LPs, on behalf of  themselves  and the  Partnership,
added  The  Levites  Organization,  one of the two  co-holders  of the  $225,000
mortgage for which the  plaintiffs'  complaint did not seek  foreclosure,  as an
additional  counterclaim  defendant,  and the  Freedom  LPs assert that both the
$100,000 and $225,000 mortgages are invalid and void ab initio.

After obtaining discovery from the putative mortgagees,  the Partnership and the
Freedom LPs, on July 12, 2005, made a motion for summary judgment dismissing the
complaint and declaring the mortgages  invalid and void ab initio.  The putative
mortgagees  cross-moved for summary  judgment  declaring the mortgages valid and
enforceable.  Subsequently,  by decision dated January 3, 2006, the Court denied
both  motions,  finding  that  questions  of  fact  exist  for  trial  as to the
reasonableness of the putative mortgagees' reliance on BUFNY.

On February 14, 2006,  the Freedom LPs filed a notice of appeal from the January
3, 2006  decision.  The appeal has not yet been fully  briefed.  The Freedom LPs
intend  to  pursue  their  appeal,   defend  the  action,  and  prosecute  their
counterclaims  and  crossclaims  vigorously.  The final  outcome  of this  case,
however,  cannot be  determined  at this  time.  If the Court were to reject the
Freedom LPs defenses and  counterclaims,  then it is possible that the Apartment
Complex might be foreclosed upon and the Partnership might lose its title to and
interests in the Apartment Complex. Even if Washington were foreclosed,  it will
not be subject to Tax Credit recapture, because its Compliance Period expired on
December 31, 2005.

In  addition,  due to BUFNY's  breach of  fiduciary  duties and  breaches of the
Partnership  Agreement,  the Special Limited Partner  exercised its rights under
the Washington  Partnership  Agreement to remove BUFNY as  Washington's  general
partner  and to  substitute  itself  as the  new  replacement  general  partner,
effective April 26, 2004.

Subsequently,  on April 20, 2006,  the  Partnership  entered into a purchase and
sale  agreement to sell the property and the related  assets and  liabilities of
Washington Brooklyn to an unaffiliated third party purchaser.

Conifer Irondequoit Associates ("Abraham Lincoln")
--------------------------------------------------
Abraham  Lincoln had not made its November  and December New York State  Housing
Finance Agency loan payments at the end of 2005. This technically  represents an
event of default under the various loan  agreements,  which could result in both
of the lenders  demanding  immediate full payment of the respective  loans.  The
Partnership  has not  solicited  a "covenant  waiver"  letter from either of the
lenders; however, based on history, management does not believe any of the loans
will be called.  Accordingly,  the loans are  classified as  non-current  in the
balance sheet.  In the event that any or all of the mortgages are called,  there
is no assurance  that a refinancing on comparable  terms could be  accomplished.
The Partnership's investment in Abraham Lincoln at March 31, 2006 was reduced to
zero as a result of prior years' losses and, on that date, the minority interest
had a deficit of $49,000.  Abraham  Lincoln's net loss after  minority  interest
amounted to  approximately  $210,000,  $232,000 and $194,000 for the years ended
March 31, 2006, 2005 and 2004, respectively.

Pine Shadow, Ltd. ("Pine Shadow")
---------------------------------
During  2005,  Pine Shadow  suffered  damages  from  flooding  due to  Hurricane
Katrina.  However,  in 2006, Pine Shadow will be entering into an agreement with

                                       74
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


Rural  Housing  Services  ("RHS") in which Pine Shadow is to receive  funding to
replace all damages to the  property.  The funds to be received will be a Second
Soft  Loan in the  amount of  $4,384,000  with an  annual  interest  rate of 1%.
Payments on the loan will be deferred for a 20 year period.  In accordance  with
SFAS No. 144, the Partnership has determined that there is no impairment and the
carrying  amounts of the assets are recoverable,  therefore,  no adjustments are
required.

Other
-----

The  Partnership is subject to 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 23% 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  U.S.
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 owners'  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 contract expires.

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  not  be  affected.  However,  the
geographic  diversification  of the portfolio may not protect  against a general
downturn in the national economy.


NOTE 12 - Discontinued Operations

The following table summarizes the financial  position of the Local Partnerships
that are classified as  discontinued  operations  because the  respective  Local
Partnerships  were  classified  as assets held for sale.  As of March 31,  2006,
Parkside, Oaks Village,  Greenfield Village, Nelson Anderson,  Ivanhoe, Davidson
Court,  Morris Avenue,  Bethel Park,  Northwood,  Hunters Chase,  Mulberry Park,
Oxford Trace, Tivoli Place, Twin Trees, Wilshire,  Zebulon, Lauderdale Lakes and
Eagle Ridge were  classified  as  discontinued  operations  in the  consolidated
financial statements.

Consolidated Balance Sheets:
<TABLE>
<CAPTION>
                                                                    March 31,     March 31,
                                                                      2006          2005
                                                                  -----------   -----------
<S>                                                               <C>           <C>
Assets
  Property and equipment - less accumulated depreciation of
    $35,174,311 and $0 and, respectively                          $31,269,354   $         0
  Cash and cash equivalents                                         1,267,871             0
  Cash held in escrow                                               1,219,590             0
  Deferred costs, net of accumulated amortization of $2,088,679
    and $0, respectively                                              288,819             0

  Other assets                                                        755,335             0
                                                                  -----------   -----------
Total assets                                                      $34,800,969   $         0
                                                                  ===========   ===========

Liabilities
  Mortgage notes payable                                          $26,468,361   $         0
  Accounts payable and other liabilities                            1,339,733             0
  Due to local general partners and affiliates                        656,543             0
  Due to general partners and affiliates                              270,000             0

  Minority interest                                                 4,189,575             0
                                                                  -----------   -----------
Total liabilities                                                 $32,924,212   $         0
                                                                  ===========   ===========
</TABLE>

The  following  table   summarizes  the  results  of  operations  of  the  Local
Partnerships that are classified as discontinued operations.  For the year ended
March 31, 2006,  Bethel Park,  Northwood,  Hunters Chase,  Mulberry Park, Oxford
Trace, Tivoli Place, Twin Trees, Wilshire,  Zebulon,  Lauderdale Lakes and Eagle
Ridge which were classified as assets held for sale, and Parkside, Oaks Village,
Greenfield Village, Nelson Anderson,  Ivanhoe, Davidson Court and Morris Avenue,
which were sold during the year, were all classified as discontinued  operations
on the consolidated financial statements. For the years ended March 31, 2005 and
2004,  Parkside,  Oaks Village,  Greenfield Village,  Nelson Anderson,  Ivanhoe,
Davidson Court, Morris Avenue, Bethel Park,  Northwood,  Hunters Chase, Mulberry
Park, Oxford Trace,  Tivoli Place,  Twin Trees,  Wilshire,  Zebulon,  Lauderdale
Lakes and Eagle Ridge, in order to present  comparable results to the year ended
March  31,  2006,  were  all  classified  as  discontinued   operations  on  the
consolidated financial statements.

                                       75
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


Consolidated Statements of Discontinued Operations:
<TABLE>
<CAPTION>
                                                                         Years Ended March 31,
                                                              --------------------------------------------
                                                                  2006            2005            2004
                                                              ------------    ------------    ------------
<S>                                                           <C>             <C>             <C>
Revenues

Rental income                                                 $  8,097,951    $  8,202,445    $  8,200,242
Other (Note 2)                                                     556,028         569,378         511,395
Loss on sale of properties (Note 10)                               (81,351)              0               0
                                                              ------------    ------------    ------------
Total revenue                                                    8,572,628       8,771,823       8,711,637
                                                              ------------    ------------    ------------

Expenses

Repairs and maintenance                                          1,453,668       1,499,037       1,247,773
Operating and other                                              1,320,262       1,306,877       1,182,711
Real estate taxes                                                  573,928         600,170         538,619
Interest                                                         2,230,700       2,316,656       2,371,279
Depreciation and amortization                                    2,574,238       2,676,309       2,671,096
General and administrative                                       1,564,524       1,610,758       1,579,827
General and administrative-related parties (Note 8)                391,688         431,286         431,004
Loss on impairment of fixed assets                                 555,000               0               0
                                                              ------------    ------------    ------------

Total expenses                                                  10,664,008      10,441,093      10,022,309
                                                              ------------    ------------    ------------

Loss from discontinued operations before minority interest      (2,091,380)     (1,669,270)     (1,310,672)
Minority interest in loss of subsidiaries from discontinued
  operations                                                     1,545,836          20,744          15,602
                                                              ------------    ------------    ------------
Loss from discontinued operations (including loss on sale
  of properties)                                              $   (545,544)   $ (1,648,526)   $ (1,295,070)
                                                              ============    ============    ============

Loss - limited partners from discontinued operations
  (including loss on sale of properties)                      $   (540,089)   $ (1,632,041)   $ (1,282,119)
                                                              ============    ============    ============

Number of BACs outstanding                                          72,896          72,896          72,896
                                                              ============    ============    ============

Loss discontinued operations (including loss on sale of
  properties) per BAC                                         $      (7.41)   $     (22.39)   $     (17.59)
                                                              ============    ============    ============

<CAPTION>
                                                                         Years Ended March 31,
                                                              --------------------------------------------
                                                                  2006            2005            2004
                                                              ------------    ------------    ------------
<S>                                                           <C>             <C>             <C>
Cash flows from discontinued operations
Net cash provided by operating activities                     $  1,863,756    $  2,356,869    $  2,990,676
Net cash provided by (used in) investing activities           $  1,388,096    $   (413,619)   $   (688,417)
Net cash used in financing activities                         $ (1,599,712)   $   (705,722)   $   (635,646)
</TABLE>


                                       76
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


NOTE 13 - 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.  The  fluctuations  between  the
quarters  are  primarily  due to the sales and  classification  as  discontinued
operations of Local Partnerships (see Notes 9 and 10).
<TABLE>
<CAPTION>
                                                                      Quarter Ended
                                                  --------------------------------------------------------

                                                    June 30,    September 30,   December 31,    March 31,
                 OPERATIONS                          2005*          2005*           2005*          2006
-----------------------------------------------   -----------    -----------    -----------    -----------
<S>                                               <C>            <C>            <C>            <C>
Revenues                                          $ 1,964,158    $ 1,884,799    $ 1,894,565    $ 2,196,234

Total expenses                                     (2,639,359)    (2,805,650)    (2,645,491)    (3,130,583)
                                                  -----------    -----------    -----------    -----------

Loss from continuing operations before minority
   interest                                          (675,201)      (920,851)      (750,926)      (934,349)

Minority interest in loss of subsidiaries from
   operations                                          10,381          4,313          5,586         14,547
                                                  -----------    -----------    -----------    -----------

Loss from continuing operations                      (664,820)      (916,538)      (745,340)      (919,802)

(Loss) income from discontinued operations
   (including minority interest)                     (954,152)      (184,081)      (245,981)       838,670
                                                  -----------    -----------    -----------    -----------

Net loss                                          $(1,618,972)   $(1,100,619)   $  (991,321)   $   (81,132)
                                                  ===========    ===========    ===========    ===========

Net loss - limited partnership                    $(1,602,782)   $(1,089,613)   $  (981,408)   $   (80,321)
                                                  ===========    ===========    ===========    ===========

Loss per weighted average BAC from operations     $     (9.03)   $    (12.45)   $    (10.12)   $    (12.49)

(Loss) income per weighted average BAC from
   discontinued operations                             (12.96)         (2.50)         (3.34)         11.39
                                                  -----------    -----------    -----------    -----------

Net loss per weighted average BAC                 $    (21.99)   $    (14.95)   $    (13.46)   $     (1.10)
                                                  ===========    ===========    ===========    ===========
<CAPTION>
                                                                      Quarter Ended
                                                  --------------------------------------------------------

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


Revenues                                          $ 1,910,731    $ 1,933,616    $ 1,927,076    $ 2,036,435

Total expenses                                     (2,469,356)    (2,567,181)    (2,385,873)    (2,979,341)
                                                  -----------    -----------    -----------    -----------

Loss from continuing operations before minority
   interest                                          (558,625)      (633,565)      (458,797)      (942,906)

Minority interest in loss of subsidiaries from
   operations                                           4,453          5,144          2,294         10,890
                                                  -----------    -----------    -----------    -----------

Loss from continuing operations                      (554,172)      (628,421)      (456,503)      (932,016)

(Loss) income from discontinued operations
   (including minority interest)                     (504,082)      (300,301)      (464,268)      (379,875)
                                                  -----------    -----------    -----------    -----------

Net loss                                          $(1,058,254)   $  (928,722)   $  (920,771)   $(1,311,891)
                                                  ===========    ===========    ===========    ===========

Net loss - limited partnership                    $(1,047,671)   $  (919,435)   $  (911,563)   $(1,298,773)
                                                  ===========    ===========    ===========    ===========

Loss per weighted average BAC from operations     $     (7.52)   $     (8.53)   $     (6.20)   $    (12.67)

(Loss) income per weighted average BAC from
   discontinued operations                              (6.85)         (4.08)         (6.31)         (5.15)
                                                  -----------    -----------    -----------    -----------

Net loss per weighted average BAC                 $    (14.37)   $    (12.61)   $    (12.51)   $    (17.82)
                                                  ===========    ===========    ===========    ===========
</TABLE>

* Reclassified for comparative purposes.

                                       77
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2006, 2005 and 2004


NOTE 14 - Subsequent Event

On June 20, 2006, the property and the related assets and  liabilities of Bethel
Park  were  sold  to an  unaffiliated  third  party  purchaser  for  $2,500,000,
resulting in a gain of approximately  $479,000,  which will be recognized on the
Partnership's  Form 10-Q dated  September  30,  2006.  The sale  resulted in the
liquidation of Bethel Park.  Bethel Park is classified as an asset held for sale
as of March 31, 2006 (see Note 10).

On June 20, 2006, the property and the related assets and liabilities of Zebulon
were sold to an unaffiliated third party purchaser for $2,000,000,  resulting in
a gain of approximately $296,000,  which will be recognized on the Partnership's
Form 10-Q dated  September  30, 2006.  The sale resulted in the  liquidation  of
Zebulon.  Zebulon is  classified  as an asset held for sale as of March 31, 2006
(see Note 10).

On June 5,  2006,  the  property  and the  related  assets  and  liabilities  of
Northwood were sold to an  unaffiliated  third party  purchaser for  $6,050,000,
resulting in a gain of approximately $2,590,000, which will be recognized on the
Partnership's  Form 10-Q dated  September  30,  2006.  The sale  resulted in the
liquidation  of Northwood.  Northwood is classified as an asset held for sale as
of March 31, 2006 (see Note 10).

On May 31, 2006, C-H Development Group Associates ("Manhattan B") entered into a
purchase and sale  agreement  to sell its  property  and the related  assets and
liabilities  to an  unaffiliated  third party  purchaser for a purchase price of
$2,100,000. The sales documents have been executed and the initial deposit funds
are being held in escrow.  The closing is expected to occur in August  2006.  No
assurance  can be given that the sale will  actually  occur.  As of December 31,
2005,  Manhattan  B had  property  and  equipment,  at  cost,  of  approximately
$3,096,000,  accumulated  depreciation of approximately  $1,891,000 and mortgage
debt of approximately $1,259,000.

On April 20, 2006, Washington entered into a purchase and sale agreement to sell
the property and the related  assets and  liabilities to an  unaffiliated  third
party  purchaser for a purchase price of $60,000.  The sales documents have been
executed and the initial deposit funds are being held in escrow.  The closing is
expected to occur by the end of 2006.  No  assurance  can be given that the sale
will  actually  occur.  As of December  31,  2005,  Washington  had property and
equipment,  at cost, of approximately  $2,926,000,  accumulated  depreciation of
approximately $1,418,000 and mortgage debt of approximately $325,000.

                                       78
<PAGE>

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 Freedom  Associates L.P. and Freedom G.P.
Inc., the general partners of the Partnership,  have 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. In
designing and evaluating our disclosure controls and procedures,  our management
recognized  that any controls and  procedures,  no matter how well  designed and
operated,  can provide only reasonable  assurance of achieving their objectives,
and  our  management   necessarily   applied  its  judgment  in  evaluating  the
cost-benefit  relationship of possible  controls and  procedures.  Based on this
evaluation,  the Chief Executive  Officer and Chief Financial Officer of Freedom
Associates L.P. and Freedom G.P. Inc., the general  partners of the Partnership,
concluded that, as of the period covered by this report, our disclosure controls
and procedures were (1) designed to ensure that material information relating to
us,  including  our  consolidated  subsidiaries,  is  made  known  to the  Chief
Executive  Officer and Chief  Financial  Officer of Freedom  Associates L.P. and
Freedom G.P. Inc.,  the general  partners of the  Partnership,  by others within
those  entities,  particularly  during the period in which this report was being
prepared and (2)  effective,  in that they  provide  reasonable  assurance  that
information  required  to be  disclosed  by us in the  reports we file or submit
under  the  Securities  Exchange  Act is  recorded,  processed,  summarized  and
reported within the time periods specified in the SEC's rules and forms.

(b) CHANGES IN INTERNAL CONTROLS 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

None.

                                       79
<PAGE>

                                    PART III


Item 10. Directors and Executive Officers of the Registrant

The  Partnership  has no  directors  or executive  officers.  The  Partnership's
affairs are managed and  controlled  by the General  Partners.  On November  25,
1997, an affiliate of the Related General Partner purchased 100% of the stock of
the Freedom General Partner.  Prior to such purchase the Freedom General Partner
was an affiliate of Lehman Brothers.  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,  LLC ("CharterMac  Capital")
(formerly known as Related  Capital  Company,  LLC),  which controls the General
Partners, has adopted a code of ethics (see http://www.chartermac.com).

On November 17,  2003,  CharterMac  acquired  CharterMac  Capital,  which is the
parent of RCC Manager LLC, the sole  shareholder  of the general  partner of the
Related  General  Partner.  RCC Manager LLC is also the  Managing  Member of the
Freedom  General  Partner.  Pursuant  to the  acquisition,  CharterMac  acquired
controlling  interests in the General Partners.  Alan P. Hirmes replaced Stephen
M. Ross as Director of the Related  General  Partner and also  replaced  Michael
Brenner as Director of the Freedom General Partner, each 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  Partners'
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  resignation,
which was  effective on November 15, 2005, he also resigned from his position as
Senior Vice President of the general  partner of the Related General Partner and
Executive Vice President of the Freedom General Partner. 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 the  general  partner of the  Related
General Partner and Executive Vice President of the Freedom General Partner.

Certain  information  concerning the directors and executive officers of each of
the General Partners is set forth below.

The Related General Partner
---------------------------

Related Freedom Associates Inc., ("RFAI") is the sole general partner of Related
Freedom Associates L.P.

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

Alan P. Hirmes      Director and President

Marc D. Schnitzer   Senior Vice President

Glenn F. Hopps      Treasurer

ALAN P.  HIRMES,  51, is the  Director  and  President  of the  Related  General
Partner.  Mr.  Hirmes 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 the
Managing  Director of  CharterMac  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  acquisition 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,  LLC 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 of
CharterMac. Mr. Schnitzer also serves on the Board of Trustees of CharterMac.

GLENN F. HOPPS, 43, joined  CharterMac  Capital in December,  1990, and prior to
that date was  employed  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.

The Freedom General Partner
---------------------------

The officers and directors of the Freedom General Partner are as follows:

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

Alan P. Hirmes      Director and President

Marc D. Schnitzer   Executive Vice President

Glenn F. Hopps      Treasurer

Biographical  information with respect to Messrs. Hirmes, Schnitzer and Hopps is
set forth above.

                                       80
<PAGE>

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 Partners for their services. However, under the terms of
the  Partnership  Agreement,  the  General  Partners  and their  affiliates  are
entitled  to receive  compensation  from the  Partnership  in  consideration  of
certain services rendered to the Partnership by such parties.  In addition,  the
General  Partners  collectively  hold a 1% interest in all  profits,  losses and
distributions attributable to operations and a subordinated 15% interest in such
items attributable to sales and refinancings.  Certain directors and officers of
the General  Partners  receive  compensation  from the General Partner and their
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
7 to the Financial  Statements 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 Partners and/or their affiliates is limited
by the terms of the Partnership  Agreement and may not be increased therefrom on
a discretionary basis.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Security Holder Matters
<TABLE>
<CAPTION>
                              Name and address of     Amount and Nature of
     Title of Class           Beneficial Ownership    Beneficial Ownership     Percentage of Class
--------------------------    --------------------    ---------------------    -------------------
<S>                           <C>                        <C>                           <C>
General Partnership           Related Freedom            $1,000 capital                50%
Interest in the Partnership   Associates L.P.            contribution -
                              625 Madison Avenue         directly owned
                              New York, NY 10022

General Partnership           Freedom GP Inc.            $1,000 capital                50%
Interest in the Partnership   625 Madison Avenue         contribution -
                              New York, NY 10022         directly owned
</TABLE>

Freedom SLP L.P., a limited  partnership  whose general partners are the General
Partners of the  Partnership  and which acts as the special  limited  partner of
each  Local  Partnership,  has  either  a .01%  or 1%  interest  in  each  Local
Partnership.

Except as set forth below, no person (other than the Assignor  Limited  Partner)
was  known by the  Partnership  to be the  beneficial  owner of more  than  five
percent of the limited partnership  interests in the Partnership and/or BACs and
neither the General Partners nor any director or officer of the General Partners
owns any Limited Partnership Interests or BACs.
<TABLE>
<CAPTION>
                                                     Amount and Nature of       Percentage
        Name of Beneficial Owner (1)                 Beneficial Ownership        of Class
-------------------------------------------------  ------------------------  -----------------
<S>                                                  <C>                         <C>
Lehigh Tax Credit Partners, Inc.                     8,375.66(2)(3)              11.5%
J. Michael Fried                                     8,375.66(2)(3)(4)           11.5%
Alan P. Hirmes                                       8,375.66(2)(3)(4)           11.5%
Stuart J. Boesky                                     8,375.66(2)(3)(4)           11.5%
Marc D. Schnitzer                                           -                       -
Glenn F. Hopps                                              -                       -
All directors and executive officers of RFAI
  and The Freedom General Partner as a group
  (six persons)                                      8,375.66(2)(3)(4)           11.5%
</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 the  Partnership,  Lehigh Tax Credit
L.L.C.  ("Lehigh") and Lehigh Tax Credit Partners,  Inc. (the "Managing Member")
on  October  24,  1997  with  the  Securities  and  Exchange   Commission   (the
"Commission") and pursuant to a letter agreement dated August 26, 1997 among the
Partnership, Lehigh and Related Freedom Associates L.P. ("RFA") (the "Standstill
Agreement"),  Lehigh  agreed  that,  prior to August 26,  2007 (the  "Standstill
Expiration Date"), it will not and it will cause certain  affiliates  (including
Lehigh Tax Credit Partners II, LLC ("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 Exchange  Act) with  respect to any voting  securities  of the  Partnership,
except  that 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 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  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 also agreed to
vote its BACs in the same  manner as a  majority  of all  voting  BACs  holders;
provided,  however,  Lehigh is entitled to vote its BACs as it  determines  with
regard to any proposal (i) to remove RFA as a general partner of the Partnership
or  (ii)  concerning  the  reduction  of any  fees,  profits,  distributions  or
allocations for the benefit of RFA or its affiliates.

(3) As of May 8, 2006,  Lehigh held  4,192.83  BACs and Lehigh II held  4,182.83
BACs which constitutes approximately 11.5% of the outstanding BACs owned.

                                       81
<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 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  Partners  and  their  affiliates,  as  discussed  in Item 11  which  is
incorporated  herein by reference  thereto.  However,  there have been no direct
financial transactions between the Partnership and the directors and officers of
the General Partners.

Item 14. Principal Accountant Fees and Services

Audit Fees
----------
The aggregate fees by Friedman 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 $67,000 and $59,500, respectively.

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

Tax Fees
--------
The aggregate fees by Weiser LLP and its affiliates  for  professional  services
rendered for the preparation of the Partnership's annual tax returns were $8,700
for each of 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.

                                       82
<PAGE>

                                                      PART IV

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

(a) 1.   Financial Statements
         --------------------
         <S>                                                                                          <C>
         Report of Independent Registered Public Accounting Firm                                      17

         Consolidated Balance Sheets as of March 31, 2006 and 2005                                    60

         Consolidated Statements of Operations for the years ended March 31, 2006, 2005 and           61
           2004

         Consolidated Statements of Changes in Partners' Capital (Deficit) for the years ended
           March 31, 2006, 2005 and 2004                                                              62

         Consolidated Statements of Cash Flows for the years ended March 31, 2006, 2005 and           63
           2004

         Notes to Consolidated Financial Statements                                                   64

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

         Report of Independent Registered Public Accounting Firm                                      89

         Schedule I - Condensed Financial Information of Registrant                                   90

         Schedule III - Real Estate and Accumulated Depreciation                                      93

         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)     The  Partnership's   Amended  and  Restated   Agreement  of  Limited
         Partnership,  incorporated  herein as an  exhibit  by  reference  to
         Exhibit A to the Partnership's  Prospectus,  dated February 9, 1990,
         as supplemented  by supplements  thereto dated December 7, 1990, May
         10, 1991, July 10, 1991 and July 23, 1991 (as so  supplemented,  the
         "Prospectus"),  filed with the Securities and Exchange Commission on
         July 30,  1992,  as part of  Post-Effective  Amendment  No. 6 to the
         Partnership's registration statement on Form S-11, File No. 33-30859
         ("Post-Effective Amendment No. 6")

(3B)     The Partnership's Certificate of Limited Partnership,  as filed with
         Secretary  of State of the State of  Delaware  on August  28,  1989,
         incorporated  herein as an exhibit by  reference  to Exhibit (3C) to
         the  Partnership's  registration  statement  on Form S-11,  File No.
         33-30859,  as filed with the Securities  and Exchange  Commission on
         September 1, 1989 (the "Initial S-11")

(10A)    Form of Subscription Agreement, incorporated herein as an exhibit by
         reference  to  Exhibit  B to the  Prospectus  as  filed  as  part of
         Post-Effective Amendment No. 6

(10B)    Form of Purchase and Sale Agreement  pertaining to the Partnership's
         acquisition of Local Partnership  Interests,  incorporated herein as
         an exhibit by reference to Exhibit (10C) to the Initial S-11

(10C)    Form of Amended and  Restated  Agreement of Limited  Partnership  of
         Local  Partnerships,  incorporated herein as an exhibit by reference
         to  Exhibit   (10D)  to   Pre-Effective   Amendment  No.  1  to  the
         Partnership's   registration   statement  on  Form  S-11,  File  No.
         33-30859,  as filed with the Securities  and Exchange  Commission on
         December 21, 1989

(21)     Subsidiaries of the Registrant                                                               84

(31.1)   Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)                                   87

(32.1)   Certification  Pursuant to Rule  13a-14(b) or Rule 15d-14(b) and Section 1350 of Title       88
         18 of the United States Coded (18 U.S.C. 1350)
</TABLE>

                                       83
<PAGE>

Item 15. Exhibits and Financial Statement Schedules (continued)

                                                                  Jurisdiction
                                                                 of Organization
                                                                 ---------------

(c)     Subsidiaries of the Registrant (Exhibit 21)
        -------------------------------------------

        Twin Trees Apartments                                           UT
        Bennion Park Apartments (Mulberry)                              UT
        Hunters Chase Apartments                                        AL
        Wilshire Park Apartments                                        AL
        Bethel Park Apartments                                          OH
        Zebulon Park Apartments                                         OH
        Tivoli Place Apartments                                         TN
        Northwood Apartments                                            FL
        Oxford Trace Apartments                                         SC
        Ivanhoe Apartments Limited Partnership                          UT
        Washington Brooklyn Limited Partnership                         NY
        C.H. Development Group Associates (Manhattan B)                 NY
        Davidson Court Limited Partnership                              NY
        Magnolia Mews Limited Partnership                               PA
        CLM Equities Limited Partnership (Morris Avenue)                NY
        Victoria Manor Associates                                       CA
        Ogontz Hall Investors                                           PA
        Eagle Ridge Limited Partnership                                 WI
        Nelson Anderson Affordable Housing Limited Partnership          NY
        Conifer Irondequoit Associates (Abraham Lincoln)                NY
        Middletown Associates (Wilson Street)                           PA
        Lauderdale Lakes Associates, Ltd.                               FL
        Flipper Temple Associates Limited Partnership                   GA
        220 Cooper Street Associates Limited Partnership                NJ
        Pecan Creek                                                     OK
        363 Grand Vendome Associates Limited Partnership                NY
        New Augusta Ltd. (Rainer Villas)                                AL
        Pine Shadow Apartments                                          MS
        Windsor Place Apartments                                        AL
        Brookwood Apartments, Ltd.                                      AL
        Heflin Hills Apartments, Ltd.                                   AL
        Shadowood Apts., Ltd.                                           AL
        Brittany Associates, Ltd.                                       MS
        Hidden Valley Apartments                                        AL
        Westbrook Square Limited Partnership                            MS
        Warsaw Elderly Housing Ltd. (Royal Pines Apts.)                 KY
        West Hill Square Apts., Ltd.                                    AL
        Elmwood Associates                                              MS
        Harmony Gate Associates                                         CA


                                       84
<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.


                          FREEDOM TAX CREDIT PLUS L.P.


                                      By:  RELATED FREEDOM ASSOCIATES L.P.
                                           a general partner


                                           By:  RELATED FREEDOM ASSOCIATES INC.,
                                                a general partner

Date:  June 27, 2006
       -------------

                                                By: /s/ Alan P. Hirmes
                                                    ------------------
                                                    Alan P. Hirmes,
                                                    Director and President



                                           By:  FREEDOM GP INC.
                                                a general partner

Date:  June 27, 2006
       -------------
                                                By: /s/ Alan P. Hirmes
                                                    ------------------
                                                    Alan P. Hirmes
                                                    Director and President




<PAGE>


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, the report has been signed below by the following persons on behalf
by the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
    Signature                              Title                                 Date
------------------    ---------------------------------------------------    -------------
<S>                   <C>                                                    <C>
/s/ Alan P. Hirmes    Director and President (Principal Executive and
------------------    Principal Financial Officer) of Related Freedom        June 27, 2006
Alan P. Hirmes        Associates,Inc. and Freedom GP Inc.                    -------------


/s/ Glenn F. Hopps
------------------    Treasurer (Principal Accounting Officer) of Related    June 27, 2006
Glenn F. Hopps        Freedom Associates, Inc.                               -------------
</TABLE>



<PAGE>
                                                                    Exhibit 31.1



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


I, Alan P. Hirmes,  Principal  Executive Officer and Principal Financial Officer
of Related  Freedom  Associates  L.P.  and  Freedom GP Inc.  (collectively,  the
"General  Partners"),  each of which is a general  partner of Freedom Tax Credit
Plus L.P. (the "Partnership"), hereby certify that:

     1.  I have  reviewed  this annual  report on Form 10-K for the period ended
         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 annual report;

     3.  Based on my knowledge, the consolidated financial statements, and other
         financial  information  included in this report,  fairly present in all
         material  respects the  consolidated  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 the General Partners:

         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 27, 2006
                -------------
                                                      By:  /s/ Alan P. Hirmes
                                                           ------------------
                                                           Alan P. Hirmes
                                                           Principal Executive
                                                           Officer and
                                                           Principal  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 Freedom  Tax  Credit  Plus L.P.  (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,  Principal  Executive  Officer  and  Principal
Financial  Officer of Related Freedom  Associates L.P. and Freedom GP Inc., each
of which is 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
    Principal Executive Officer and
    Principal Financial Officer
    June 27, 2006



<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------
                        ON FINANCIAL STATEMENT SCHEDULES
                        --------------------------------



TO THE PARTNERS OF
FREEDOM TAX CREDIT PLUS L.P. AND SUBSIDIARIES


In  connection  with our  audits of the  consolidated  financial  statements  of
FREEDOM  TAX CREDIT  PLUS L.P.  AND  SUBSIDIARIES  included  in the Form 10-K as
presented in our opinion  dated June 23, 2006,  we have also audited  supporting
Schedule I as of March 31, 2006 and 2005 and for the years ended March 31, 2006,
2005 and 2004,  and  Schedule  III as of March 31,  2006 and for the years ended
March 31,  2006,  2005 and 2004.  In our  opinion,  based on our  audits,  these
schedules  present fairly,  when read in conjunction with the related  financial
statements, the financial data required to be set forth therein.






/s/ Friedman LLP
New York, New York
June 23, 2006

                                       89
<PAGE>


                          FREEDOM TAX CREDIT PLUS L.P.
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT



Summarized   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                                            $  2,281,735      $     81,271
Investment in subsidiary partnerships, carried on an equity basis       3,090,682         6,255,312
                                                                     ------------      ------------

Total assets                                                         $  5,372,417      $  6,336,583
                                                                     ============      ============


                        LIABILITIES AND PARTNER'S DEFICIT


Due to general partner and affiliates                                $  9,314,244      $  8,400,538
Accounts payable and other liabilities                                  1,969,046            54,874
                                                                     ------------      ------------
Total liabilities                                                      11,283,290         8,455,412
                                                                     ------------      ------------

Partners' deficit                                                      (5,910,873)       (2,118,829)
                                                                     ------------      ------------

Total liabilities and partners' deficit                              $  5,372,417      $  6,336,583
                                                                     ============      ============
</TABLE>

                                       90
<PAGE>

                                           FREEDOM TAX CREDIT PLUS L.P.
                                                    SCHEDULE I
                                   CONDENSED FINANCIAL INFORMATION OF REGISTRANT



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

Other income                                  $   171,862    $    10,404    $    35,374
                                              -----------    -----------    -----------


Expenses


Equity in losses of subsidiary partnerships     2,651,688      3,163,835      2,813,143
General and administrative                        238,053        115,972         69,472
General and administrative-related parties      1,074,165        950,235        907,723
                                              -----------    -----------    -----------

Total Expenses                                  3,963,906      4,230,042      3,790,338
                                              -----------    -----------    -----------

Net loss                                      $(3,792,044)   $(4,219,638)   $(3,754,964)
                                              ===========    ===========    ===========
</TABLE>

                                       91
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT



                                        CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                  Year Ended March 31,
                                                       -----------------------------------------
                                                           2006           2005           2004
                                                       -----------    -----------    -----------
<S>                                                    <C>            <C>            <C>
Net loss                                               $(3,792,044)   $(4,219,638)   $(3,751,426)
                                                       -----------    -----------    -----------

 Adjustments  to reconcile  net loss to net cash
  provided by (used in) operating activities:

  Equity in losses of subsidiary partnerships            2,651,688      3,163,835      2,809,605

  Loss on sale                                              81,351              0              0

  Increase (decrease) in liabilities:

  Due to general partner and affiliates                    913,706        969,889        900,629

  Deferred revenue from sale of properties               1,888,040              0              0

  Accounts payable and other liabilities                    26,756          9,958           (391)
                                                       -----------    -----------    -----------

  Total adjustments                                      5,561,541      4,143,682      3,709,843
                                                       -----------    -----------    -----------

Net cash provided by (used in) operating activities      1,769,497        (75,956)       (41,583)
                                                       -----------    -----------    -----------

Cash flows from investing activities:

Distributions from subsidiaries                             24,060        138,247         15,544

Contributions from related party sales                     406,907              0              0
                                                       -----------    -----------    -----------

Net cash provided by investing activities                  430,967        138,247         15,544
                                                       -----------    -----------    -----------

Net increase (decrease) in cash and cash equivalents     2,200,464         62,291        (26,039)

Cash and cash equivalents, beginning of year                81,271         18,980         45,019
                                                       -----------    -----------    -----------

Cash and cash equivalents, end of year                 $ 2,281,735    $    81,271    $    18,980
                                                       ===========    ===========    ===========
</TABLE>

                                       92
<PAGE>
                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                 MARCH 31, 2006
<TABLE>
<CAPTION>
                                                          Initial Cost to Partnership
                                                          ---------------------------
                                                                                             Cost        Purchase Price
                                                                                          Capitalized    Adjustments (B)
                                                                        Buildings and    Subsequent to    Buildings and
            Description                  Encumbrances        Land        Improvements     Acquisition      Improvements
-------------------------------------    ------------     -----------   -------------    -------------   ---------------
<S>                                      <C>              <C>            <C>              <C>              <C>
Parkside Townhouses
  York, PA (E)                           $          0     $   263,231    $  4,439,564     $(4,702,795)     $         0
Twin Trees
  Layton, UT (F)                            1,047,306         112,401       2,668,179         243,080          (47,642)
Bennion (Mulberry)
  Taylorsville, UT (F)                      1,994,354         258,000       4,934,447         835,758          (22,842)
Hunters Chase
  Madison, AL (F)                           2,296,266         411,100       5,616,330      (1,350,349)        (713,028)
Bethel Park
  Bethel, OH (F)                            1,758,335         141,320       5,365,882         489,449         (846,229)
Zebulon Park
  Owensville, OH (F)                        1,478,441         165,000       4,187,880         434,527         (542,936)
Tivoli Place
  Murphreesboro, TN (F)                     1,409,208         267,500       4,146,759         410,466         (207,625)
Northwood
  Jacksonville, FL (F)                      2,545,103         494,900       6,630,321         619,169         (294,886)
Oxford Trace
  Aiken, SC (F)                               658,170         162,000       1,725,512        (576,103)        (161,049)
Wilshire
  Huntsville, AL (F)                        1,574,484         178,497       4,014,281        (794,635)        (432,405)
Ivanhoe
  Salt Lake City, UT (E)                      322,986          41,000       1,136,915          33,554                0
Washington Avenue
  Brooklyn, NY                                325,000          42,485       2,843,351          73,904                0
C.H. Development (Manhattan B)
  New York, NY                              1,258,929               3       3,294,688        (164,887)               0
Davidson Court
  Staten Island, NY (E)                             0          96,892         773,052          37,064                0
Magnolia Mews
  Philadelphia, PA                          1,520,971         200,000         668,007       2,419,836                0
Oaks Village
  Whiteville, NC (E)                                0          63,548       1,799,849      (1,863,397)               0
Greenfield Village
  Dunn, NC (E)                                      0          78,296       1,806,126      (1,884,422)               0
Morris Avenue (CLM Equities)
  Bronx, NY (E)                             2,079,467               2       4,767,049         598,304                0
Victoria Manor
  Riverside, CA                             2,036,689         615,000       5,340,962        (153,198)               0
Ogontz Hallz
  Philadelphia, PA                          2,175,375               0         328,846       3,454,664                0
Eagle Ridge
  Stoughton, WI (F)                         1,496,198         321,594       2,627,385         184,877                0
Nelson Anderson
  Bronx, NY (E)                             3,162,790               2       6,524,096         241,687                0
Conifer Irondequoit (Abraham Lincoln)
  Irondequoit, NY                           2,657,591          20,000       5,407,108          96,415                0
Wilson Street Apts. (Middletown)
  Middletown, PA                            1,673,496          38,449               0       3,461,004                0
Lauderdale Lakes
  Lauderdale Lakes, FL (F)                  4,645,253         873,973       3,976,744       5,817,148                0
Flipper Temple
  Atlanta, GA                               2,461,135          70,519       4,907,110         699,720                0
220 Cooper Street
  Camden, NJ                                  922,071          41,000               0       3,686,468                0
<CAPTION>
                                         Gross Amount at which Carried at Close of Period
                                         ------------------------------------------------

                                                          Buildings and
            Description                        Land       Improvements       Total(A)
-------------------------------------       -----------   -------------    ------------
<S>                                         <C>            <C>             <C>
Parkside Townhouses
  York, PA (E)                              $         0    $          0    $          0
Twin Trees
  Layton, UT (F)                                115,125       2,860,882       2,976,007
Bennion (Mulberry)
  Taylorsville, UT (F)                          260,565       5,744,798       6,005,363
Hunters Chase
  Madison, AL (F)                               413,665       3,550,388       3,964,053
Bethel Park
  Bethel, OH (F)                                143,885       5,006,537       5,150,422
Zebulon Park
  Owensville, OH (F)                            167,565       4,076,906       4,244,471
Tivoli Place
  Murphreesboro, TN (F)                         270,065       4,347,035       4,617,100
Northwood
  Jacksonville, FL (F)                          497,465       6,952,039       7,449,504
Oxford Trace
  Aiken, SC (F)                                 164,564         985,796       1,150,360
Wilshire
  Huntsville, AL (F)                            181,060       2,784,678       2,965,738
Ivanhoe
  Salt Lake City, UT (E)                         41,000       1,136,929       1,177,929
Washington Avenue
  Brooklyn, NY                                   44,162       2,915,578       2,959,740
C.H. Development (Manhattan B)
  New York, NY                                    1,680       3,128,124       3,129,804
Davidson Court
  Staten Island, NY (E)                          96,892         776,576         873,468
Magnolia Mews
  Philadelphia, PA                              201,677       3,086,166       3,287,843
Oaks Village
  Whiteville, NC (E)                                  0               0               0
Greenfield Village
  Dunn, NC (E)                                        0               0               0
Morris Avenue (CLM Equities)
  Bronx, NY (E)                                       2       5,331,827       5,331,829
Victoria Manor
  Riverside, CA                                 616,677       5,186,101       5,802,778
Ogontz Hallz
  Philadelphia, PA                                1,677       3,781,833       3,783,510
Eagle Ridge
  Stoughton, WI (F)                             323,271       2,810,585       3,133,856
Nelson Anderson
  Bronx, NY (E)                                       2       6,732,243       6,732,245
Conifer Irondequoit (Abraham Lincoln)
  Irondequoit, NY                                21,677       5,501,846       5,523,523
Wilson Street Apts. (Middletown)
  Middletown, PA                                 40,126       3,459,327       3,499,453
Lauderdale Lakes
  Lauderdale Lakes, FL (F)                      875,668       9,792,197      10,667,865
Flipper Temple
  Atlanta, GA                                    72,196       5,605,153       5,677,349
220 Cooper Street
  Camden, NJ                                     42,677       3,684,791       3,727,468
<CAPTION>
                                                                                           Life on which
                                                                                          Depreciation in
                                                           Year of                         Latest Income
                                         Accumulated     Construction/        Date        Statements are
            Description                  Depreciation     Renovation        Acquired      Computed (C)(D)
-------------------------------------    ------------    -------------     ----------     ---------------
<S>                                      <C>                 <C>           <C>                 <C>
Parkside Townhouses
  York, PA (E)                           $          0        1989          Sept. 1990          27.5
Twin Trees
  Layton, UT (F)                            1,670,018        1989           Oct. 1990          27.5
Bennion (Mulberry)
  Taylorsville, UT (F)                      3,429,931        1989           Oct. 1990          27.5
Hunters Chase
  Madison, AL (F)                           2,630,451        1989           Oct. 1990          27.5
Bethel Park
  Bethel, OH (F)                            3,096,268        1989           Oct. 1990          27.5
Zebulon Park
  Owensville, OH (F)                        2,472,462        1989           Oct. 1990          27.5
Tivoli Place
  Murphreesboro, TN (F)                     2,602,979        1989           Oct. 1990          27.5
Northwood
  Jacksonville, FL (F)                      4,128,107        1989           Oct. 1990          27.5
Oxford Trace
  Aiken, SC (F)                               845,584        1989           Oct. 1990          27.5
Wilshire
  Huntsville, AL (F)                        1,858,592        1989           Oct. 1990          27.5
Ivanhoe
  Salt Lake City, UT (E)                      587,149        1991           Jan. 1991          27.5
Washington Avenue
  Brooklyn, NY                              1,430,328        1991           Jan. 1991          27.5
C.H. Development (Manhattan B)
  New York, NY                              1,903,691        1991           Jan. 1991          27.5
Davidson Court
  Staten Island, NY (E)                       350,026        1991           Mar. 1991          27.5
Magnolia Mews
  Philadelphia, PA                          1,548,578        1991           Mar. 1991          27.5
Oaks Village
  Whiteville, NC (E)                                0        1991           Mar. 1991          27.5
Greenfield Village
  Dunn, NC (E)                                      0        1991           Mar. 1991          27.5
Morris Avenue (CLM Equities)
  Bronx, NY (E)                             2,646,157        1991           Apr. 1991          27.5
Victoria Manor
  Riverside, CA                             2,708,585        1991           Apr. 1991          27.5
Ogontz Hallz
  Philadelphia, PA                          1,921,846        1990           Apr. 1991          27.5
Eagle Ridge
  Stoughton, WI (F)                         1,849,562        1991            May 1991          27.5
Nelson Anderson
  Bronx, NY (E)                             3,410,644        1991           June 1991          27.5
Conifer Irondequoit (Abraham Lincoln)
  Irondequoit, NY                           2,921,631        1991          Sept. 1991          27.5
Wilson Street Apts. (Middletown)
  Middletown, PA                            1,547,388        1991          Sept. 1991          27.5
Lauderdale Lakes
  Lauderdale Lakes, FL (F)                  3,596,435        1991           Oct. 1991          40
Flipper Temple
  Atlanta, GA                               2,456,397        1991           Oct. 1991          27.5
220 Cooper Street
  Camden, NJ                                1,890,441        1991           Dec. 1991          27.5
</TABLE>

                                       93
<PAGE>

                          FREEDOM TAX CREDIT PLUS L.P.
                          AND CONSOLIDATED PARTNERSHIPS
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                 MARCH 31, 2006
                                   (continued)
<TABLE>
<CAPTION>
                                                          Initial Cost to Partnership
                                                          ---------------------------
                                                                                             Cost        Purchase Price
                                                                                          Capitalized    Adjustments (B)
                                                                        Buildings and    Subsequent to    Buildings and
            Description                  Encumbrances        Land        Improvements     Acquisition      Improvements
-------------------------------------    ------------     -----------   -------------    -------------   ---------------
<S>                                      <C>              <C>            <C>              <C>              <C>
Vendome
  Brooklyn, NY                              2,559,658          12,000       4,867,584         220,536                0
Pecan Creek
  Tulsa, OK                                   984,135          50,000       1,484,923         233,586                0
New Augusta Ltd. (Rainer Villas)
  New Augusta, AL                             699,647          15,000         939,681         122,997                0
Pine Shadow Apts
  Waveland, MS                              1,610,199          74,550       2,117,989         208,141                0
Windsor Place Apts
  Wedowee, AL                                 750,086          40,000         904,888          63,308                0
Brookwood Apts
  Foley, AL                                 1,240,142          68,675       1,517,190          91,937                0
Heflin Hills Apts
  Heflin, AL                                  727,761          50,000         841,300          55,259                0
Shadowood Apts
  Stevenson, AL                               729,901          27,000         898,800          22,347                0
Brittany Apartments
  DeKalb, MS                                  675,393          20,000         843,592          66,202                0
Hidden Valley Apts
  Brewton, AL                               1,192,119          68,000       1,637,840         100,388                0
Westbrook Square L.P.
  Carthage, MS                              1,007,555          40,000       1,254,957          69,751                0
Warsaw Elderly Housing Ltd.
  Warsaw, KY                                1,114,843          98,819       1,333,606          21,772                0
West Hill Square Apts. Ltd.
  Gordo, AL                                   752,975          60,000         954,020          46,245                0
Elmwood Assoc
  Picayune, MS                                694,878          81,500         829,183          66,416                0
Harmony Gate Assoc
  Los Angeles, CA                           3,626,851               0       9,757,807         181,291                0

Less discontinued operations              (26,468,361)     (3,929,256)    (67,140,371)      1,223,177        3,268,642
                                         ------------     -----------    ------------     -----------      -----------

                                         $ 33,397,400     $ 1,733,000    $ 52,973,432     $15,140,661      $         0
                                         ============     ===========    ============     ===========      ===========

<CAPTION>
                                         Gross Amount at which Carried at Close of Period
                                         ------------------------------------------------


                                                          Buildings and                    Accumulated
            Description                        Land       Improvements       Total(A)      Depreciation
-------------------------------------       -----------   -------------    ------------    ------------
<S>                                         <C>            <C>             <C>             <C>
Vendome
  Brooklyn, NY                                   13,677       5,086,443       5,100,120       3,435,493
Pecan Creek
  Tulsa, OK                                      50,161       1,718,348       1,768,509         748,773
New Augusta Ltd. (Rainer Villas)
  New Augusta, AL                                15,161       1,062,517       1,077,678         406,116
Pine Shadow Apts
  Waveland, MS                                   74,711       2,325,969       2,400,680       1,077,865
Windsor Place Apts
  Wedowee, AL                                    40,161         968,035       1,008,196         382,680
Brookwood Apts
  Foley, AL                                      68,836       1,608,966       1,677,802         638,323
Heflin Hills Apts
  Heflin, AL                                     50,161         896,398         946,559         374,952
Shadowood Apts
  Stevenson, AL                                  27,161         920,986         948,147         362,778
Brittany Apartments
  DeKalb, MS                                     20,161         909,633         929,794         351,838
Hidden Valley Apts
  Brewton, AL                                    68,161       1,738,067       1,806,228         690,821
Westbrook Square L.P.
  Carthage, MS                                   40,161       1,324,547       1,364,708         522,868
Warsaw Elderly Housing Ltd.
  Warsaw, KY                                     98,980       1,355,217       1,454,197         505,631
West Hill Square Apts. Ltd.
  Gordo, AL                                      60,161       1,000,104       1,060,265         387,632
Elmwood Assoc
  Picayune, MS                                   81,661         895,438         977,099         329,733
Harmony Gate Assoc
  Los Angeles, CA                                   161       9,938,937       9,939,098       4,839,913

Less discontinued operations                 (3,550,953)    (62,892,712)    (66,443,665)    (35,174,307)
                                            -----------    ------------    ------------    ------------

                                            $ 1,751,865    $ 68,095,228    $ 69,847,093    $ 33,384,359
                                            ===========    ============    ============    ============
<CAPTION>

                                                                             Life on which
                                                                            Depreciation in
                                             Year of                         Latest Income
                                           Construction/        Date        Statements are
            Description                     Renovation        Acquired      Computed (C)(D)
-------------------------------------      -------------     ----------     ---------------
<S>                                            <C>           <C>                 <C>
Vendome
  Brooklyn, NY                                 1991           Dec. 1991          20
Pecan Creek
  Tulsa, OK                                    1991           Dec. 1991          27.5
New Augusta Ltd. (Rainer Villas)
  New Augusta, AL                              1991           Dec. 1991          27.5
Pine Shadow Apts
  Waveland, MS                                 1991           Dec. 1991          27.5
Windsor Place Apts
  Wedowee, AL                                  1991           Dec. 1991          27.5
Brookwood Apts
  Foley, AL                                    1991           Dec. 1991          27.5
Heflin Hills Apts
  Heflin, AL                                   1991           Dec. 1991          27.5
Shadowood Apts
  Stevenson, AL                                1991           Dec. 1991          27.5
Brittany Apartments
  DeKalb, MS                                   1990           Dec. 1991          27.5
Hidden Valley Apts
  Brewton, AL                                  1991           Dec. 1991          27.5
Westbrook Square L.P.
  Carthage, MS                                 1990           Dec. 1991          27.5
Warsaw Elderly Housing Ltd.
  Warsaw, KY                                   1991           Dec. 1991          27.5
West Hill Square Apts. Ltd.
  Gordo, AL                                    1991           Dec. 1991          27.5
Elmwood Assoc
  Picayune, MS                                 1991           Dec. 1991          27.5
Harmony Gate Assoc
  Los Angeles, CA                              1992           Jan. 1992          27.5
</TABLE>

(A)  Aggregate cost for federal income tax purposes, $146,576,191.
(B)  Rental guarantees and development  deficit guarantees for GAAP purposes are
     treated as a reduction of the asset.
(C)  Furniture and  fixtures,  included with  buildings  and  improvements,  are
     depreciated primarily by the straight line method over the estimated useful
     lives ranging from 5 to 7 years.
(D)  Since all properties were acquired as operating properties, depreciation is
     computed using primarily the straight line method over the estimated useful
     lives determined by the Partnership from date of acquisition.
(E)  The Partnership's  limited partnership  interest was sold during the fiscal
     year ended March 31, 2006.
(F)  These properties are included in discontinued operations for the year ended
     March  31,  2006.  See  Note  12  in  Item  8,  Financial   Statements  and
     Supplementary Data.
(G)  Reconciliation of Real Estate owned:
<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 year   $ 144,777,331    $ 144,210,167    $ 143,202,053    $  68,560,673    $  63,733,516    $  58,927,642
Additions during year:
Improvements                         741,465          749,123        1,017,659
Discontinued operations and
dispositions                     (75,671,703)        (181,959)          (9,545)     (39,899,656)            (706)          (5,513)
Depreciation expense                                                                  4,723,342        4,827,863        4,811,387
                               -------------    -------------    -------------    -------------    -------------    -------------

Balance at close of year       $  69,847,093    $ 144,777,331    $ 144,210,167    $  33,384,359    $  68,560,673    $  63,733,516
                               =============    =============    =============    =============    =============    =============
</TABLE>

At the time the local  partnerships  were  acquired  by Freedom  Tax Credit Plus
L.P., the entire  purchase price paid by Freedom Tax Credit Plus L.P. 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.

                                       94