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

                                   FORM 10-K
   (Mark One)

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

          For the fiscal year ended       December 31, 1997

                                        OR

          TRANSITION REPORT PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

          For the transition period from                  to                  
          Commission file number                0-19244              

                          Krupp Government Income Trust
              (Exact name of registrant as specified in its charter)
          Massachusetts                                   04-3089272
   (State or other jurisdiction of                           (IRS Employer
   incorporation or organization)                      Identification No.)

   470 Atlantic Avenue, Boston, Massachusetts                        02210
   (Address of principal executive offices)                   (Zip Code)

   (Registrant's telephone number, including area code) (617)423-2233 

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

          Title                         Name of Exchange on which Registered
   Shares of Beneficial Interest                       None

   Securities registered pursuant to Section 12(g) of the Act:  None
   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 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. [ ].

   Aggregate  market value of voting  securities held by  non-affiliates:  Not
   applicable.

   Documents incorporated by reference: see Part IV, Item 14
<PAGE>






   The exhibit index is located on pages 10-20.
<PAGE>






                                     PART I

   This Form  10-K contains forward-looking statements  within the meaning of
   Section  27A  of  the Securities  Act  of  1933 and  Section  21E  of  the
   Securities Exchange Act  of 1934.  Actual results could  differ materially
   from those  projected in the forward-looking  statements as a  result of a
   number of factors, including those identified herein.

   ITEM 1.  BUSINESS

Krupp Government Income  Trust (the "Trust") was  formed on November 1,
1989    by  filing   a  Declaration  of  Trust  in  the  Commonwealth   of
Massachusetts.   The Trust is  authorized to sell and issue  not more than
17,510,000 shares of beneficial interest ("the Shares").  The Trust raised
approximately  $300  million  through  a  public  offering  of  Shares  of
beneficial  interest  and  used  the  proceeds  available  for  investment
primarily   to   acquire   participating   insured   mortgages   ("PIMs"),
participating insured mortgage  investments ("PIMIs"), and mortgage-backed
securities  ("MBS").  The Trust considers itself to be engaged in only one
industry segment, investment  in mortgages.  The  Trust has elected  to be
treated  as a  real estate  investment trust  ( REIT ) under  the Internal
Revenue Code of 1986,  as amended.  The Trust shall terminate  on December
31,  2029, unless earlier terminated by the affirmative vote of holders of
a majority of the outstanding Shares entitled to vote thereon.

The Trust's investments  in PIMs on multi-family residential properties
consist of  1)  a MBS  or  an  insured mortgage  loan  (collectively,  the
"insured  mortgage") guaranteed  or  insured as  to  principal  and  basic
interest  and 2)  a participating  mortgage.   The insured  mortgages were
issued or originated under or in connection  with the housing programs  of
the  Federal  National  Mortgage  Association   ("FNMA"),  the  Government
National  Mortgage   Association   ("GNMA"),  or   the   Federal   Housing
Administration  ("FHA") under the  authority of the Department  of Housing
and  Urban  Development  ("HUD").   PIMs provide  the  Trust  with monthly
payments of principal  and basic interest and  may also provide for  Trust
participation in the current revenue stream and in residual value, if any,
from a sale or other realization of the underlying property.  The borrower
conveys these rights  to the Trust through a subordinated  promissory note
and  mortgage.    The  participation  features  are  neither  insured  nor
guaranteed.

The  PIMIs  consist  of 1)  an  insured  mortgage  issued  by  GNMA  or
originated under  the lending  program of the FHA,  2) an  additional loan
("Additional Loan") to the borrower or owners of the borrower in excess of
mortgage amounts insured under  GNMA or  FHA programs  that increases  the
Trust's   total  financing  with   respect  to   that  property   and  its
participation interests and 3) a participating mortgage.  Additional Loans
associated with  an insured  mortgage issued  or originated  in connection
with  HUD  insured  programs  cannot,  under  government  regulations,  be
collateralized by a mortgage on the underlying property.  These Additional
Loans  are typically collateralized by a security interest satisfactory to
Berkshire  Mortgage Advisors  Limited  Partnership ("the  Advisor").   The
Additional Loans  are neither  insured nor guaranteed.   In addition,  the
participation features  related to the  participating mortgage are neither
insured nor guaranteed.   Additional Loans  provide the  Trust with  semi-
annual interest payments and may provide additional interest in the future
while the  participating mortgage provides for  Trust participation in the
net income and residual value, if any, of the underlying property.


                                        3
<PAGE>






The  Trust also  acquired MBS  collateralized by  single-family mortgage
loans issued  or originated by GNMA,  FNMA, the Federal Home  Loan Mortgage
Corporation ("FHLMC") or  FHA.  FNMA and FHLMC guarantee  the principal and
asic interest of  the FNMA and FHLMC  MBS, respectively.  GNMA  guarantees
the timely  payment of principal and  interest on its MBS,  and HUD insures
the pooled mortgage loans underlying the GNMA MBS and FHA mortgage loans.
Prior  to  December  14,  1997  the  Trust  could  reinvest  or commit  for
reinvestment principal proceeds  or other realization  of the mortgages  in
new mortgages.   However, the  Trust will distribute  any and all  proceeds
from prepayments  or other,  realizations of  mortgage assets  to investors
either through quarterly dividends or possibly special dividends.

Although the Trust  will terminate no later than December  31, 2029, the
value of the PIMs and PIMIs may be  realized by the Trust through repayment
or  sale as  early  as ten  years from  the dates  of  the closings  of the
permanent loans, and  the Trust may realize  the value of all  of its other
investments within that  time frame thereby resulting  in a dissolution  of
the Trust significantly prior to December 31, 2029.

The Trust's  investments  are not  expected to  be  subject to  seasonal
fluctuations, although net income may vary somewhat from quarter to 
quarterbased upon the participation features of its investments.  The 
requirements for compliance with federal, state and local  regulations to date 
have not adversely affected  the Trust's operations,  and the  Trust 
anticipates  no adverse effect in the future.

To qualify as a real estate investment trust ("REIT") for federal income
tax purposes, the  Trust made a  valid election to  be so treated  and must
continue  to satisfy  a range  of complex  requirements  including criteria
related to its  ownership structure, the nature of  its assets, the sources
of its income and  the amount of its dividends to  shareholders.  The Trust
intends to  qualify as a REIT  in each year of  operation, however, certain
factors may have an adverse effect on the Trust's REIT status.  If  for any
taxable year, the Trustees and the Advisor determine that any of the asset,
income, or distribution tests are not likely to be satisfied, the Trust may
be required to  borrow money, dispose of mortgages or  take other action to
avoid loss of REIT status.

Additionally, if  the Trust does not  qualify as a REIT  for any taxable
year, it will be subject to federal income tax as if it were  a corporation
and the  shareholders will be taxed  as shareholders of a  corporation.  If
the Trust were taxed as a corporation, the payment of such tax by the Trust
would substantially  reduce   the  funds   available  for   dividends  to
shareholders  or for  reinvestment. To the  extent that  dividends had been
made in  anticipation of  the Trust's  qualification as  a REIT, the  Trust
might be required to borrow additional funds or to liquidate certain of its
investments  in order  to pay  the applicable  tax.   Moreover, should  the

Trust's  election  to be  taxed  as  a REIT  be  terminated  or voluntarily
revoked, the Trust may not be able to elect to be treated as a REIT for the
following five-year period.

As of December 31,  1997, there were  no personnel directly employed  by
the Trust.

   ITEM 2.  PROPERTIES

      None.

   ITEM 3.  LEGAL PROCEEDINGS

                                        4
<PAGE>






There are no material pending legal proceedings to which the  Trust is a
party or to which any of its investments are subject to.


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

      None.




                                     PART II


ITEM 5.  MARKET FOR  THE REGISTRANT'S COMMON  STOCK AND RELATED  STOCKHOLDER
         MATTERS

   There currently is no established public trading market for the Shares.

    The  number of  investors  holding Shares  as of  December  31, 1997  is
   approximately 13,200.

  The Trust has and intends to continue declaring and paying dividends  on
 a quarterly  basis.  The Trustees established a dividend rate per Share per
 quarter of $.325 for 1997 and 1996.


   ITEM 6.  SELECTED FINANCIAL DATA

The following table sets  forth selected financial information regarding
the Trust's financial  position and  operating results.   This  information
should  be read in conjunction with Management's Discussion and Analysis of
Financial  Condition and Results of Operations and the Financial Statements
and  Supplementary Data, which are included in  Item 7 and Item 8 (Appendix
   A) of this report, respectively.

<TABLE>
<CAPTION>
              (Amounts in thousands, except for per Share amounts)
                        1997          1996        1995      1994       1993

   <S>                <C>        <C>       <C>        <C>          <C>
   Total revenues     $ 17,618   $ 16,358  $ 17,200   $ 16,846     $ 18,046

   Net income         $ 12,899   $ 12,481  $ 13,022   $ 12,599     $ 13,869

   Net income 
           per Share  $    .86   $    .83  $    .87   $    .84     $    .92

   Weighted average Shares     
    outstanding         15,053     15,053    15,053     15,053       15,053

   Total assets at 
    December 31       $221,779   $241,634  $247,620   $251,333     $256,565


   Average dividends 
    per Share         $   2.22   $   1.30   $   1.30  $   1.30     $   1.70

</TABLE>

page


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

   Management s discussion and analysis of  financial condition and results of
   operations  contains  forward-looking  statements  within  the  meaning  of
   Section 27A of the Securities Act of 1933 and Section 21E of the Securities
   Exchange  Act of 1934.   Actual results could  differ materially from those
   projected  in the  forward-looking statements  as a  result of a  number of
   factors, including those identified herein.

   Liquidity and Capital Resources

              At December  31,  1997,  the  Trust  has  significant  liquidity
   consisting of cash and cash equivalents,  of approximately  $10  million as
   well  as  the cash  inflows provided  by PIMs,  PIMIs,  MBS, cash  and cash
   equivalents.  The Trust anticipates that these sources will  be adequate to
   provide  the  Trust with  sufficient  liquidity  to meet  its  obligations,
   including providing dividends to its investors.
              The  most  significant  demand  on  the  Trust's  liquidity  are
   dividends paid to  investors which currently approximate $19.6  million per
   year ($4.9  million per quarter).   For 1997, the Trust  declared an annual
   dividend of  $1.30 per share, paid  in quarterly installments of  $.325 per
   share  and a  one  time special  dividend of  $.92  per share.   Funds  for
   dividends come from interest  income received on PIMs, PIMIs, MBS  and cash
   and  cash  equivalents  net  of   operating  expenses,  and  the  principal
   collections  and prepayments received on PIMs,  PIMIs and MBS.  The portion
   of  dividends  funded  from   principal  collections  reduces  the  capital
   resources of  the Trust.  As  the capital resources of  the Trust decrease,
   the total  cash flows to the Trust will also  decrease which will result in
   periodic adjustments to the dividends paid to the investors.

              The  Trust's  investments  in  PIMs and  PIMIs,  in  addition to
 providing guaranteed  or insured  monthly principal and  interest payments,
 may provide the Trust  with additional income through participation  in the
 cash generated by the operations of the underlying properties and a 
portionof the appreciation realized upon the sale or refinancing of the 
underlying properties.   The Trust's participation interests and the interest 
payments on  the  Additional Loan  portion  of the  PIMIs  are  neither insured
nor guaranteed, and will depend primarily  on the successful  operation of the
underlying  properties.   Seven  of  the  Trust's eight  PIMIs  funded  the
construction  of  multi-family  housing,  which  require  time  to  achieve
stabilized operations following completion  of construction.  With  this in
mind, the Trust  required the borrowers to  establish reserves and  escrows
with Additional Loan proceeds to provide funds for the Additional Loan base
interest payments  during the construction and lease-up  periods.  As these
reserves become depleted, full payment of the Additional Loan base interest
will depend  primarily  on whether  the  underlying property  can  generate
sufficient operating cash flow.  As of December 31, 1997, Mountain View and
Red Run  have sufficient escrows to make  the required Additional Loan base
interest payments  in 1998 if necessary.   Management is closely monitoring
the  operating  performances  of  the remaining  properties.  Overall,  the
Trust's  ability  to meet  its  objectives  will  depend primarily  on  the
operating performance of the properties underlying the PIMs and PIMIs. 

  Many of the properties had stable operating results during 1997.
High occupancy  rates  were  maintained  and  rental  rate  increases  were

                                        6
<PAGE>



achieved at  more  than half  the  properties due  to stable  or  improving
markets or the unique character  of the specific property.  As a  result of
strong operating  performances during 1997,  the Advisor  expects that  two
properties   will  generate   sufficient   operating  cash   flow  to   pay
participation  interest to  the Trust  during 1998:  Lincoln Green  and The
Seasons.  During  1997, the Trust received participation  interest based on
1996 operating results  from three properties.   Two properties with  PIM s
held  by the Trust paid participation interest: Lincoln Green paid $102,233
and Riverview paid $4,466.  One property with a PIMI held by the Trust paid
participation  interest  beyond  the   base  interest  requirement  on  the
additional loan: The Seasons paid $32,622.

 Most of  the  other properties  underlying  the PIMs  and  PIMIs
generate sufficient  operating revenues  to adequately maintain  the assetsand 
pay  principal and interest on  the insured first mortgage  and, in the
case of the PIMIs, the base interest on  the Additional Loan.  However, the
operating results of  four of the construction  properties with PIMIs  have
been  inadequate to  fully  cover  debt  service  requirements.    Red  Run
experienced a  slow initial lease-up and has relied on reserve funds to pay
the base interest on its Additional Loan.   Lifestyles Apartments, Windward
Lakes  Apartments and  Coconut Palm  Apartments all  have been  affected by
strong competition  from newly  built apartment communities  and affordable
single-family homes in markets where the ability to raise rents is limited.
Lifestyles operating  performance began deteriorating  in early 1996.   The
borrower of  the  Lifestyles  PIMI  requested  debt  service relief.    The
Advisor and the  borrower finalized a workout agreement  that included a 1%
per annum  reduction in  the interest  paid  monthly on  the insured  first
mortgage for a 24-month period which ended in December 1997.  The agreement
also  specified that  the Additional  Loan base  interest payments  will be
based on  surplus cash  and extended  the prepayment  lockout date by  five
years.  The borrower contributed $150,000 to fund operating deficits of the
property and agreed to fund future operating deficits of the property up to
a maximum of $50,000 per year if deemed necessary by the Advisor, which has
occurred.   In addition to the workout s  financial attributes, the Advisor
also required a change in the property s on-site management.  Since the new
company assumed  responsibility for  day-to-day operations,  the property s
occupancy has improved and more closely reflects typical market conditions.
However,  the market  is still  absorbing new  product, and  many competing
properties offer  concessions as rental  incentives.   The Advisor  expects
that additional  debt  service relief  may be  necessary  until the  rental
market  is  less  volatile.   Windward  Lakes   operating performance  also
deteriorated during  1996 when the  property was the  scene of a  number of
burglary  incidents  which  affected  occupancy.   The  drop  in  occupancy
exacerbated the  operating deficits the property  was already experiencing,
leading the  borrower to seek debt  service relief from the  Trust.  During
the first quarter of 1997, the Advisor  agreed to a workout that includes a
reduction in the interest paid on the insured mortgage of 2% per  annum fora 
12 month period  and then  1%  per annum  for a  36 month  period.   The
agreement also specifies the Additional Loan base interest payments will be
based on surplus cash.   In addition, the borrower contributed  $133,000 of
new equity.  Since the workout was finalized, Windward Lakes  occupancy has
fluctuated with  increasing market  competitiveness fueled by  the building
boom in  south Florida.  Occupancy  at Coconut Palm Apartments,  located in
the  same regional  market  as  Windward  Lakes, also  has  been  adversely
affected by highly  competitive market conditions.  Operating  deficits and
base interest  payments have been  funded with reserves established  with a
portion  of the Additional Loan proceeds.   However, the reserves have been
drawn down and will be inadequate to cover 1998 requirements.  The borrower
is  attempting to secure additional equity to  bring into the deal, and the
Advisor  expects  to negotiate  loan  restructure  that will  provide  some
interim  debt service  relief to  improve the  property s economic  outlook
                                        7
<PAGE>

until the market  stabilizes.  Management will continue  to closely monitor
the operations of all of these properties.

  Whether  the  operating performance  at  any  of the  properties
 mentioned  above improves  enough to  provide sufficient  cash flow  to pay
Additional Loan interest will  depend on factors that the  Trust has little
or no control over.  Should the properties be unable to generate sufficientcash 
 flow to pay their Additional Loan  base interest, it would reduce the
Trust's  distributable  cash  flow  and  could  affect  the  value  of  the
Additional Loan collateral.

During  the   first  quarter  of  1997,  the  Trust  received  a
prepayment  of  the  Timber Ridge  Apartments  PIMI.    The Trust  received
$1,540,000 to repay the additional loan, $1,246,159 representing additional
interest which  includes prepayment penalties  and $5,630,985 to  repay the
outstanding first mortgage principal balance.

 During the third quarter,  the Trust made a special  dividend of
$.92 per share to its  investors.  This special dividends consisted  of the
1996 Canyon  Ridge  PIM prepayment  and the  1997  Timber Ridge  prepayment
proceeds,  net of  the  reinvestment  in a  $3,400,000  face value  insured
multifamily mortgage.

For the first five years of the PIMs and PIMIs the borrowers areprohibited from
repaying.  For  the second  five years,  the borrower  can
repay the  loans incurring  a  prepayment penalty  for PIMs  or paying  all
amounts  due under the PIMIs and  satisfying the required preferred return.
The  Trust  has the  option  to  call certain  PIMs  and all  the  PIMIs by
accelerating their maturity, if the loans are not prepaid by the tenth year
after permanent funding.  The Trust will determine the merits of exercising
the call option for each PIM or PIMI as economic  conditions warrant.  Such
factors as the  condition of the asset,  local market conditions,  interest
rates and available financing will have an impact on this decision.




   Assessment of Credit Risk

 The Trust's  investments in mortgages are  guaranteed or insured
by FNMA,  FHLMC, GNMA  and HUD  and therefore the  certainty of  their cash
flows and the risk of material loss of the amounts invested depends  on the
creditworthiness of these entities.

FNMA  is   a  federally   chartered  private   corporation  that
guarantees obligations originated under its programs.  FHLMC is a federally
chartered  corporation  that guarantees  obligations  originated  under its
programs and  is wholly-owned by the twelve Federal Home Loan Banks.  These
obligations are not  guaranteed by the U.S. Government  or the Federal Home
Loan Bank Board.  GNMA guarantees  the full and timely payment of principal
and basic interest  on the securities it issues,  which represents interest
in pooled mortgages insured by HUD.  Obligations insured by  HUD, an agency
of the U.S. Government, are backed by the full faith and credit of the U.S.
Government.

 The  Trust's  Additional  Loans  have  similar  risks  as  those
associated with higher  risk debt instruments, including:   reliance on the
owner's  operating skills,  ability to  maintain occupancy  levels, control
operating expenses,  maintain the properties and  obtain adequate insurance
coverage;  adverse changes  in general  economic conditions,  adverse local

                                        8
<PAGE>




conditions,  and changes  in governmental  regulations, real  estate zoning
laws, or  tax laws; and other  circumstances over which the  Trust may have
little or no control.

   Operations

 The following discussion  relates to the operations of the Trust
 during  the years  ended December  31, 1997,  1996 and  1995.   Dollars are
 stated in thousands, except for per Share amounts.

<TABLE>

<CAPTION>

                                                      Year Ended  December 31,               

                                            1997               1996              1995      
            Per                                    Per               Per
                                      Amount      Share  Amount     Share   Amount    Share
            <S>
            Interest income on PIMs
             and PIMIs:
             <S>                      <C>        <C>     <C>        <C>     <C>       <C>
             Base Interest            $12,181    $ .81   $12,808    $ .86   $13,690   $ .91
             Additional loan interest     794      .05       -         -        -        -
             Participation income       1,385      .09       359      .02       372     .02
            Interest income on MBS      2,199      .15     2,306      .15     2,608     .17
            Interest income on cash
             and cash equivalents       1,059      .07       886      .06       531     .04
            Trust expenses             (2,313)    (.15)   (2,264)    (.15)   (2,496)   (.17)
            Amortization of prepaid
             fees, expenses and
             organization costs        (2,406)    (.16)   (1,614)    (.11)   (1,683)   (.10)

                 Net income           $12,899    $ .86   $12,481    $ .83   $13,022   $ .87

            Weighted average
              Shares outstanding         15,053,135        15,053,135         15,053,135

</TABLE>




The Trust s net  income for 1997 increased by approximately  $418,000 when
compared  to  1996.   This  increase  resulted  from  higher participation
income,  additional loan  interest income  and  other  interest income  of
approximately  $1,026,000 ,  $793,000 and  $173,000, respectively,  net of
lower base  interest  income  on  PIMs  and  interest  income  on  MBS  of
approximately  $627,000   and  107,000,  respectively  and   increases  in
amortization  expense   and  Trust  expenses   of  $791,000  and  $49,000,
respectively.   The increase in  participation income  and additional loan
interest income are primarily related to the Timber Ridge PIMI.  The Trust
received $1,246,000  of participation interest upon early repayment of the
PIMI.   The Trust  also received participation interest  from the  Lincoln
Green PIM, The Seasons PIMI and the Riverview PIM of $102,000, $33,000 and
$4,000,  respectively.    Interest income  on  cash and  cash  equivalents
increased as  a result  of short-term investments made  with the  proceeds
from the  Canyon Ridge and  Timber Ridge prepayments prior  to the special
distribution made  in the  third  quarter. Base  interest decreased  as  a
result of the repayment of  the Timber Ridge PIMI during the first quarter
of 1997, the repayment  of the Canyon Ridge PIM during the  second quarter
of  1996  and  the  interest  rate  reduction  given  to  Windward   Lakes
Apartments.   Interest income on MBS will continue to decline as principal
collections  reduce  the  outstanding  balance  of  the  MBS  portfolio.  
Amortization expenses increased for 1997 as compared to 1996 due primarily
to the Trust  fully amortizing the prepaid acquisition and  servicing fees

                                        9
<PAGE>


   associated with  Canyon Ridge Apartments PIM  and Timber  Ridge Apartments
   PIMI.

   The Trust's  net income  for 1996 decreased by  approximately $541,000  as
   compared to 1995 due primarily to decreases in interest income on PIMs and
   insured mortgages and interest income on MBS of approximately $882,000 and
   $302,000,  respectively, which  were  partially offset  by an  increase in
   interest income on cash and cash equivalents of approximately $355,000 and
   a decrease in  Trust expenses of approximately  $232,000.  The decrease in
   base interest income on PIMs and insured mortgages for 1996 as compared to
   1995 was  due primarily to  the prepayment  of the Canyon  Ridge PIM which
   caused  a  decline  in  interest income  of  $502,000  and  interest  rate
   reductions of $211,000  for the  Mountain View  and Lifestyles  Apartments
   PIMs.    Interest income  on  MBS will  continue  to decline  as principal
   collections reduce the outstanding balance of the MBS portfolio.  Interest
   income on cash and  cash equivalents increased  as a result of  short-term
   investments  made with  the  proceeds  from the  Canyon  Ridge prepayment.
   Expenses decreased  for 1996  as compared to 1995  due primarily  to lower
   asset management  fees, expense  reimbursements to  affiliates and general
   and administrative expenses.


   ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       See Appendix A to this report.

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

      None.

                                    PART III

   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information  as  to  the  Trustees  and   Executive  Officers  of  Krupp
   Government Income Trust is as follows:

                              Position with Krupp
              Name and Age    Government Income Trust

          Douglas Krupp (51)  Chairman of Board of Trustees and Trustee
             *           Charles N. Goldberg (56)      Trustee
             *           E. Robert Roskind (52)        Trustee
             *           J. Paul Finnegan (72)         Trustee
          Robert A. Barrows (40)                       Treasurer
          Scott D. Spelfogel (37)                      Clerk
          K. Scott Griggs (35)                         Assistant Clerk

   * Independent Trustee

          Douglas Krupp  is Co-Founder and  Chairman of The Berkshire  Group.
   Established  in 1969 as  the Krupp Companies and  headquartered in Boston,
   the Berkshire Group  is a privately  held real estate-based firm  that has
   expanded over the years within its areas of expertise including investment
   program sponsorship,  property and asset  management, mortgage banking and
   healthcare facility  management. The  Berkshire Group s  interests include
   ownership  of  a  mortgage  company  specializing  in commercial  mortgage
   financing  with a portfolio  of approximately $4.5 billion.   In addition,
   The Berkshire  Group  has a  majority  ownership  interest  in  Harborside
   Healthcare  (NYSE-HBR), a  long-term  and  subacute  care  company  and  a
   significant ownership  interest in  Berkshire Realty  Company, Inc. (NYSE-
   BRI),   a  real   estate  investment   trust  specializing   in  apartment
   investments.   Mr.  Krupp is  a graduate of  Bryant College.   In  1989 he
   received  an honorary Doctor  of Science  in Business  Administration from
   this institution and was elected trustee in 1990. Mr. Krupp is Chairman of
   the  Board  and a  Director of  both  Berkshire Realty  Company,  Inc. and
   Harborside Healthcare.  Mr. Krupp also serves as Chairman of the Board and
   Trustee of Krupp Government Income Trust II. 

          Charles N. Goldberg is of counsel to the law firm of Broocks, Baker
   & Lange,  L.L.P.  Prior to  joining Broocks,  Baker &  Lange, L.L.P.,  Mr.
   Goldberg was a  partner in the law firm of  Hirsch & Westheimer from March
   of 1996  to December of 1997.   Prior to  Hirsch & Westheimer,  he was the
   Managing Partner of Goldberg Brown, Attorneys at Law from 1980 to March of
   1996.  He  currently serves as a Trustee  of Krupp Government Income Trust
   II.   He  is also currently  a director of Berkshire  Realty Company, Inc.
   (NYSE-BRI).   He  received a  B.B.A. degree  and a  J.D.  degree from  the
   University  of Texas.   He is a member  of the State  Bar of  Texas and is
   admitted to practice  before the U.S. Court of Appeals, Fifth  Circuit and
   U.S. District Court, Southern District of Texas.

          E. Robert Roskind is the Chairman and Co-Chief Executive Officer of
   Lexington Corporate  Properties, a  self-administered REIT,  the shares of
   which are listed on the NYSE.  Mr. Roskind is also the Managing Partner of
   The  LCP  Group, a  real  estate investment  firm based  in New  York, the
   predecessor of  which he co-founded in  1974.   He currently  serves as  a
   Trustee  of Krupp  Government Income  Trust II.   He  is also  currently a
   director of Berkshire Realty Company, Inc. (NYSE-BRI).  Mr. Roskind  holds
   a B.A. degree from the University of  Pennsylvania and a J.D. degree  from
   Columbia Law School.  He has been a member of the New York Bar since 1970.

          J. Paul Finnegan retired as a partner of Coopers & Lybrand in 1987.
   Since then,  he has been engaged  in business as  a consultant, a director
   and  arbitrator.  Mr. Finnegan holds a B.A. degree from Harvard College, a
   J.D.  degree from  Boston  College  Law School  and  an ASA  from  Bentley
   College.  Mr. Finnegan currently  serves as a Trustee  of Krupp Government
   Income Trust  II.   He is  also currently a director  at Scituate  Federal
   Savings Bank and a director of Berkshire Realty Company, Inc.  (NYSE-BRI).
   Mr. Finnegan is a Certified Public Accountant and an attorney.  

          Robert  A. Barrows is the Treasurer of  the Trust and is Senior Vice
   President and Chief Financial  Officer of Berkshire Mortgage Finance.   Mr.
   Barrows has held several positions within The Berkshire Group since joining
   the  company in 1983 and is currently responsible for accounting, financial
   reporting, treasury,  management information  systems and loan  closing and
   servicing  for Berkshire Mortgage  Finance. Prior to  joining The Berkshire
   Group, he was an audit supervisor for Coopers & Lybrand  L.L.P.  in Boston.
   He received  a B.S. degree  from Boston College  and is a  Certified Public
   Accountant.



                                        11
<PAGE>






          Scott D. Spelfogel is  Senior Vice President and General  Counsel to
   The Berkshire  Group.  He previously served as Vice President and Assistant
   General  Counsel.   Before  joining the  firm in  November  1988, he  was a
   litigator in private practice in Boston.  He received a Bachelor of Science
   degree in  Business Administration from  Boston University, a  Juris Doctor
   Degree  from Syracuse  University's College of  Law, and  a Master  of Laws
   degree in  Taxation from Boston University  Law School.  He  is admitted to
   practice law  in Massachusetts and New  York, is a member  of the American,
   Boston,  Massachusetts and New  York State  bar associations,  the American
   Corporate  Counsel  Association  and  the  American  Society  of  Corporate
   Secretaries and is a licensed real estate broker in Massachusetts.

          K.  Scott Griggs  is  Assistant  Clerk of  the  Trust and  the  Vice
   President and Assistant  General Counsel  of The Berkshire  Group.   Before
   joining The  Berkshire Group in  March 1991,  he served as  counsel to  The
   Fafard  Companies, a construction and  real estate firm  in Greater Boston.
   He  received a  B.A. degree  from Columbia  University in  1984 and  a J.D.
   degree from the Boston University School of Law in 1989.  He is a member of
   the American, Boston and Massachusetts Bar associations.

          In  addition, the following are  deemed to be  Executive Officers of
   the registrant:

          George  Krupp (age  53) is the  Co-Founder of The  Berkshire Group. 
   Established in 1969 as the Krupp Companies and headquartered in Boston, the
   Berkshire  Group  is  a privately  held  real  estate-based  firm that  has
   expanded  over the years within its areas of expertise including investment
   program sponsorship,  property and  asset management, mortgage  banking and
   healthcare  facility management.  The Berkshire  Group s interests  include
   ownership  of  a  mortgage  company  specializing  in  commercial  mortgage
   financing with a portfolio of approximately $4.5 billion.  In addition, The
   Berkshire Group has a majority ownership interest in  Harborside Healthcare
   (NYSE-HBR), a  long-term  and  subacute  care  company  and  a  significant
   ownership interest  in Berkshire  Realty Company,  Inc. (NYSE-BRI), a  real
   estate investment trust  specializing in apartment investments.   Mr. Krupp
   received his  undergraduate education  from the University  of Pennsylvania
   and  Harvard University  Extension School  and holds  a Master s  Degree in
   History from Brown University.

          Peter  F. Donovan (age 44)  is Chief Executive  Officer of Berkshire
   Mortgage Finance and oversees  the strategic growth plans of  this mortgage
   banking  firm  which is  the 12th  largest in  the  United States  based on
   servicing   and  asset  management  of   a  $4.5  billion  loan  portfolio.
   Previously  he  served  as  President of  Berkshire  Mortgage  Finance  and
   directed  the production  underwriting and  servicing and  asset management
   activities of the  firm.  Prior  to that, he was  Senior Vice President  of
   Berkshire  Mortgage  Finance  and  was responsible  for  all  participating
   mortgage originations.  Before joining the firm in 1984, he was Second Vice
   President, Real Estate  Finance for  Continental Illinois  National Bank  &
   Trust,  where  he managed  a $300  million  construction loan  portfolio of
   commercial  properties.  Mr. Donovan  received a B.A.  from Trinity College
   and an M.B.A. degree from Northwestern University.

   ITEM 11.  EXECUTIVE COMPENSATION



                                        12
<PAGE>






          Except for the Independent Trustees as described below, the Trustees
   and Officers of  the Trust have not been and will not be compensated by the
   Trust for their services.  However, the Officers will be compensated by the
   Advisor or an affiliate of the Advisor.

          Compensation of Trustees

          The Trust paid each of the  Independent Trustees a fee of $25,000 in
          1997.

   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          As of February  5, 1998, no person owned  of record or was  known by
   the Advisor  to own  beneficially more  than 5%  of the Trust's  15,053,135
   outstanding  Shares.  The  only shares  held by the  Advisor or any  of its
   affiliates consist of the original 10,000 Shares.

   Class of  Name of Beneficial      Amount and Nature of      Percent
    Stock        Owner               Beneficial Interest       of Class
   Shares of     Douglas Krupp
   Beneficial   470 Atlantic Avenue
   Interest     Boston, Mass. 02210   10,000 Shares**           ***

   Shares of
   Beneficial All Directors and
   Interest   Officers                10,000 Shares          ***

      ** Mr.  Krupp  is a  beneficial owner  of  the  10,000 shares  held  by
   Berkshire  Mortgage  Advisors  Limited  Partnership,  the  Advisor to  the
   Company, by virtue  of being a director of Berkshire  Funding Corporation,
   the general  partner of  Berkshire Mortgage  Advisors Limited Partnership.
   In each case where Mr. Krupp is a beneficial owner of shares he has shared
   voting and investment powers.

    ***  The amount  owned does  not exceed  one percent  of the  shares of
   beneficial interest of the Trust outstanding as of February 5, 1998.

   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      See Note  G to  Financial Statements  included in  Appendix  A of  this
   report.

                                     PART IV

   ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  1.   Financial   Statements   -  see   Index   to   Financial
                  Statements and  Supplementary Data  included under  Item
                   8, Appendix A, on page F-2 of this report.

      2.         Financial  Statement  Schedules  -  see  Index to  Financial
                 Statements  and Supplementary  Data  included under  Item 8,
                 Appendix A,  on page F-2 of this report.   All schedules are

                                       13
<PAGE>

                 omitted as  they  are not  applicable, not  required or  the
                 information is  provided in the Financial  Statements or the
                 Notes thereto.

   (b)           Exhibits:

      Number and Description
      Under Regulation S-K  

      The following reflects all applicable Exhibits required under  Item 601
      of Regulation S-K:

      (4)        Instruments   defining  the   rights  of   security  holders
                 including indentures:

                 (4.1)       Second Amended and Restated Declaration of Trust
                             filed with The  Massachusetts Secretary of State
                             on April  12, 1990  [Included as Exhibit  4.4 to
                             Prospectus  included in  Pre-effective Amendment
                             No. 3 to  Registrant's Registration Statement on
                             Form  S-11 dated  April 16,  1990 (File  No. 33-
                             31942)].*

                 (4.2)       Subscription  Agreement  Specimen  [Included  as
                             Exhibit  C  to   Prospectus  included  in   Pre-
                             effective  Amendment  No.  2   to  Regis-trant's
                             Registration Statement on Form S-11  dated March
                             23, 1990 (File No. 33-31942)].*

      (10)  Material Contracts:

                 (10.1)         Advisory Services Agreement dated  October 22,
                                1990 between  the Trustee  and Krupp  Mortgage
                                Advisors  Limited Partnership.  [Exhibit  10.1
                                to Registrant's  report on  Form 10-K  for the
                                year  ended December  31,  1994  (File No.  0-
                                19244)].*

                 (10.2)         Assignment  and  Assumption   Agreement  dated
                                December  29,  1994 by  and  between Berkshire
                                Realty Advisors Limited  Partnership (formerly
                                known   as   Krupp  Realty   Advisors  Limited
                                Partnership    ("Assignor")    and   Berkshire
                                Mortgage    Advisors    Limited    Partnership
                                ("Assignee")  [Exhibit  10.2  to  Registrant's
                                report   on  Form  10-K  for  the  year  ended
                                December 31, 1994 (File No. 0-19244)].*
    
                 Lifestyles Apartments

                 (10.3)         Modification  Agreement  by and  between Krupp
                                Government  Income  Trust  and  Lifestyles  at
                                Boot Ranch and  M&D Palm Harbor,  and FL-Tampa
                                Inc.  [Exhibit 10.1 to  Registrant's report on
                                Form 10-Q  for the quarter ended September 30,
                                1996 (File No. 0-19244)].*



                 (10.4)         Escrow Deposit  Agreement by and between Krupp
                                Government Income  Trust and M&D  Palm Harbor,
                                and  FL-Tampa  Inc.  the  general partners  of
                                Lifestyles  at  Boot Ranch.  [Exhibit  10.2 to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter ended  September 30, 1996 (File No. 0-
                                19244)].*

                 (10.5)         Subordinated  Promissory Note  dated  December
                                11, 1990  between  Lifestyles  At  Boot  Ranch
                                (the "Mortgagor") and Krupp  Government Income
                                Trust   (the   "Holder")   [Exhibit  10.1   to
                                Registrant's Annual  Report on  Form 10-K  for
                                the fiscal year ended December 31,  1990 (File
                                No. 33-31942)].*

                 (10.6)         Agreement RE Subordinated Note  dated December
                                11,  1990  between  Krupp   Government  Income
                                Trust and Krupp Mortgage  Corporation [Exhibit
                                10.2  to Registrant's  Annual  Report on  Form
                                10-K for  the fiscal  year ended  December 31,
                                1990 (File No. 33-31942)].*

                 (10.7)         Subordinated   Multifamily    Mortgage   dated
                                December 11, 1990  between Lifestyles at  Boot
                                Ranch (the "Mortgagor")  and Krupp  Government
                                Income Trust (the  "Mortgagee") [Exhibit  10.3
                                to  Registrant's  Annual Report  on  Form 10-K
                                for the  fiscal year  ended December 31,  1990
                                (File No. 33-31942)].*

                 (10.8)         Additional Loan Agreement  dated December  11,
                                1990 between  FL-Tampa, Inc.  and M  & D  Palm
                                Harbor,  Inc (collectively,  the  "Borrowers")
                                and   Krupp   Government  Income   Trust  (the
                                "Holder")   [Exhibit  10.4   to   Registrant's
                                Annual  Report on  Form  10-K for  the  fiscal
                                year  ended December  31, 1990  (File No.  33-
                                31942)].*

                 (10.9)         Additional  Loan  Note dated  December 11,1990
                                between FL-Tampa, Inc  and M & D  Palm Harbor,
                                Inc.  (collectively,   the  "Borrowers")   and
                                Krupp Government Income  Trust (the  "Holder")
                                [Exhibit  10.5  to Registrant's  Annual Report
                                on   Form  10-K  for  the  fiscal  year  ended
                                December 31, 1990 (File No. 33-31942)].*

                 (10.10)        Mortgage Note  dated December 11, 1991 between
                                Lifestyles at Boot Ranch  (the "Borrower") and
                                Krupp  Mortgage  Corporation  (the  "Holder").
                                [Exhibit  10.6  to Registrant's  Annual Report
                                on   Form  10-K  for  the  fiscal  year  ended
                                December 31, 1991 (File No. 0-19244)].*



                                       15
<PAGE>






                 (10.11)        GNMA  Purchase  Agreement  dated December  11,
                                1991  between  Krupp  Government Income  Trust
                                and Krupp Mortgage Corporation.  [Exhibit 10.7
                                to  Registrant's  Annual Report  on  Form 10-K
                                for  the fiscal  year ended  December 31, 1991
                                (File No. 0-19244)].*

                 Windward Lakes Apartments

                 (10.12)        Subordinated  Promissory Note  dated  December
                                28, 1990  between  the  McNab-K  C  3  Limited
                                Partnership   (the  "Mortgagor")   and   Krupp
                                Government   Income   Trust   (the   "Holder")
                                [Exhibit  10.6  to Registrant's  Annual Report
                                on  Form  10-K  for   the  fiscal  year  ended
                                December 31, 1990 (File No. 33-31942)].*

                 (10.13)        Additional Loan Agreement  dated December  28,
                                1990 between George  Krupp, Douglas Krupp  and
                                Krupp    GP,    Inc.     (collectively,    the
                                "Borrowers")  and   Krupp  Government   Income
                                Trust   (the   "Holder")   [Exhibit  10.7   to
                                Registrant's Annual  Report on  Form 10-K  for
                                the fiscal year ended  December 31, 1990 (File
                                No. 33-31942)].*

                 (10.14)        Additional  Loan Note dated  December 28, 1990
                               between  Krupp  GP,  Inc.,  George  Krupp  and
                                Douglas Krupp (collectively,  the "Borrowers")
                                and   Krupp   Government  Income   Trust  (the
                                "Holder")   [Exhibit  10.8   to   Registrant's
                                Annual  Report  on Form  10-K  for the  fiscal
                                year  ended  December 31,  1990 (File  No. 33-
                                31942)].*

                 (10.15)        Agreement RE Subordinated Note  dated December
                                28,  1990  between  Krupp   Government  Income
                                Trust and Love  Funding Corporation.  [Exhibit
                                10.11 to  Registrant's Annual  Report on  Form
                                10-K  for the  fiscal year  ended December 31,
                                1991 (File No. 0-19244)].*

                 (10.16)        Subordinated   Multi-family   Mortgage   dated
                                December  28,  1991 between  McNab-KC3 Limited
                                Partnership   (the   "Borrower")   and   Krupp
                                Government   Income  Trust   (the   "Lender").
                                [Exhibit 10.12 to  Registrant's Annual  Report
                                on  Form   10-K  for  the  fiscal  year  ended
                                December 31, 1991 (File No. 0-19244)].*

                 (10.17)        GNMA  Purchase  Agreement  dated December  28,
                                1991  between  Krupp  Government Income  Trust
                                and Love Funding  Corporation. [Exhibit  10.13
                                to Registrant's  Annual  Report on  Form  10-K
                                for the  fiscal year ended  December 31,  1991
                                (File No. 0-19244)].*

                                       16
<PAGE>


                 River View Apartments

                 (10.18)        Subordinated  Promissory  Note dated  April 2,
                                1991  between  Sterling  Partners III  Limited
                                Partnership   (the  "Mortgagor")   and   Krupp
                                Government   Income   Trust   (the   "Holder")
                                [Exhibit 19.1 to  Registrant's report on  Form
                                10-Q  for  the  quarter ended  June  30,  1991
                                (File No. 0-19244)].*

                 (10.19)        Agreement  RE  Subordinated   Promissory  Note
                                dated  April 2, 1991  between Krupp Government
                                Income  Trust  and  Love  Funding  Corporation
                                [Exhibit 19.2  to Registrant's report  on Form
                                10-Q  for  the  quarter ended  June  30,  1991
                                (File No. 0-19244)].*

                 (10.20)        Subordinated Multifamily Mortgage  dated April
                                2, 1991  between Sterling Partners III Limited
                                Partnership   (the  "Mortgagor")   and   Krupp
                                Government  Income  Trust   (the  "Mortgagee")
                                [Exhibit 19.3 to  Registrant's report on  Form
                                10-Q  for  the  quarter  ended  June  30, 1991
                                (File No. 0-19244)].*

                 (10.21)        Supplement  to Prospectus  dated  May 1,  1991
                                for Government  National Mortgage  Association
                                Pool   Number   280840   [Exhibit    19.4   to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30,  1991  (File  No. 0-
                                19244)].*

                 Mill Pond Apartments

                 (10.22)        Subordinated  Promissory  Note  dated May  28,
                                1991  between  Mill  Pond Limited  Partnership
                                (the "Mortgagor") and Krupp  Government Income
                                Trust   (the   "Holder")   [Exhibit  19.5   to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30,  1991 (File  No.  0-
                                19244)].*

                 (10.23)        Agreement  RE  Subordinated   Promissory  Note
                                dated May  28, 1991  between Krupp  Government
                                Income  Trust  and Krupp  Mortgage Corporation
                                [Exhibit 19.6 to  Registrant's report on  Form
                                10-Q  for  the  quarter  ended June  30,  1991
                                (File No. 0-19244)].*

                 (10.24)        Subordinated  Multifamily Mortgage  dated  May
                                28,   1991   between    Mill   Pond    Limited
                                Partnership   (the  "Mortgagor")   and   Krupp
                                Government  Income  Trust   (the  "Mortgagee")
                                [Exhibit  19.7 to Registrant's  report on Form
                                10-Q  for the  quarter  ended  June  30,  1991
                                (File No. 0-19244)].*

                                       17
<PAGE>


                 (10.25)        Mortgage  Note  dated  May  28,  1991  between
                                Krupp Mortgage Corporation (the  "Holder") and
                                Mill   Pond   Apartments    (the   "Borrower")
                                [Exhibit 19.8 to  Registrant's report on  Form
                                10-Q  for  the  quarter  ended June  30,  1991
                                (File No. 0-19244)].*

                 (10.26)        Participation  Agreement  dated  May 28,  1991
                                between   Krupp  Mortgage   Corporation   (the
                                "Mortgagee")  and   Krupp  Government   Income
                                Trust [Exhibit 19.9 to  Registrant's report on
                                Form 10-Q for the quarter  ended June 30, 1991
                                (File No. 0-19244)].*

                 (10.27)        Assignment  of  Open  End  Mortgage  Deed  and
                                Security Agreement  dated May 28, 1991 between
                                Krupp  Mortgage Corporation  (the  "Assignor")
                                and   Krupp   Government  Income   Trust  (the
                                "Assignee")  [Exhibit   19.1  to   Registrants
                                report  on  Form  10-Q for  the  quarter ended
                                September 30, 1991 (File No. 0-19244)].*

                 Waterford Townhome Apartments

                 (10.28)        Subordinated  Promissory  Note dated  June 12,
                                1991  between  Waterford Apartment  Corp. (the
                                "Mortgagor")  and   Krupp  Government   Income
                                Trust   (the   "Holder")  [Exhibit   19.10  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30,  1991  (File  No. 0-
                                19244)].*

                 (10.29)        Agreement  RE  Subordinated   Promissory  Note
                                dated June 12,  1991 between Krupp  Government
                                Income  Trust  and   Nichols/Conlan  Financial
                                Company [Exhibit 19.11 to  Registrant's report
                                on Form  10-Q for the  quarter ended  June 30,
                                1991 (File No. 0-19244)].*

                 (10.30)        Subordinated Multifamily  Mortgage dated  June
                                12,  1991  between Waterford  Apartments Corp.
                                (the "Mortgagor") and Krupp  Government Income
                                Trust  (the  "Mortgagee")  [Exhibit  19.12  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30, 1991  (File  No.  0-
                                19244)].*

                 (10.31)        Mortgage  Note  dated  June  12, 1991  between
                                Nichols/Conlan    Financial    Company    (the
                                "Holder") and Waterford  Apartment Corp.  (the
                                "Borrower")  [Exhibit  19.13  to  Registrant's
                                report  on Form  10-Q  for  the quarter  ended
                                June 30, 1991 (File No. 0-19244)].*

                 (10.32)        Assignment of  Loan Documents  dated June  12,
                                1991  by  Nichols/Conlan Financial  Company to
                                Krupp   Mortgage   Corp   [Exhibit  19.14   to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30, 1991  (File  No.  0-
                                19244)].*

                 (10.33)        Participation  Agreement  dated June  12, 1991
                                between Nichols/Conlan Financial  Company (the
                                "Mortgagee")  and   Krupp  Government   Income
                                Trust  [Exhibit  19.15 to  Registrant's report
                                on Form  10-Q for the  quarter ended  June 30,
                                1991 (File No. 0-19244)].*

                 Rivergreens Apartments

                 (10.34)        Subordinated  Promissory Note  dated  November
                                14,   1991  between   Rivergreens   Associates
                                Limited  Partnership  (the   "Mortgagor")  and
                                Krupp Government Income Trust  (the "Holder").
                                [Exhibit 10.33 to  Registrant's Annual  Report
                                on  Form   10-K  for  the  fiscal  year  ended
                                December 31, 1991 (File No. 0-19244)].*

                 (10.35)        Agreement   Re-Subordinated  Promissory   Note
                                dated   November   14,   1991  between   Krupp
                                Government  Income  Trust  and Krupp  Mortgage
                                Corporation.  [Exhibit 10.34  to  Registrant's
                                Annual  Report  on  Form 10-K  for  the fiscal
                                year ended  December  31, 1991  (File  No.  0-
                                19244)].*

                 (10.36)        Subordinated Multifamily Deed  of Trust  dated
                                November   14,   1991    between   Rivergreens
                                Associates     Limited    Partnership     (the
                                "Borrower"),  Oregon Title  Insurance  Company
                                (the  "Trustee")  and Krupp  Government Income
                                Trust  (the  "Lender").   [Exhibit  10.35   to
                                Registrant's Annual  Report on  Form 10-K  for
                                the fiscal year ended  December 31, 1991 (File
                                No. 0-19244)].*

                 (10.37)        Mortgage Note dated November  14, 1991 between
                                Krupp  Mortgage  Corporation  and  Rivergreens
                                Associates   Limited   Partnership.   [Exhibit
                                10.36 to  Registrant's Annual  Report on  Form
                                10-K for  the fiscal  year ended December  31,
                                1991 (File No. 0-19244)].*

                 (10.38)        Participation  Agreement  dated  November  14,
                                1991  between  Krupp Mortgage  Corporation and
                                Krupp Government Income Trust.  [Exhibit 10.37
                                to Registrant's  Annual  Report on  Form  10-K
                                for the  fiscal year  ended December 31,  1991
                                (File No. 0-19244)].*

                 Audubon Villas


                                       19
<PAGE>


                 (10.39)        Prospectus  for Government  National  Mortgage
                                Association  Pool  Number 295307(CS)  and Pool
                                Number   295308(PN).    [Exhibit   10.38    to
                                Registrant's Annual  Report on  Form 10-K  for
                                the fiscal year ended December  31, 1991 (File
                                No. 0-19244)].*

                 (10.40)        Subordinated  Promissory Note  dated  December
                                27,  1991  between  Golf  View Partners,  Ltd.
                                (the "Mortgagor") and Krupp  Government Income
                                Trust  (the  "Holder").   [Exhibit  10.39   to
                                Registrant's Annual  Report on  Form 10-K  for
                                the fiscal  year ended December 31, 1991 (File
                                No. 0-19244)].*

                 (10.41)        Agreement   Re-Subordinated   Promissory  Note
                                dated   December   27,   1991  between   Krupp
                                Government  Income  Trust  and   Love  Funding
                                Corporation.  [Exhibit 10.40  to  Registrant's
                                Annual  Report  on  Form 10-K  for  the fiscal
                                year ended  December  31, 1991  (File  No.  0-
                                19244)].*

                 (10.42)        Subordinated   Multifamily    Mortgage   dated
                                December 27,  1991 between Golf View Partners,
                                Ltd.  (the  "Borrower")  and Krupp  Government
                                Income  Trust  (the "Lender").  [Exhibit 10.41
                                to  Registrant's  Annual Report  on  Form 10-K
                                for the  fiscal year  ended December 31,  1991
                                (File No. 0-19244)].*

                 (10.43)        Additional Loan Agreement  dated December  27,
                                1991 between Capital  Developments, Inc.,  Gus
                                M. Pelias,  Jr.,  and  Durham  Partners,  Ltd.
                                (collectively,  the  "Borrowers"),  Golf  View
                                Partners,   Ltd.   (the  "Owner")   and  Krupp
                                Government   Income  Trust   (the   "Holder").
                                [Exhibit 10.42 to  Registrant's Annual  Report
                                on   Form  10-K  for  the  fiscal  year  ended
                                December 31, 1991 (File No. 0-19244)].*

                 (10.44)        Additional  Loan Note dated  December 27, 1991
                                between  Capital  Developments,  Inc., Gus  M.
                                Pelias,   Jr.,   and  Durham   Partners,  Ltd.
                                (collectively,  the  "Borrowers")   and  Krupp
                                Government   Income  Trust   (the   "Holder").
                                [Exhibit 10.43 to  Registrant's Annual  Report
                                on  Form   10-K  for  the  fiscal  year  ended
                                December 31, 1991 (File No. 0-19244)].*

                 Coconut Palm Apartments

                 (10.45)        Subordinated  Promissory Note  dated  December
                                11,  1991  between  CoClub Associates  Limited
                                Partnership   (the  "Mortgagor")   and   Krupp
                                Government   Income  Trust   (the   "Holder").
                                [Exhibit 10.44 to  Registrant's Annual  Report
                                on  Form  10-K  for  the  fiscal  year   ended
                                December 31, 1991 (File No. 0-19244)].*

                 (10.46)        Agreement   Re-Subordinated  Promissory   Note
                                dated   December   11,   1991  between   Krupp
                                Government  Income  Trust  and Krupp  Mortgage
                                Corporation.  [Exhibit 10.45  to  Registrant's
                                Annual  Report on  Form  10-K for  the  fiscal
                                year  ended December  31,  1991  (File No.  0-
                                19244)].*

                 (10.47)        Subordinated   Multifamily   Mortgage    dated
                                December  11,  1991 between  CoClub Associates
                                Limited  Partnership   (the  "Borrower")   and
                                Krupp    Government    Income    Trust    (the
                                "Mortgagee"). [Exhibit  10.46 to  Registrant's
                                Annual  Report  on Form  10-K  for the  fiscal
                                year  ended  December 31,  1991  (File  No. 0-
                                19244)].*

                 (10.48)        Additional Loan Agreement  dated December  11,
                                1991 between  Roger A. Hard,  Robert V. Meehan
                                and The  May Company  L.P. (collectively,  the
                                "Borrowers"),   CoClub   Associates    Limited
                                Partnership    (the   "Owner")    and    Krupp
                                Government   Income  Trust   (the   "Holder").
                                [Exhibit 10.47 to  Registrant's Annual  Report
                                on  Form  10-K  for   the  fiscal  year  ended
                                December 31, 1991 (File No. 0-19244)].*

                 (10.49)        Additional Loan  Note dated December  11, 1991
                                between  Roger A.  Hard, Robert  V. Meehan and
                                The  May  Company   L.P.  (collectively,   the
                                "Borrowers")  and   Krupp  Government   Income
                                Trust  (the  "Holder").   [Exhibit  10.48   to
                                Registrant's Annual  Report on  Form 10-K  for
                                the fiscal year ended  December 31, 1991 (File
                                No. 0-19244)].*

                 (10.50)        Mortgage Note dated December  11, 1991 between
                                Krupp Mortgage Corporation (the  "Holder") and
                                CoClub  Associates  Limited  Partnership  (the
                                "Borrower").  [Exhibit 10.49  to  Registrant's
                                Annual  Report on  Form  10-K  for the  fiscal
                                year  ended  December 31,  1991  (File No.  0-
                                19244)].*

                 (10.51)        GNMA  Purchase  Agreement  dated December  11,
                                1991  between  Krupp Mortgage  Corporation and
                                Krupp Government Income Trust.  [Exhibit 10.50
                                to  Registrant's  Annual Report  on  Form 10-K
                                for  the fiscal year  ended December  31, 1991
                                (File No. 0-19244)].*



                                       21
<PAGE>

                 (10.52)        Prospectus  for Government  National  Mortgage
                                Association  Pool  Number 293805(CL)  and Pool
                                Number   293806(PL).    [Exhibit   10.51    to
                                Registrant's Annual  Report on  Form 10-K  for
                                the fiscal year ended December  31, 1991 (File
                                No. 0-19244)].*

                 Mountain View Apartments

                 (10.53)        Subordinated Promissory Note  dated April  21,
                                1992   between   Mountain   View   Ltd.   (the
                                "Mortgagor")  and   Krupp  Government   Income
                                Trust   (the   "Holder").  [Exhibit   19.1  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30, 1992  (File  No.  0-
                                19244)].*

                 (10.54)        Agreement  RE  Subordinated   Promissory  Note
                                dated April  21, 1992 between Krupp Government
                                Income Trust and  Krupp Mortgage  Corporation.
                                [Exhibit  19.2 to Registrant's  report on Form
                                10-Q  for  the  quarter ended  June  30,  1992
                                (File No. 0-19244)].*

                 (10.55)        Subordinated Multifamily Mortgage  dated April
                                21,  1992  between  Mountain  View  Ltd.  (the
                                "Mortgagor")  and   Krupp  Government   Income
                                Trust  (the  "Mortgagee").   [Exhibit  19.3 to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30,  1992  (File  No. 0-
                                19244)].*

                 (10.56)        Additional  Loan  Agreement  dated  April  21,
                                1992 between  Philip P. Mulkey, Henry V. Bragg
                                and  Gregory  V.   Bragg  (collectively,   the
                                "Borrowers")  and   Krupp  Government   Income
                                Trust   (the   "Holder").  [Exhibit   19.4  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter ended  June  30,  1992  (File  No.  0-
                                19244)].*

                 (10.57)        Additional  Loan  Note  dated  April 21,  1992
                                between Philip  P. Mulkey, Henry V.  Bragg and
                                Gregory    V.   Bragg    (collectively,    the
                                "Borrowers")  and   Krupp  Government   Income
                                Trust   (the   "Holder").  [Exhibit   19.5  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended June  30,  1992  (File  No.  0-
                                19244)].*

                 (10.58)        Mortgage Note  dated  April 21,  1992  between
                                Mountain View  Ltd. (the "Borrower") and Krupp
                                Mortgage Corporation (the  "Holder"). [Exhibit
                                19.6 to Registrant's  report on Form 10-Q  for
                                the quarter ended  June 30, 1992 (File  No. 0-
                                19244)].*


                 (10.59)        Modification  Agreement  by and  between Krupp
                                Government  Income  Trust  and  Mountain  View
                                Ltd.  [Exhibit  10.1  to  Registrant's  report
                                Form  10-Q for the quarter ended September 30,
                                1995 (File No. 0-19244)].*

                 Red Run Apartments

                 (10.60)        Subordinated  Promissory  Note  dated  May  5,
                                1992 between  Red Run Limited Partnership (the
                                "Mortgagor")  and   Krupp  Government   Income
                                Trust   (the   "Holder").  [Exhibit   19.7  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30,  1992  (File No.  0-
                                19244)].*

                 (10.61)        Agreement  RE  Subordinated   Promissory  Note
                                dated May  5,  1992 between  Krupp  Government
                                Income  Trust  and Maryland  National Mortgage
                                Corporation  (the"Mortgagee").  [Exhibit  19.8
                                to Registrant's  report on  Form 10-Q  for the
                                quarter  ended  June  30, 1992  (File  No.  0-
                                19244)].*

                 (10.62)        Subordinated  Multifamily Mortgage  dated  May
                                5, 1992  between Red  Run Limited  Partnership
                                (the  "Trustor")  and Krupp  Government Income
                                Trust   (the   "Lender").  [Exhibit   19.9  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended  June  30,  1992  (File  No. 0-
                                19244)].*

                 (10.63)        Additional Loan  Agreement dated  May 5,  1992
                                between Red  Run Corporation and Summit Towers
                                Company  (collectively, the  "Borrowers")  and
                                Krupp Government Income Trust  (the "Holder").
                                [Exhibit 19.10  to Registrant's report on Form
                                10-Q  for  the  quarter ended  June  30,  1992
                                (File No. 0-19244)].*

                 (10.64)        Additional  Loan   Note  dated  May   5,  1992
                                between Red Run Corporation and Summit  Towers
                                Company  (collectively, the  "Borrowers")  and
                                Krupp Government Income Trust  (the "Holder").
                                [Exhibit 19.11 to Registrant's report on  Form
                                10-Q for  the  quarter  ended  June  30,  1992
                                (File No. 0-19244)].*

                 (10.65)        Deed of Trust  Note dated May 5,  1992 between
                                Red  Run  Limited  Partnership   and  Maryland
                                National Mortgage Corporation.   [Exhibit 19.3
                                to Registrant's  report on  Form 10-Q for  the
                                quarter  ended September 30, 1992 (File No. 0-
                                19244)].*



                                       23
<PAGE>


                 (10.66)        Participation and Servicing  Agreement by  and
                                between     Maryland     National     Mortgage
                                Corporation   and  Krupp   Government   Income
                                Trust.  [Exhibit  19.4 to  Registrant's report
                                on Form 10-Q  for the quarter ended  September
                                30, 1992 (File No. 0-19244)].*

                 Park Highland Apartments

                 (10.67)        Subordinated  Promissory  Note  dated June  5,
                                1992    between    Park    Highland    Limited
                                Partnership   (the  "Mortgagor")   and   Krupp
                                Government   Income  Trust   (the   "Holder").
                                [Exhibit 19.12 to Registrant's  report on Form
                                10-Q  for  the  quarter ended  June  30,  1992
                                (File No. 0-19244)].*

                 (10.68)        Agreement  RE  Subordinated   Promissory  Note
                                dated June  5, 1992  between Krupp  Government
                                Income Trust and  Krupp Mortgage  Corporation.
                                [Exhibit 19.13 to Registrant's report on  Form
                                10-Q  for  the  quarter ended  June  30,  1992
                                (File No. 0-19244)].*

                 (10.69)        Subordinated Multifamily  Mortgage dated  June
                                5,   1992   between   Park  Highland   Limited
                                Partnership   (the   "Borrower")   and   Krupp
                                Government Income  Trust (the  "Beneficiary").
                                [Exhibit 19.14 to Registrant's  report on Form
                                10-Q  for  the  quarter  ended  June  30, 1992
                                (File No. 0-19244)].*

                 (10.70)        Additional  Loan Agreement dated  June 5, 1992
                                between   Intrawest   Corporation   and   Park
                                Highland Apartments,  Ltd. (collectively,  the
                                "Borrowers")  and   Krupp  Government   Income
                                Trust  (the  "Holder").   [Exhibit  19.15   to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter ended  June  30,  1992  (File  No.  0-
                                19244)].*

                 (10.71)        Additional  Loan  Note  dated  June  5,   1992
                                between   Intrawest   Corporation   and   Park
                                Highlands Apartment,  Inc. (collectively,  the
                                "Borrowers")  and   Krupp  Government   Income
                                Trust  (the  "Holder").   [Exhibit  19.16   to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended June  30,  1992  (File  No.  0-
                                19244)].*

                 (10.72)        Deed of Trust Note dated  June 5, 1992 between
                                Park Highlands Limited  Partnership and  Krupp
                                Mortgage   Corporation.   [Exhibit   19.1   to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter ended  September 30, 1992 (File No. 0-
                                19244)].*

                                       24
<PAGE>

                 (10.73)        Participation Agreement  dated June 5, 1992 by
                                and  between  Krupp  Mortgage Corporation  and
                                Krupp Government Income Trust.  [Exhibit  19.2
                                to  Registrant's report on  Form 10-Q  for the
                                quarter ended September 30, 1992  (File No. 0-
                                19244)].*

                 Lincoln Green Apartments

                 (10.74)        Supplement to  prospectus dated August 1, 1992
                                for  Federal  National   Mortgage  Association
                                pool  number  MX-073023.   [Exhibit  19.8   to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter ended September 30, 1992 (File  No. 0-
                                19244)].*

                 (10.75)        Subordinated promissory  note dated  September
                                15,  1992   by  and   between  Lincoln   Green
                                Associates     Limited     Partnership    (the
                                "Mortgagor")  and   Krupp  Government   Income
                                Trust   (the   "Holder").  [Exhibit   19.9  to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter ended September 30, 1992 (File No.  0-
                                19244)].*

                 (10.76)        Subordinated Multi-family Deed of  Trust dated
                                September  16,  1992  by  and between  Lincoln
                                Green  Associates  Limited   Partnership  (the
                                "Borrower") and Krupp Government  Income Trust
                                (the    "Lender").    [Exhibit     19.10    to
                                Registrant's  report  on  Form  10-Q  for  the
                                quarter  ended September 30, 1992 (File No. 0-
                                19244)].*

                 The Seasons

                 (10.77)        Additional Loan Agreement dated  September 16,
                                1993   between   The  Krupp   Company  Limited
                                Partnership-IV  (the  "Borrower")   and  Krupp
                                Government  Income  Trust  II  (the  "Holder")
                                [Exhibit 10.80 to Registrant's  report on Form
                                10-K for  the  year ended  December  31,  1994
                                (File No. 0-19244)].*

                 (10.78)        Additional Loan Note dated September 16,  1993
                                between    The    Krupp     Company    Limited
                                Partnership-IV  (the  "Borrower")   and  Krupp
                                Government  Income  Trust  II  (the  "Holder")
                                [Exhibit 10.81  to Registrant's report on Form
                                10-K  for the  year  ended  December 31,  1994
                                (File No. 0-19244)].*

                 (10.79)        Subordinated Promissory  Note dated  September
                                16, 1993 between  Maryland Associates  Limited
                                Partnership    (the   "Maker")    and    Krupp
                                Government  Income  Trust  II  (the  "Holder")
                                {Exhibit 10.82 to Registrants report on form
                                10-K  for the  year  ended December  31,  1994
                                (File No. 0-19244)].*

                 (10.80)        Pledge and Security Agreement  dated September
                                16,  1993  by  and between  The  Krupp Company
                                Limited  Partnership-IV  (the   "Debtor")  and
                                Krupp   Government   Income   Trust  II   (the
                                "Secured    Party")    [Exhibit    10.83    to
                                Registrant's report on Form  10-K for the year
                                ended December 31, 1994 (File No. 0-19244)].*

                 (10.81)        The Deed of Trust dated  September 16, 1993 by
                                and   between  Maryland   Associates   Limited
                                Partnership  and  Krupp  Mortgage  Corporation
                                [Exhibit 10.84  to Registrant's report on Form
                                10-K  for the  year  ended  December 31,  1994
                                (File No. 0-19244)].*

                 (10.82)        Participation and Servicing Agreement  made as
                                of September  16,  1993 by  and between  Krupp
                                Mortgage  Corporation  (the   "Servicer")  and
                                Krupp   Government   Income   Trust  II   (the
                                "Participant") [Exhibit 10.85  to Registrant's
                                report   on  Form  10-K  for  the  year  ended
                                December 31, 1994 (File No. 0-19244)].*

                 (10.83)        Assignment  and  Assumption   Agreement  dated
                                September  16,  1993 between  Krupp Government
                                Income Trust  II  (the "Assignor")  and  Krupp
                                Government  Income   Trust  (the   "Assignee")
                                [Exhibit 10.86 to Registrant's  report on Form
                                10-K  for  the year  ended  December  31, 1994
                                (File No. 0-19244)].*

                 Rosemont Apartments

                 (10.84)        Participation  and Servicing  Agreement  dated
                                July   14,  1994,  by   and  between  Rockport
                                Mortgage  Corporation  (the   "Servicer")  and
                                Krupp    Government    Income    Trust    (the
                                "Participant") [Exhibit 10.87  to Registrant's
                                report  on  Form  10-K   for  the  year  ended
                                December 31, 1994 (File No. 0-19244)].*

                 (10.85)        Deed of Trust Note dated  July 1, 1994 between
                                Rosemont    Ltd.   and    Rockport    Mortgage
                                Corporation.  [Exhibit 10.88  to  Registrant's
                                report  on  Form  10-K  for  the   year  ended
                                December 31, 1994 (File No. 0-19244)].*

                 (10.86)        Allonge to  Deed of Trust  Note dated  July 1,
                                1994  between  Rosemont   Ltd.  and   Rockport
                                Mortgage   Corporation   [Exhibit   10.89   to
                                Registrant's report  on Form 10-K for the year
                                ended December 31, 1994 (File No. 0-19244)].*

                                       26
<PAGE>



                 (10.87)        Participation    Certificate    with     Krupp
                                Government Income Trust  as registered  owner.
                                [Exhibit 10.96 to Registrant's report on  Form
                                10-K  for  the year  ended  December 31,  1995
                                (File No. 0-19244)].*

      * Incorporated by reference



      (c)        Reports on Form 8-K

                 During the last quarter of the year ended December 31, 1997,
                 the Trust did not file any reports on Form 8-K.


                                       27
<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, on the
   12th day of March, 1998.

                                           KRUPP GOVERNMENT INCOME TRUST




                            By:/s/ Douglas Krupp                          
                            Douglas Krupp, Chairman of Board  of Trustees and
                            a Trustee of Krupp Government Income Trust

          Pursuant  to the  requirements of  the  Securities Exchange  Act of
   1934, this report has been signed below by the following persons on behalf
   of the  registrant and in the  capacities indicated,  on the  12th day  of
   March, 1998.

               Signatures   Title(s)


   /s/ Douglas Krupp              Chairman of Board of Trustees and a
   Douglas Krupp            Trustee of Krupp Government Income Trust


   /s/ Robert A. Barrows                   Treasurer   of   Krupp  Government
                                           Income Trust 
   Robert A. Barrows


   /s/ Charles N. Goldberg                 Trustee of Krupp Government Income
                                           Trust
   Charles N. Goldberg


   /s/ E. Robert Roskind                   Trustee of Krupp Government Income
                                           Trust
   E. Robert Roskind


   /s/ J. Paul Finnegan                    Trustee of Krupp Government Income
                                           Trust
   J. Paul Finnegan


                                                    28
<PAGE>



                                                APPENDIX A

                                      KRUPP GOVERNMENT INCOME TRUST
                                                          









                               FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                           ITEM 8 of FORM 10-K

                         ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                                   For the Year Ended December 31, 1997




                                                    1
<PAGE>






                          KRUPP GOVERNMENT INCOME TRUST

               INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                               



   Report of Independent Accountants                                       F-3

   Balance Sheets at December 31, 1997 and 1996                            F-4

   Statements of Income for the Years Ended December 31, 1997,
    1996 and 1995                                                          F-5

   Statements of Changes in Shareholders' Equity for the Years Ended
   December 31, 1997, 1996 and 1995                                        F-6

   Statements of Cash Flows for the Years Ended December 31, 1997, 1996
   and 1995                                                                F-7

   Notes to Financial Statements                                    F-8 - F-19

   Supplementary Data - Selected Quarterly Financial Data (Unaudited)     F-20





   All schedules  are omitted as they  are not applicable or  not required, or
   the  information is  provided  in the  financial  statements or  the  notes
   thereto.  



                                                    2
<PAGE>





                        REPORT OF INDEPENDENT ACCOUNTANTS
                                             






   To the Shareholders of
   Krupp Government Income Trust:

          We have audited the financial statements of Krupp Government Income
   Trust  (the "Trust") listed  in the index  on page F-2 of  this Form 10-K.
   These financial  statements  are the  responsibility of  management.   Our
   responsibility  is to  express an  opinion  on these  financial statements
   based on our audits.

          We  conducted  our audits  in  accordance  with  generally accepted
   auditing standards.   Those standards require that we plan and perform the
   audit  to  obtain  reasonable  assurance  about  whether  these  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,  these  financial  statements  referred to  above
   present fairly, in all material respects, the financial position of  Krupp
   Government Income Trust as of December 31, 1997 and  1996, and the results
   of its operations and cash flows for each of the three years in the period
   ended December  31, 1997 in conformity  with generally accepted accounting
   principles.




                                               COOPERS & LYBRAND L.L.P.







   Boston, Massachusetts
   March 9, 1998
<PAGE>



<TABLE>

<CAPTION>
                                      KRUPP GOVERNMENT INCOME TRUST

                                              BALANCE SHEETS

                                        December 31, 1997 and 1996
                                                          

                                                  ASSETS
                                                                                    19971996

            <S>
            Participating Insured Mortgage Investments
             ("PIMIs") (Notes B, C and J):
                                                               <C>              <C>
             Insured Mortgages                                 $108,470,247     $114,625,179
             Additional loans                                    19,209,108       20,749,108
            Participating Insured Mortgages ("PIMs")             
             (Notes B, D and J)                                  48,112,523       48,479,897
            Mortgage-Backed Securities and insured
             mortgage ("MBS") (Notes B, E and J)                 27,085,341       26,754,326

                     Total mortgage investments                 202,877,219      210,608,510

            Cash and cash equivalents (Notes B and J)             9,749,804       19,053,931
            Interest receivable and other assets                  1,294,240        1,707,799
            Prepaid acquisition fees and expenses, net
             of accumulated amortization of $6,658,224
               and $6,090,173 respectively (Note B)               5,608,226        7,383,186
            Prepaid participation servicing fees, net of
             accumulated amortization of $1,839,070
               and $1,610,677 respectively (Note B)               2,249,643        2,880,328

                     Total assets                              $221,779,132     $241,633,754

                                  LIABILITIES AND SHAREHOLDERS' EQUITY

            Deferred income on Additional Loans (Note B)       $  7,871,606     $  7,325,414
            Other liabilities                                        25,414           27,733

                     Total liabilities                            7,897,020        7,353,147

            Commitments (Note H)

            Shareholders' equity (Notes A, F, H and I):
                 Common stock, no par value; 17,510,000
                 Shares authorized; 15,053,135 Shares
                 issued and outstanding                         212,496,510      233,015,255
                 Unrealized gain on MBS (Note B)                  1,385,602        1,265,352

                     Total Shareholders  equity                 213,882,112      234,280,607

                     Total liabilities and Shareholders'
                       equity                                  $221,779,132     $241,633,754


</TABLE>



                                                    4
<PAGE>



                                 The accompanying notes are an integral
                                    part of the financial statements.





<TABLE>

<CAPTION>
                                      KRUPP GOVERNMENT INCOME TRUST

                                          STATEMENTS OF INCOME

                          For the Years Ended December 31, 1997, 1996 and 1995
                                                           

                                                       1997          1996           1995

            <S>     
            Revenues:
              Interest income - PIMs and PIMIs:
                <S>                               <C>            <C>            <C>
                Base interest                     $ 12,180,539   $12,807,392    $13,689,837
                Additional Loan interest               793,577          -              - 
                Participation income                 1,385,480       359,161        372,228
              Interest income - MBS                  2,199,234     2,305,613      2,607,682
              Interest income cash and cash
                 equivalents                         1,058,966       885,874        530,669

                Total revenues                      17,617,796    16,358,040     17,200,416

            Expenses:
              Asset management fee 
               to an affiliate (Note G)              1,531,026     1,604,853      1,692,943
              Expense reimbursements 
               to affiliates (Note G)                  395,934       343,214        440,891
              Amortization of prepaid fees, 
               expenses and organization costs       2,405,645     1,613,665      1,682,629
              General and administrative               385,956       315,613        362,321

                    Total expenses                   4,718,561     3,877,345      4,178,784

            Net income                             $12,899,235   $12,480,695    $13,021,632

            Earnings per share                     $       .86   $       .83    $       .87

            Weighted average shares outstanding     15,053,135    15,053,135     15,053,135

</TABLE>


                                                 6
<PAGE>



                               The accompanying notes are an integral
                                 part of the financial statements.




<TABLE>

<CAPTION>
                                        KRUPP GOVERNMENT INCOME TRUST

                                STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                             For the Years Ended December 31, 1997, 1996 and 1995
                                                             

                                                                                      Total
                                             Common      Retained    Unrealized    Shareholders'
                                              Stock      Earnings    Gain on MBS      Equity    

           <S>                           <C>           <C>           <C>           <C>
           Balance at December 31, 1994  $246,651,119  $     -       $    -        $246,651,119

           Dividends                       (6,547,464) (13,021,632)       -         (19,569,096)

           Net income                          -        13,021,632        -          13,021,632

           Unrealized gain on MBS              -            -          1,574,821      1,574,821

           Balance at December 31, 1995   240,103,655       -          1,574,821    241,678,476

           Dividends                       (7,088,400) (12,480,695)       -         (19,569,095) 

           Net income                          -        12,480,695        -          12,480,695

           Change in unrealized gain
               on MBS                          -            -           (309,469)      (309,469)

           Balance at December 31, 1996   233,015,255       -          1,265,352    234,280,607

           Dividends (Notes F and I)      (20,518,745) (12,899,235)       -         (33,417,980) 

           Net income (Note I)                 -        12,899,235        -          12,899,235

           Change in unrealized gain
               on MBS                          -            -            120,250        120,250

           Balance at December 31, 1997  $212,496,510  $    -        $ 1,385,602   $213,882,112


Shared issued  and outstanding for each of  the three years ended December 31, 1997 are
15,053,135

</TABLE>

                                                     8
<PAGE>

                                   The accompanying notes are an integral
                                     part of the financial statements.


<TABLE>

<CAPTION>
                                       KRUPP GOVERNMENT INCOME TRUST

                                          STATEMENTS OF CASH FLOWS

                            For the Years Ended December 31, 1997, 1996 and 1995
                                                            

                                                         1997             1996         1995
           Operating activities:
            <S>                                      <C>             <C>           <C>
            Net income                               $ 12,899,235    $12,480,695   $13,021,632
            Adjustments to reconcile net income
             to net cash provided by operating
             activities:
            Amortization of premium and discounts           2,816         (1,110)        8,663
            Amortization of prepaid fees, expenses
             and organization costs                     2,405,645      1,613,665     1,682,629
            Changes in assets and liabilities:
             Decrease in interest  receivable
              and other assets                            413,559        154,536       246,218
             Increase (decrease) in other
              liabilities                                  (2,319)         7,156       (17,148)

                 Net cash provided by operating
                  activities                           15,718,936     14,254,942    14,941,994

           Investing activities:
            Principal collections on PIMs and PIMIs       891,321        855,308       844,835
            Principal collections on MBS                3,152,419      4,331,574     3,554,556
            Increase in deferred income on
              Additional Loans                            546,192      1,404,457     1,276,777
            PIM prepayment                              5,630,985      8,862,450        -
            Collection of Additional Loan               1,540,000         -             -
            Acquisition of MBS                         (3,366,000)        -         (3,203,221)

                 Net cash provided by investing
                  activities                            8,394,917     15,453,789     2,472,947

           Financing activity:  
            Dividends                                 (33,417,980)   (19,569,095)  (19,569,096)

           Net increase (decrease) in cash and
            cash equivalents                           (9,304,127)    10,139,636    (2,154,155)

           Cash and cash equivalents, beginning
            of year                                    19,053,931      8,914,295    11,068,450

           Cash and cash equivalents, end of year    $  9,749,804    $19,053,931   $ 8,914,295


</TABLE>

                                                     10
<PAGE>




                          KRUPP GOVERNMENT INCOME TRUST

                          NOTES TO FINANCIAL STATEMENTS
                                                
   A.           Organization

                Krupp  Government Income  Trust  (the "Trust")  was  formed on
                November 1,  1989 by  filing  a Declaration  of Trust  in  The
                Commonwealth  of Massachusetts.   The  Trust is  authorized to
                sell and issue  not more than 17,510,000  shares of beneficial
                interest (the "Shares").   Berkshire Mortgage Advisors Limited
                Partnership ("BMALP")(the  Advisor ), acquired 10,000  of such
                Shares  for  $200,000  and  14,999,999  Shares were  sold  for
                $299,480,263 net  of  purchase  volume discounts  of  $519,717
                under a public offering which commenced on April 19, 1990  and
                ended on July 15, 1991.  Under the Dividend Reinvestment  Plan
                ("DRP"),  43,136  Shares were  sold  for  $819,356 during  its
                public offering.   The Trust  shall terminate  on December 31,
                2029,  unless earlier  terminated by  the affirmative  vote of
                holders  of a majority of  the outstanding Shares  entitled to
                vote thereon.

   B.           Significant Accounting Policies

                The Trust uses the following accounting policies for financial
                reporting purposes:

                    MBS

                    The  Trust, in  accordance with  the Financial  Accounting
                    Standards Board's Statement 115,  "Accounting for  Certain
                    Investments in  Debt and  Equity Securities" ( FAS  115"),
                    classifies  its MBS portfolio  as available-for-sale.   As
                    such the  Trust carries its MBS  at fair  market value and
                    reflects any  unrealized  gains  (losses)  as  a  separate
                    component of  Shareholders' Equity.   The  Trust amortizes
                    purchase  premiums  or  discounts over  the  life  of  the
                    underlying mortgages using the effective interest method.

                    PIMs and PIMIs

                    The Trust accounts for  its MBS portion  of a PIM or  PIMI
                    investments  in   accordance  with  FAS   115  under   the
                    classification of  held to  maturity.   The Trust  carries
                    those MBS at amortized cost.

                    The Federal  Housing Administration  Participating Insured
                    Mortgages  and  all   Additional  Loans  are  carried   at
                    amortized  cost unless the  Advisor of  the Trust believes
                    there is a impairment in value, in which case  a valuation
                    allowance  is  established  in  accordance with  Financial
                    Accounting  Standards  No. 114,   Accounting  by Creditors
                    for  impairment  of  a  Loan,   and  Financial  Accounting
                    Standard No.  118,  Accounting by Creditors for Impairment
                    of a Loan - Income Recognition and Disclosures. 

                    Base interest  is recognized  based on the  stated rate of
                    the Department  of Housing  and Urban Development  ("HUD")
                    insured mortgage  loan (less  the servicer's  fee) or  the
                    coupon  rate   of   the   Government   National   Mortgage
                    Association   ("GNMA")   or   Federal  National   Mortgage
                    Association ("FNMA")  MBS.  The  Trust recognizes interest
                    related to the  participation features as earned  and when
                    it deems these amounts are collectible.   The Trust defers
                    the  recognition of  Additional Loan  interest payments as
                    income  to the  extent these  interest  payments are  from
                    escrows established  with the  proceeds of  the Additional
                    Loan.  When  the properties underlying the  PIMIs generate
                    sufficient cash flow to make the  required Additional Loan
                    interest payments with funds other than  from escrows, the
                    Trust  may recognize  income as  earned  and may  commence
                    amortizing deferred interest amounts into income  over the
                    remaining estimated term of the Additional Loan.

                                    Continued


                          KRUPP GOVERNMENT INCOME TRUST

                     NOTES TO FINANCIAL STATEMENTS, Continued
                                                

   B.           Significant Accounting Policies, Continued

                   PIMs and PIMIs, Continued

The Trust also fully reserves the portion of any Additional
Loan base interest payment  satisfied through the  issuance
of  an operating  loan and  any associated interest  due onsuch operating 
loan.  The Trust  will recognize the income related  to the  operating loan 
when  the borrower  repays amounts due under the operating loan.

 Cash Equivalents
The   Trust  includes   all  short-term   investments  with
maturities  of three  months  or  less  from  the  date  of
acquisition  in  cash  and  cash  equivalents.    The Trustinvests its  cash
primarily in  commercial paper and  money market funds with a commercial bank 
and has not experienced any loss to date on its invested cash.

 Prepaid Fees and Expenses

Prepaid  fees and  expenses represent  prepaid  acquisition
fees and expenses  and prepaid participation servicing feespaid for the 
acquisition and servicing of PIMs  and PIMIs. The Trust amortizes  prepaid 
acquisition fees and  expenses using a  method that  approximates the  
effective  interest method  over  a  period  of  ten  to  twelve  years,  which
represents the  actual maturity or  anticipated call payoff of the underlying 
mortgage. The  Trust amortizes  prepaid participation  servicing fees
using  a method  that  approximates the  effective interest
method  over   a  ten  year   period  beginning  at   final
endorsement of the loan  if a HUD-insured mortgage loan and at closing if a 
FNMA MBS.

Income Taxes

The  Trust has  elected  to be  taxed as  a REIT  under the
Internal Revenue  Code of 1986, as amended, and believes it

                                        13
<PAGE>



will    continue   to   meet   all   such   qualifications.
Accordingly, the Trust will not be subject to federal 
income  taxes  on  amounts   distributed  to   shareholders
provided it distributes annually at least 95% of its REIT taxable income
and meets certain other requirements for qualifying as a REIT. Therefore, no 
provision for federal income taxes has been recorded in the financial 
statements.

Estimates and Assumptions

The preparation of financial statements in accordance  with
generally    accepted   accounting    principles   requires
management to  make estimates  and assumptions that  affect
the reported amount of  assets and liabilities,  contingent
assets and liabilities and revenues and expenses during the
period.    Significant estimates  include the  net carrying
value of  Additional Loans and  the unrealized  gain on MBS
investments.    Actual  results  could  differ  from  those
estimates.

   C.           PIMIs

         The Trust has investments in eight PIMIs that in most cases
         financed  the construction  and  in all  cases  provide the
         permanent financing of multi-family housing.  One component
         of  a  PIMI  is  either  a  securitized  HUD-insured  first
         mortgage loan  issued and  guaranteed  by GNMA  or  a  sole
         participation interest in a first  mortgage loan originated
         under  the Federal  Housing Administration  ("FHA") lending
         program and insured by HUD 

                                    Continued
                          KRUPP GOVERNMENT INCOME TRUST

                     NOTES TO FINANCIAL STATEMENTS, Continued
                                                
   C.           PIMIs, Continued

              (collectively  the  "insured  mortgages").   The  FHA first
              mortgage or the first mortgage underlying the GNMA security
              provides  the borrower  (generally a  limited  partnership)
              with  a below  market interest  rate loan  in exchange  for
              providing the  Trust with participation in  a percentage of
              the  cash  generated  from  property  operations and  in  a
              percentage of  any appreciation of  the underlying property
              to   a  preferred   return,  then   a  percentage   of  any
              appreciation thereafter.  The borrower conveys these rights
              to  the Trust  through a  subordinated promissory  note and
              mortgage.   In addition, the Trust  made an Additional Loan
              to the owners of  the borrower to provide  additional funds
              for  the  construction  and  permanent  financing   of  the
              property.     The   owners   generally   collateralize  the
              Additional Loan  through  a pledge  and security  agreement
              that pledges their ownership interests in the borrower, and
              their  share of  any distributions  made from  surplus cash
              generated by  the property  and the proceeds  realized upon
              the refinancing of  the property,  sale of the property  or
              sale of the partnership interests.Amounts payable under 
              the Additional Loan are neither guaranteed nor insured.

              The Trust receives  monthly principal and interest payments
              on  the  insured  mortgage   and  is  entitled  to  receive
              participation interest  under the  subordinated  promissory
              note and mortgage, and semi-annual interest payments ("Base
              Interest") and preferred interest under the Additional 
              Loan.   The Trust receives principal  and interest payments
              on the insured mortgages currently, because  these payments
              are insured  or guaranteed; however,  there are limitations
              to the amount and  obligation to pay participation interest
              and Additional Loan interest.  

              The subordinated promissory note and  mortgage entitles the
              Trust   to  receive   (i)  Participating   Income  Interest
              generally  equal to  50% of  (a) all  distributable Surplus
              Cash (as  defined in the  regulatory agreement  of the HUD-
              insured first  mortgage) generated by the  property (b) any
              unrestricted  cash generated  from property  operations and
              (c)   to  the  extent  available  unexpended  reserves  and
              escrows,  and  (ii)   Participating  Appreciation  Interest
              generally equal to  50% of the net proceeds or value of the
              property  upon   the   sale,   refinancing,   maturity   or
              accelerated   maturity,  or  permitted  prepayment  of  all
              amounts due under the  insured mortgage and Additional Loan
              less the  Outstanding Indebtedness,  as defined.    Amounts
              received  by  the   Trust  pursuant  to  the   subordinated
              promissory  note as  Participating  Income  Interest reduce
              amounts  payable  as  Preferred  Interest  and  may  reduce
              amounts payable as Base Interest under the Additional Loan.

              The  insured  mortgage  and  subordinated  promissory  note
              generally have maturities of 30 to 40 years, however, under
              the  subordinated promissory note  the Trust  can generally
              accelerate these maturity dates at any time after the ninth
              or  tenth anniversary of final  endorsement for coinsurance
              and insurance, but in  certain cases for construction loans
              after  the  eleventh  or  twelfth  anniversary  of  initial
              endorsement (commencement of  construction) for coinsurance
             and insurance, upon giving twelve months written notice for
             the payment of all  accrued participation interest  through
             the accelerated  maturity date.   The Trust  can accelerate
             the  maturity date  for payment  of  amounts due  under the
             subordinated promissory 
             note  and the  insured mortgage  providing the  contract of
             coinsurance  with  the  Secretary  of  HUD on  the  insured
             mortgage is  canceled  prior  to the  accelerated  maturity
             date.




                                    Continued

                          KRUPP GOVERNMENT INCOME TRUST

                     NOTES TO FINANCIAL STATEMENTS, Continued

                                        15
<PAGE>



                                                

   C.           PIMIs, Continued

         Additional Loan Base Interest is payable from the following
         sources:  (i) any  Surplus  Cash received  pursuant  to the
         subordinated  promissory  note   as  Participating   Income
         Interest,  (ii) amounts conveyed to the Trust by the owners
         of  the  borrowing  entity  representing  distributions  of
         Surplus   Cash  and  (iii)  amounts   in  reserve  accounts
         established   with  the   Additional   Loan   proceeds,  if
         available,  and any  interest earned on these  amounts.  If
         these  sources are  not  sufficient to  make  Base Interest
         payments the owners of the borrowing entity must notify the
         Trust of the amount of the shortfall and at  its option the
         Trust could require  a capital call from the owners  of the
         borrowing entity.   The capital call would be equal  to 50%
         of the  Base Interest  shortfall and  the Trust  in certain
         situations  could   convert  the  remaining  50%   into  an
         operating loan  or would forego  50% of  the Base  Interest
         shortfall.

         In addition  to the Base Interest  payments, the Additional
         Loan   requires   the   payment   of   Preferred   Interest
         representing a cumulative,  non-compounded preferred return
         from   the  date  of  final  endorsement  to  the  date  of
         calculation at interest rates  ranging from 9.5% to 11% per
         annum on  the original  outstanding balance of  the insured
         mortgage  plus  the Additional  Loan  and  any other  funds
         advanced by the Trust to the borrowing entity or the owners
         of  the  borrowing  entity  until  the   insured  mortgage,
         Additional  Loan  and  other  funds (reduced  by  principal
         collections)  have been  paid  in full  less:  (i) interest
         payments paid to the Trust under the insured mortgage, (ii)
         Participating  Income  Interest  and  (iii)  Base  Interest
        payments made under the  Additional Loan including  amounts
        foregone by the Trust.     

         The  insured  mortgage  and  subordinated  promissory  note
         generally cannot be  prepaid for a term of five  years from
         the construction completion  date or final  endorsement and
         thereafter may be prepaid in whole without penalty provided
         all  participation interest and  amounts under  the insured
         mortgage are paid.   Any prepayment requires not  less than
        ninety nor more than 180 days prior written notice.

         The Additional Loan generally may not be prepaid before the
         fifth  anniversary  of the  Agreement  or  the construction
         completion  date and  thereafter  may  be prepaid  in  full
         without penalty provided Preferred Interest and any amounts
         due under the insured mortgage and  subordinated promissory
         note are paid in full.
         On  February 6, 1997, the  Trust, with the  approval of the
         independent Trustees, agreed to a workout with the borrower
         of the  Windward Lakes Apartments PIMI, an affiliate of the
         Advisor  of  the  Trust.   The  terms  are  as  follows: a)
         interest rate relief  for 1997 of  2% per annum and  1% per
         annum for 1998 through 2000 on the insured mortgage: b) the
         borrower,  McNab KC-3 L.P. ( McNab ),  contributed $133,036

                                       16
<PAGE>

     of new equity into  the property; c) the  borrower will cap
 the  annual management  fee paid to  an affiliate at  3% ofrevenues; d) the
 Trust s participation in current operations shall be 50% of Surplus Cash as 
determined under HUD guidelines; e) Base Interest  on the Additional Loan is
payable from the  Trust s share of Surplus Cash  and unpaid
amounts accrue  at  7.5%  per annum;  and  f)  the  Trust s
participation in a sale or refinancing, after repayment 

                                    Continued

                          KRUPP GOVERNMENT INCOME TRUST

                     NOTES TO FINANCIAL STATEMENTS, Continued
                                              

   C.           PIMIs, Continued
                   of  the first mortgage and  additional loans, interest rate
                   relief, accrued Base Interest and McNab s new equity, shall
                   be 50%  of any  remaining proceeds  up to  an amount  which
                   would result  in the  Trust having  received a  cumulative,
                   noncompounded preferred return of 10% on its  investment in
                   the  first  mortgage  and additional  loans;  any remaining
                   proceeds shall be distributed to McNab.
                   During  the first quarter the  Trust received proceeds from
                   the  prepayment of  The  Timber  Ridge Apartments  PIMI  as
                   follows:  $1,540,000   to  payoff   the  Additional   Loan;
                   $1,246,159 representing additional  interest which includes
                   prepayment penalties; $5,630,985 to  payoff the outstanding
                   first   mortgage  principal  balance.    During  the  third
                   quarter,  the Trust  made a  special dividend  of  $.92 per
                   share to it s investors.  This special  dividends consisted
                   of the 1996 Canyon Ridge PIM prepayment and the 1997 Timber
                   Ridge prepayment  proceeds, net  of the  reinvestment in  a
                   $3,400,000 face value insured multifamily mortgage.

                   During  August 1996, the Trust  entered into a modification
                   agreement  (the   Agreement )  with  the  borrower  of  the
                   Lifestyles Apartments  PIMI that reduces  the interest paid
                   monthly  on  the insured  mortgage by  1%  per annum  for a
                   period  of  24 months.    The  Agreement also  extended the
                   prepayment lock out period by five years  and postponed the
                   date when  the Trust can accelerate  the maturity date five
                   years.  The Agreement modified the terms of  the Additional
                   Loan as  follows: base interest  will only  be payable from
                   50% of available surplus cash during each fiscal year up to
                   a maximum payment of $100,000; the Preferred  Interest rate
                   will be 10%; and the Preferred Rate will only be calculated
                   on  the outstanding balance  of the  Additional Loan.   The
                  Agreement  also  amended  the   participation  features  to
                  increase the Participating Income Interest percentage  from
                   50%  to 75% of  surplus cash on  available surplus  cash in
                   excess of  $200,000.  In addition,  the borrower agreed  to
                   contribute $150,000 to an escrow account controlled  by the
                   Trust to fund operating deficits of the property and agreed
                   to fund up  to a maximum of $50,000  per year for operating
                   deficits at the property if deemed necessary by GIT.   Upon
                   the  sale, refinancing,  maturity or  permitted prepayment,
                   and  following payment  of  the  insured mortgage  and  the
                   Additional Loan  principal, the Trust  will be  entitled to
                   receive the  interest  currently foregone  on  the  insured
                   mortgage.   However, the Trust and  the borrower will share
                   equally  in  the  proceeds  until  the   borrower  receives
                   repayment  of the  $150,000 contributed to the  escrow.  If
                   there are still sufficient proceeds, the Trust will then be
                   entitled to  payment for  any Preferred  Interest and  will
                   then receive  50% of the  remaining proceeds.   Any amounts
                   under  the participation  features or the  Preferred Return
                   accumulated prior to the modification have been foregone by
                   the Trust.

                   At December 31, 1997 and 1996 there are no insured mortgage
                   loans  within the Trust s portfolio  that are delinquent of
                   principal or interest.







                                               Continued

                                     KRUPP GOVERNMENT INCOME TRUST

                               NOTES TO FINANCIAL STATEMENTS, Continued
                                                        

    C.  PIMIs, Continued
  The  Trust's investments in PIMIs consist of the following at December 31,
  1997 and 1996:


<TABLE>
<CAPTION>
                             Original
                               Loan       Interest    Maturity         Balance Outstanding
                              Amount        Rate        Date             at December 31,
        <S>
        PIM
                                                                       1997           1996     
      <S>                    <C>           <C>         <C>          <C>              <C>
      Lifestyles (GNMA)      $10,292,394   7.25%(a)    5/1/32       $10,074,176$     10,121,765

      Windward (GNMA)         14,000,778    6.50%(b)   6/1/32        13,732,172      13,791,753

      Audubon Villas(GNMA)    15,250,000 7.75%         9/15/33       14,985,694      15,056,168

      Coconut Palm (GNMA)     16,155,100 8.25%         5/1/33        15,899,315      15,966,932

      Mountain View (FHA)      9,547,700  8.125%
                                         (c)           1/1/34         9,407,192       9,447,473


      Red Run (FHA)           19,019,600  7.875%       5/1/34        18,742,124      18,832,455

      Park Highland (FHA)     17,068,500  7.625%       1/1/34        16,788,083      16,869,418

      Timber Ridge (FHA)       5,775,000  8.125%       10/1/29             -          5,634,320

      The Seasons (FHA)(d)     9,075,351  7.875%       10/1/28        8,841,491       8,904,895


                             $116,184,423                         $108,470,247      $114,625,179
                                                                         (f)

</TABLE>
<PAGE>





                                                         Base     Preferred
                              Outstanding Balance       Interest    Interest
          Additional Loan       1997         1996         Rate        Rate 

           Lifestyles (a)     $ 1,817,665  $1,817,665       7.5%       11%

           Windward (b)         2,471,294   2,471,294       7.5%       11%

           Audubon Villas       2,691,000   2,691,000       7.0%       10%

           Coconut Palm         2,850,900   2,850,900       7.5%       11%

           Mountain View (c)    1,553,600   1,553,600       7.0%       10%

           Red Run              2,900,000   2,900,000       7.0%       10%

           Park Highland        3,000,000   3,000,000       7.5%       9.5%

           Timber Ridge             -       1,540,000       9.0%       11%

           The Seasons (d)      1,924,649   1,924,649       9.0%       10%
                                                                 (e)
                              $19,209,108 $20,749,108


<PAGE>

   Continued
                          KRUPP GOVERNMENT INCOME TRUST

                     NOTES TO FINANCIAL STATEMENTS, Continued
                                              
   C.   PIMIs, Continued

   (a)The Trust  entered into an Agreement which  reduced the interest rate on
   the insured mortgage by  1% per annum effective August 1, 1996 for a period
   of twenty-four months, extended the lockout date by five years and modified
   the terms of the Lifestlyes Additional Loan as mentioned  above.

                (b)  The  Trust entered  into an  agreement which  reduced the
   interest  rate on the insured  mortgage by 2.0%  per annum for  1997 and by
   1.0% for 1998 through 2000. 

                (c)  The  Trust entered  into an  agreement which  reduced the
                     interest  rate  on the  insured  mortgage  .5% per  annum
                     effective  July 1, 1995 for a  period of eighteen months.
                     The  borrower  was also  allowed  to  forego making  four
                     semiannual  interest  payments beginning  March  1, 1995.
                     These  unpaid  amounts  will  be  payable  from  the  net
                     proceeds of a sale or refinancing of the property.



                (d)  The total  PIM and Additional Loan on  this property were
                     $32,300,000 and $6,850,000, respectively, of which 72% is
                     held by Krupp Government Income Trust II.  The Seasons is
                     affiliated with the Advisor of the Trust.

                (e)  The base interest  rate was  6% per annum  for the  first
                     three years and beginning  in September 1996 increased to
                     9% per annum.

                (f)  The  aggregate cost  for federal  income tax  purposes is
                     $108,470,247.

                A  reconciliation of activity  for each of the  three years in
   the period ended  December 31, 1997 is as follows:

<TABLE>
<CAPTION>

                                                   1997           1996           1995

              <S>                             <C>             <C>            <C>
              Balance at beginning of period  $114,625,179    $115,131,611   $115,612,833

                PIM prepayment                  (5,630,985)        -                -

                Principal collections             (523,947)       (506,432)      (481,222)


              Balance at end of period        $108,470,247    $114,625,179   $115,131,611

</TABLE>


         Property descriptions:

             Lifestyles Apartments ("Lifestyles")  is a 236-unit garden style
              apartment complex located in Palm Harbor, Florida.
          Windward  Lakes  Apartments ("Windward")  is  a  276-unit garden
          style apartment complex located in Pompano Beach, Florida.
          Audubon  Villas  is  a  308-unit  apartment  complex  located in
          Clearwater, Florida.
          Coconut  Palm  Club ("Coconut  Palm")  is  a  301-unit apartment
          complex located in Coconut Creek, Florida.
        Mountain  View  Apartments  ("Mountain  View")  is   a  256-unit
          apartment complex located in Madison, Alabama.
        Red Run  Apartments ("Red Run") is  a 304-unit apartment complex
       located in  Owings Mills, Maryland.
      Park   Highland  Apartments  ("Park  Highland")  is  a  250-unit
       apartment complex  located in Bellevue, Washington.


    Continued
                                     KRUPP GOVERNMENT INCOME TRUST

                               NOTES TO FINANCIAL STATEMENTS, Continued
                                                        
            C.  PIMIs, Continued

                  Timber  Ridge  Apartments ("Timber  Ridge")  is  a 198-unit
                   apartment complex  located in Vail, Colorado.
                 The Seasons  is a  1,088-unit apartment complex  located in
                   Laurel, Maryland.

   D.   PIMs

                The Trust has  investments in five PIMs at December  31, 1997.
                The  Trust's PIMs consist  of a GNMA or  FNMA MBS representing
                the securitized first mortgage loan on the underlying property
                or  a  sole participation  interest in  a first  mortgage loan
                originated  under the  FHA lending  program on  the underlying
                property   (collectively   the   "insured   mortgages"),   and
                participation interests in the revenue stream and appreciation
                of  the underlying property above specified  base levels.  The
                borrower conveys  these  participation features  to the  Trust
                generally through a subordinated  promissory note and mortgage
                (the "Agreement").

                The Trust  receives guaranteed  monthly payments  of principal
                and  interest on the  GNMA and  FNMA MBS  and HUD  insures the
                mortgage loan  underlying the  GNMA MBS  and the  FHA mortgage
                loan.  The borrower  usually cannot prepay the  first mortgage
                loan  during the  first five  years and  may prepay  the first
                mortgage loan thereafter subject to a 9% prepayment penalty in
                years  six through nine,  a 1% prepayment penalty  in year ten
                and no  prepayment penalty  thereafter. The Trust  may receive
                interest  related  to  its  participation  interests   in  the
                underlying  property,  however,  these  amounts   are  neither
                insured nor guaranteed.

                Generally,   the  participation   features  consist   of   the
                following:  (i) "Minimum Additional Interest" at rates ranging
                from .5% to .75% per annum calculated on the unpaid  principal
                balance of the first mortgage on the underlying property, (ii)
                "Shared  Income  Interest"  ranging from  25%  to  30%  of the
                monthly  gross  rental  income  generated  by  the  underlying
                property in excess of a specified base, but only to the extent
                that  it exceeds  the  amount of  Minimum  Additional Interest
                received  during such  month, and  (iii) "Shared  Appreciation
                Interest" ranging from  25% to 30% of any increase in value of
                the  underlying  property  in  excess  of  a  specified  base.
                Payment of  participation interest from the  operations of the
                property  is limited to 50% of net  revenue or surplus cash as
                defined by FNMA or HUD, respectively.  The aggregate amount of
                Minimum Additional Interest, Shared Income Interest and Shared
                Appreciation  Interest payable by  the underlying  borrower on
                the maturity date generally can not exceed 50% of any increase
                in value of the  property. However, generally the net proceeds
                from  a sale or  refinancing will be available  to satisfy any
                accrued  but  unpaid  shared  income  or  minimum   additional
                interest.

                Shared  Appreciation  Interest  is  payable  when one  of  the
                following occurs: (1) the sale  of the underlying property  to
                an  unrelated third party  on a date which  is later than five
                years from the date of the Agreement, (2) the maturity date or
                accelerated maturity date of  the Agreement, or (3) prepayment
                of amounts due under the Agreement and the insured mortgage.
    
                                        25
<PAGE>



            Under  the Agreement,  the  Trust, upon  giving  twelve months
            written  notice,  can  accelerate  the  maturity date  of  the
            Agreement to a date not earlier 
                                             
   D.   PIMs, continued

           than ten  years from  the date  of the  Agreement for  (a) the
           payment of all participation interest due  under the Agreement
           as of the  accelerated maturity date,  or (b)  the payment  of
           all participation  interest due under  the Agreement plus  all
           amounts due on the first mortgage note on the property. 

           On April  25, 1996,  the Trust  received a  prepayment of  the
           Canyon  Ridge   Apartments  PIM  from  the   Federal  National
           Mortgage Association  ( FNMA ) for  the outstanding  principal
           balance of approximately $8.9 million. The  borrower defaulted
           on its first mortgage loan  and FNMA intended to  foreclose on
           the property,  but the  borrower filed  for bankruptcy  before
           this happened.   The Trust subsequently collected  $200,000 of
           participation   interest  income  through  a  claim  with  the
           bankruptcy court.

           At December  31, 1997 and 1996  there are  no insured mortgage
           loans  within the  Trust s portfolio  that  are delinquent  of
           principal or interest.

           The Trust's PIMs consisted  of the  following at December  31,
                1997 and 1996:

<TABLE>

<CAPTION>
                                 Original
                                   Loan       Interest   Maturity
            PIM                  Amount         Rate       Date         Balance at December 31,
                                                                            1997          1996
            <S>                   <C>           <C>        <C>        <C>           <C>
            River View (GNMA)     $ 9,284,877   8.00%      1/15/33    $ 9,116,775   $ 9,159,679

            Mill Pond (FHA)         7,812,100   8.15%       1/1/33      7,661,308     7,697,101

            Waterford (FHA)         6,935,900   8.125%      8/1/32      6,787,988     6,841,912

            Rivergreens (FHA)      10,003,000   8.005%      4/1/33      9,815,836     9,862,103

            Lincoln Green (FNMA)   15,565,000   6.75%      10/1/02     14,730,616    14,919,102
                                                              (a)

              Total               $49,600,877                         $48,112,523   $48,479,897
                                                                           (b)
</TABLE>
                                                     26
<PAGE>


   (a)   Normal  monthly  benefit is  based on  a  30-year amortization.   All
         unpaid principal of approximately $13,583,000 and accrued interest is
         due at the maturity date.
   (b)   The aggregate cost for federal income tax purposes is $48,112,523.


   A  reconciliation of  activity for each  of the  three years  in the period
   ended December 31, 1997 is as follows:

<TABLE>


<CAPTION>
                                                    1997           1996          1995

              <S>                               <C>            <C>           <C>
              Balance at beginning of period    $48,479,897    $57,691,223   $58,054,836

               PIM prepayment                        -          (8,862,450)        -

               Principal collections               (367,374)      (348,876)     (363,613)

              Balance at end of period          $48,112,523    $48,479,897   $57,691,223

</TABLE>

   Continued

    KRUPP GOVERNMENT INCOME TRUST

                     NOTES TO FINANCIAL STATEMENTS, Continued
                                              
      D. PIMs, continued

   Property descriptions:
      River View Apartments ("River View") is  a 220-unit apartment complex
      located in Columbia, South Carolina.
      Mill Pond Apartments ("Mill Pond") is a 146-unit apartment complex in
      Bellbrook, Ohio.
      Waterford Townhomes Apartments ("Waterford") is a  122-unit apartment
      complex in Eagen, Minnesota.
      Rivergreens   Apartments  ("Rivergreens")  is  a  208-unit  apartment
      complex in Gladstone, Oregon.
      Lincoln Green  Apartments ("Lincoln  Green") is a  616-unit apartment
      complex in Greensboro, North Carolina.

   E. MBS

         At December 31, 1997, the Trust's MBS portfolio had an amortized cost
         of $25,699,739 and gross unrealized gains of  $1,385,602. At December
         31,  1996, the  Trust s  MBS  portfolio  had  an  amortized  cost  of
         $25,488,974 and  gross unrealized gains  of $1,265,352.   The Trust's
         MBS have maturities ranging from 2008 to 2029.

         During the first  quarter of  1997, the Trust  acquired a  $3,400,000
         face  value insured  multi-family  mortgage for  $3,366,000 having  a
         coupon rate of 7.5% per annum and a maturity of April 2032.

   F. Shareholders' Equity
 
         Under  the Declaration  of  Trust  and  commencing with  the  initial
         closing of the public offering of  shares, the Trust has declared and
         paid dividends  on a quarterly basis.  During the period in which the
         Trust  qualifies as  a  REIT, the  Trust has  and will  pay quarterly
         dividends aggregating at  least 95%  of taxable income  on an  annual
         basis  to be  allocated to  the shareholders  in proportion  to their
         respective number of shares.

         In order  for the Trust to  maintain its REIT status  with respect to
         the  requirements  of  Share  ownership,  the  Declaration  of  Trust
         prohibits any investor from owning, directly or indirectly, more than
         9.8% of the outstanding Shares and empowers the Trustees to refuse to
         permit  any  transfer  of  Shares  which,  in  their  opinion,  would
         jeopardize the status of the Trust as a REIT.

   G. Related Party Transactions

         Under  the  terms  of  the Advisory  Service  Agreement,  the Advisor
         receives an Asset Management Fee equal to .75% per annum of the value
         of  the   Trust's  actual  and  committed   invested  assets  payable
         quarterly.

         The Trust also reimburses affiliates of the Advisor for certain costs
         incurred  in connection with maintaining the books and records of the
         Trust  and  the preparation  and  mailing of  financial  reports, tax
         information and other communications to investors.

         During  the three years ended  December 31, 1997,  the Trust received
         interest  collections  on Additional  Loans  with  affiliates of  the
         Advisor of the Trust of $400,838, $234,593 and $300,825 respectively.
         In  addition,  the  Trust   received  $32,622  in  1997   related  to
         Participating Interest Income.

                                        28
<PAGE>






                          KRUPP GOVERNMENT INCOME TRUST

                     NOTES TO FINANCIAL STATEMENTS, Continued
                                               

   H. Original Shares

         Upon  termination of  the Trust,    an affiliate  of  the Advisor  is
         committed to  pay to holders of  Original Shares the amount  (if any)
         by which (a)  the Shareholders' Original  Investments exceed (b)  all
         Dividends  (as  defined in  the prospectus)  paid  by the  Trust with
         respect to  such Original Shares.   Original Shares  are those Shares
         purchased during the  Trust's initial public offering  either through
         purchase or through the dividend reinvestment program and  held until
         the last mortgage held by the Trust is repaid or disposed of.



<TABLE>
<CAPTION>

            
            I.  Federal Income Taxes

                <S>                                                     <C>
                Net income per statement of income                      $ 12,899,235

                Add:    Additional Loan interest deferred
                         for book purposes                                   605,259

                        Book to tax difference for amortization
                         of prepaid fees and expenses                        867,928

                        Net income for federal income tax purposes      $ 14,372,422

</TABLE>


         The  Trust paid  dividends  of $2.22  per  share during  1997  which
         represents  approximately  $.95  from  ordinary  income   and  $1.27
         represents  a  non-taxable   distribution  for  federal  income  tax
         purposes.

         The  basis of the Trust s assets for financial reporting purposes is
         less than its  tax basis by approximately  $4,622,000 and $3,815,000
         at  December 31,  1997 and  1996,  respectively.   The basis  of the
         Trust s liabilities  for financial reporting  purposes exceeded  its
         tax basis by approximately $7,872,000 and $7,325,000 at December 31,
         1997 and 1996, respectively.

   J. Fair Value Disclosures of Financial Instruments

         The Trust uses the following methods and assumptions to estimate the
         fair value of each class of financial instruments:

             Cash and Cash Equivalents

             The carrying amount approximates fair value because of the short
             maturity of those instruments.

             MBS

             The Trust estimates the fair value of MBS based on quoted market
             prices.

             PIMs and PIMIs

             There is  no active  trading  market for  these investments,  so
             management  estimates the fair value of the PIMs and the insured
             mortgage  portion of the PIMIs using quoted market prices of MBS
             having  the same stated coupon rate as the insured mortgages and
             Additional  Loans  based  on the  estimated  fair  value of  the
             underlying  properties.    Management   does  not  include   any
             participation  income  in  the  Trust s estimated  fair  values,
             because Management does  not believe it can predict the  time of
             realization of  the feature with  any certainty.   Based on  the
             estimated fair value determined 

   J. Fair Value Disclosures of Financial Instruments, continued

             using these methods and  assumptions, the Trust's investments in
             PIMs  and  PIMIs  had  gross  unrealized  losses  and  gains  of
             approximately $6,511,000 and $381,000, respectively, at December
             31, 1997  and gross unrealized losses and gains of approximately
             $5,668,000 and $889,000, respectively, at December 31, 1996.

             At  December 31,  1997 and  1996, the  Trust estimated  the fair
             value of its financial instruments as follows:

                                                     ( amounts in thousands)
                                                         1997       1996  

                    Cash and cash equivalents         $  9,750    $ 19,054

                    MBS                                 27,085      26,754

                    PIMs and PIMIs:
                       PIMs                             48,382      48,783
                       Insured mortgages               109,902     116,869
                       Additional Loans                 11,378      13,424

                                                      $206,497    $224,884


                                                     30
<PAGE>



<TABLE>


<CAPTION>
            KRUPP GOVERNMENT INCOME TRUST
                                             SUPPLEMENTARY DATA
                                     SELECTED QUARTERLY FINANCIAL DATA
                                                (Unaudited)




                                                   For the Quarter Ended               
                                 March 31,      June 30,    September 30,  December 31,
                                   1997           1997          1997           1997    

         <S>                    <C>            <C>           <C>           <C>
         Total revenues         $6,057,058     $3,850,203    $3,951,415    $3,759,120

         Net income             $5,041,789     $2,876,464    $2,173,105    $2,807,877

         Earnings per Share     $      .33     $      .20    $      .14    $      .19


</TABLE>



<TABLE>
<CAPTION>
                                                           For the Quarter Ended
                 
                                        March 31, June 30,     September 30, December 31,
                                          1996      1996           1996        1996    

         <S>                    <C>         <C>         <C>            <C>
         Total revenues         $4,120,423  $4,233,475  $3,961,045     $4,043,097

         Net income             $3,077,602  $3,264,669  $3,000,682     $3,137,742

         Earnings per Share     $      .20  $      .22  $      .20  $         .21

</TABLE>



<PAGE>