UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2004or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________
Commission File #0-19220Inland Land Appreciation Fund II, L.P.(Exact name of registrant as specified in its charter)



|Delaware                          | #36-3664407                            
|--------------------------------- | ---------------------------------------
|(State or other jurisdiction      | (I.R.S. Employer Identification Number)
|of incorporation or organization) |                                        





|2901 Butterfield Road, Oak Brook, Illinois | 60523     
|------------------------------------------ | ----------
|(Address of principal executive office)    | (Zip Code)
|                                           |           

Registrant's telephone number, including area code:  630-218-8000
________________N/A___________________
(Former name, former address and former fiscal
year, if changed since last report)

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 a checkmark whether the registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2)    Yes  No X

-1-



INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Balance Sheets
September 30, 2004 and December 31, 2003
(unaudited)

Assets



|                                                                                                                                                                       |   | 2004       | 2003      
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | ----------
|Current assets:                                                                                                                                                        |   |            |           
|Cash and cash equivalents (Note 1)                                                                                                                                     | $ | 9,483,596  | 3,165,895 
|Restricted cash                                                                                                                                                        |   | -          | 182,879   
|Accounts and accrued interest receivable (net of allowance for
    doubtful accounts of $336,712 at September 30, 2004 and 
    December 31, 2003) (Note 5)            |   | 326,033    | 103,262   
|Other current assets                                                                                                                                                   |   | 274,849    | 7,029     
|                                                                                                                                                                       |   |            |           
|Total current assets                                                                                                                                                   |   | 10,084,478 | 3,459,065 
|                                                                                                                                                                       |   |            |           
|Mortgage loans receivable (net of allowance for doubtful   accounts of $1,208,378 at September 30, 2004 and December   31, 2003) (Note 5)                              |   | 14,133,954 | 14,795,872
|Investment properties (including acquisition fees paid to   Affiliates of $697,337 and $951,392 at September 30, 2004   and December 31, 2003, respectively) (Note 3): |   |            |           
|Land and improvements                                                                                                                                                  |   | 17,892,106 | 21,019,622
|                                                                                                                                                                       |   |            |           
|Total assets                                                                                                                                                           | $ | 42,110,538 | 39,274,559



See accompanying notes to financial statements.

-2-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Balance Sheets
(continued)
September 30, 2004 and December 31, 2003
(unaudited)Liabilities and Partners' Capital



|                                                                                                                                                                                                              |   | 2004         | 2003        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | ------------
|                                                                                                                                                                                                              |   |              |             
|Current liabilities:                                                                                                                                                                                          |   |              |             
|Accounts payable                                                                                                                                                                                              | $ | 1,389,747    | 48,989      
|Accrued real estate taxes                                                                                                                                                                                     |   | 26,645       | 56,313      
|Due to Affiliates (Note 3)                                                                                                                                                                                    |   | 70,362       | 45,267      
|Unearned income                                                                                                                                                                                               |   | 1,223,706    | 1,203,176   
|                                                                                                                                                                                                              |   |              |             
|Total current liabilities                                                                                                                                                                                     |   | 2,710,460    | 1,353,745   
|                                                                                                                                                                                                              |   |              |             
|Deferred gain on sale of investment properties (Note 5)                                                                                                                                                       |   | 8,263,531    | 8,651,061   
|                                                                                                                                                                                                              |   |              |             
|Total liabilities                                                                                                                                                                                             |   | 10,973,991   | 10,004,806  
|                                                                                                                                                                                                              |   |              |             
|Partners' capital:                                                                                                                                                                                            |   |              |             
|General Partner:                                                                                                                                                                                              |   |              |             
|Capital contribution                                                                                                                                                                                          |   | 500          | 500         
|Cumulative net income                                                                                                                                                                                         |   | 7,867,376    | 3,750,834   
|Cumulative cash distributions                                                                                                                                                                                 |   | (7,488,195)  | (3,376,293) 
|                                                                                                                                                                                                              |   |              |             
|                                                                                                                                                                                                              |   | 379,681      | 375,041     
|Limited Partners:                                                                                                                                                                                             |   |              |             
|Units of $1,000. Authorized 60,000 Units, 50,068 Units outstanding
      at September 30, 2004 and December 31, 2003, (net of offering       costs of $7,532,439, of which $2,535,445 was paid to Affiliates) |   | 42,559,909   | 42,559,909  
|Cumulative net income                                                                                                                                                                                         |   | 43,262,791   | 30,512,539  
|Cumulative cash distributions                                                                                                                                                                                 |   | (55,065,834) | (44,177,736)
|                                                                                                                                                                                                              |   |              |             
|                                                                                                                                                                                                              |   | 30,756,866   | 28,894,712  
|                                                                                                                                                                                                              |   |              |             
|Total Partners' capital                                                                                                                                                                                       |   | 31,136,547   | 29,269,753  
|                                                                                                                                                                                                              |   |              |             
|Total liabilities and Partners' capital                                                                                                                                                                       | $ | 42,110,538   | 39,274,559  



See accompanying notes to financial statements.

-3-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 2004 and 2003
(unaudited)

|                                                          |   | Three months  | Three months  | Nine months   | Nine months  
|--------------------------------------------------------- | - | ------------- | ------------- | ------------- | -------------
|                                                          |   | ended         | ended         | ended         | ended        
|                                                          |   | September 30, | September 30, | September 30, | September 30,
|                                                          |   | 2004          | 2003          | 2004          | 2003         
|Income:                                                   |   |               |               |               |              
|Sale of investment properties (Note 3)                    | $ | -             | 271,605       | 21,810,441    | 3,648,213    
|Deferred gain recognized                                  |   | 165,600       | -             | 387,530       | -            
|Rental income (Note 4)                                    |   | 34,773        | 45,913        | 103,564       | 136,244      
|Interest income                                           |   | 247,026       | 262,951       | 729,412       | 759,442      
|Other income                                              |   | 3,550         | 3,075         | 10,725        | 9,175        
|                                                          |   |               |               |               |              
|                                                          |   | 450,949       | 583,544       | 23,041,672    | 4,553,074    
|                                                          |   |               |               |               |              
|Expenses:                                                 |   |               |               |               |              
|Cost of investment properties sold                        |   | -             | 287,362       | 5,795,222     | 2,111,699    
|Professional services to Affiliates                       |   | 3,053         | 9,189         | 26,601        | 27,155       
|Professional services to non-affiliates                   |   | 5,890         | 3,818         | 54,126        | 42,723       
|General and administrative expenses to     Affiliates     |   | 1,383         | 4,526         | 20,111        | 27,932       
|General and administrative expenses to     non-affiliates |   | 12,701        | 8,897         | 166,484       | 77,798       
|Marketing expenses to Affiliates                          |   | 28,605        | 7,664         | 39,702        | 19,957       
|Marketing expenses to non-affiliates                      |   | 6,920         | 24,823        | 31,926        | 57,160       
|Land operating expenses to non-affiliates                 |   | 20,318        | 626           | 40,706        | 50,805       
|Impairment loss on land                                   |   | -             | 407,359       | -             | 561,359      
|                                                          |   |               |               |               |              
|                                                          |   | 78,870        | 754,264       | 6,174,878     | 2,976,588    
|                                                          |   |               |               |               |              
|Net income (loss)                                         | $ | 372,079       | (170,720)     | 16,866,794    | 1,576,486    
|                                                          |   |               |               |               |              



See accompanying notes to financial statements.

-4-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the three and nine months ended September 30, 2004 and 2003
(unaudited)



|                                                                                                                                                                                                            |   | Three months  | Three months  | Nine months   | Nine months  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | ------------- | ------------- | -------------
|                                                                                                                                                                                                            |   | ended         | ended         | ended         | ended        
|                                                                                                                                                                                                            |   | September 30, | September 30, | September 30, | September 30,
|                                                                                                                                                                                                            |   | 2004          | 2003          | 2004          | 2003         
|Net income (loss) allocated to:                                                                                                                                                                             |   |               |               |               |              
|General Partner                                                                                                                                                                                             | $ | 2,064         | 2,524         | 4,116,542     | 6,013        
|Limited Partners                                                                                                                                                                                            |   | 370,015       | (173,244)     | 12,750,252    | 1,570,473    
|                                                                                                                                                                                                            |   |               |               |               |              
|Net income (loss)                                                                                                                                                                                           | $ | 372,079       | (170,720)     | 16,866,794    | 1,576,486    
|                                                                                                                                                                                                            |   |               |               |               |              
|Net income allocated to the one General Partner Unit                                                                                                                                                        | $ | 2,064         | 2,524         | 4,116,542     | 6,013        
|                                                                                                                                                                                                            |   |               |               |               |              
|Net income (loss) per Unit, basic and   diluted, allocated to Limited Partners per   weighted average Limited Partnership   Units (50,073 for the three and nine
months ended September 30, 2004 
and 2003) | $ | 7.39          | (3.46)        | 254.66        | 31.37        



See accompanying notes to financial statements.

-5-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 2004 and 2003
(unaudited)

|                                                                                   |   | 2004         | 2003       
|---------------------------------------------------------------------------------- | - | ------------ | -----------
|Cash flows from operating activities:                                              |   |              |            
|Net income                                                                         | $ | 16,866,794   | 1,576,486  
|Adjustments to reconcile net income to net cash provided by 
operating activities: |   |              |            
|Gain on sale of investment properties                                              |   | (16,015,219) | (1,536,514)
|Recognition of deferred gain on sale of investment properties                      |   | (387,530)    | -          
|Impairment loss on land                                                            |   | -            | 561,359    
|Changes in assets and liabilities:                                                 |   |              |            
|Accounts and accrued interest receivable                                           |   | (222,771)    | 156,994    
|Other current assets                                                               |   | (267,820)    | -          
|Accounts payable                                                                   |   | 340,552      | (177,165)  
|Accrued real estate taxes                                                          |   | (29,668)     | (124,524)  
|Due to Affiliates                                                                  |   | 25,095       | 469        
|Unearned income                                                                    |   | 20,530       | 149,210    
|Restricted cash                                                                    |   | 182,879      | -          
|                                                                                   |   |              |            
|Net cash provided by operating activities                                          |   | 512,842      | 606,315    
|                                                                                   |   |              |            
|Cash flows from investing activities:                                              |   |              |            
|Additions to investment properties                                                 |   | (1,667,500)  | (1,078,209)
|Principal payments collected on mortgage loans receivable                          |   | 661,918      | -          
|Proceeds from sale of investment properties                                        |   | 21,810,441   | 3,648,213  
|                                                                                   |   |              |            
|Net cash provided by investing activities                                          |   | 20,804,859   | 2,570,004  
|                                                                                   |   |              |            
|Cash flows from financing activities:                                              |   |              |            
|Distributions                                                                      |   | (15,000,000) | -          
|                                                                                   |   |              |            
|Net cash used in financing activities                                              |   | (15,000,000) | -          
|                                                                                   |   |              |            
|Net increase in cash and cash equivalents                                          |   | 6,317,701    | 3,176,319  
|Cash and cash equivalents at beginning of period                                   |   | 3,165,895    | 2,247,179  
|                                                                                   |   |              |            
|Cash and cash equivalents at end of period                                         | $ | 9,483,596    | 5,423,498  
|                                                                                   |   |              |            

Supplemental disclosure of non-cash investing activities:

Accounts payable at September 30, 2004 includes $1,000,206 for the purchase of land improvements.

See accompanying notes to financial statements.

-6-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 2004
(unaudited)

Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2003, which are included in the Partnership's 2003 annual report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report.

(1) Organization and Basis of Accounting

The Registrant, Inland Land Appreciation Fund II, L.P. (the "Partnership"), is a limited partnership formed on June 28, 1989, pursuant to the Delaware Revised Uniform Limited Partnership Act, to invest in undeveloped land on an all-cash basis and realize appreciation of such land upon resale. On October 25, 1989, the Partnership commenced an offering of 30,000 (subject to increase to 60,000) limited partnership units or Units pursuant to a Registration under the Securities Act of 1933. The Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") provides for Inland Real Estate Investment Corporation to be the General Partner. On October 24, 1991, the Partnership terminated its offering of Units, with total sales of 50,476.17 Units, at $1,000 per Unit, resulting in $50,476,170 in gross offering proceeds, not including the General Partner's capital contribution of $500. All of the holders of these Units have been admitted to the Partnership. As of September 30, 2004, the Partnership has repurchased a total of 408.65 Units for $383,822 from various Limited Partners through the Unit Repurchase Program.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



The Partnership uses the area method of allocation, which approximates the relative sales method of allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

In January 2003, FASB issued Interpretation No. 46 ("FIN 46") "Consolidation of Variable Interest Entities and Interpretation of Accounting Research Bulletin (ARB) No. 51", which was revised in December 2003. The primary objectives of FIN No. 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (Variable Interest Entities) and how to determine when and which business enterprise should consolidate the Variable Interest Entity (the Primary Beneficiary). FIN 46 became effective for the Partnership as of March 31, 2004. FIN 46 does not have a material impact on the Partnership's financial condition and results of operations.

-7-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 2004
(unaudited)

(2) Transactions with Affiliates

The General Partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its affiliates relating to the administration of the Partnership. Such costs are included in professional services to affiliates and general and administrative expenses to affiliates, of which $8,611 and $8,354 was unpaid as of September 30, 2004 and December 31, 2003, respectively.

An affiliate of the General Partner performed marketing and advertising services for the Partnership and was reimbursed (as set forth under term of the Partnership Agreement) for direct costs. Such costs of $39,702 and $19,957 have been incurred and are included in marketing expenses to affiliates for the nine months ended September 30, 2004 and 2003, respectively, all of which was paid as of September 30, 2004 and December 31, 2003.

An affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the Partnership Agreement) for salaries and direct costs. For the nine months ended September 30, 2004, the Partnership incurred $163,859 of such costs. The affiliate did not recognize a profit on any project. Such costs are included in investment properties, of which $61,751 and $36,913 was unpaid as of September 30, 2004 and December 31, 2003, respectively.

-8-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

September 30, 2004 (unaudited)

(3) Investment Properties

|       | Gross Acres | Purchase/  | Initial Costs | Costs Capitalized | Costs of  | Total Remaining Costs of | Current Year Gain
|------ | ----------- | ---------- | ------------- | ----------------- | --------- | ------------------------ | -----------------
|Parcel | Illinois    | Purchased  | Sales         |                   | Original  | Acquisition              | Total            
|#      | County      | (Sold)     | Date          |                   | Costs     | Costs                    | Costs            
|1      | McHenry     | 372.759    | 04/25/90      | $                 | 2,114,295 | 114,070                  | 2,228,365        
|       |             | (372.759)  | 02/23/04      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  
|2      | Kendall     | 41.118     | 07/06/90      |                   | 549,639   | 43,889                   | 593,528          
|       |             | (3.47)     | 08/29/03      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  
|3      | Kendall     | 120.817    | 11/06/90      |                   | 1,606,794 | 101,863                  | 1,708,657        
|       |             |            |               |                   |           |                          |                  
|4      | Kendall     | 299.025    | 06/28/91      |                   | 1,442,059 | 77,804                   | 1,519,863        
|       |             |            |               |                   |           |                          |                  
|5      | Kane        | 189.0468   | 02/28/91      |                   | 1,954,629 | 94,569                   | 2,049,198        
|       |             | (189.0468) | 05/16/01      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  
|6      | Lake        | 57.3345    | 04/16/91      |                   | 904,337   | 71,199                   | 975,536          
|       |             | (.258)     | 10/01/94      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  
|7      | McHenry     | 56.7094    | 04/22/91      |                   | 680,513   | 44,444                   | 724,957          
|       |             | (12.6506)  | Var 1997      |                   |           |                          |                  
|       |             | (15.7041)  | Var 1998      |                   |           |                          |                  
|       |             | (19.6296)  | Var 1999      |                   |           |                          |                  
|       |             | (8.7251)   | Var 2000      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  
|8      | Kane        | 325.394    | 06/14/91      |                   | 3,496,700 | 262,275                  | 3,758,975        
|       |             | (.870)     | 04/03/96      |                   |           |                          |                  
|       |             | (63.000)   | 01/23/01      |                   |           |                          |                  
|       |             | (80.000)   | 05/11/04      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  
|9 (c)  | Will        | 9.867      | 08/13/91      |                   | -         | -                        | -                
|       |             | (9.867)    | 09/16/02      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  
|10     | Will        | 150.66     | 08/20/91      |                   | 1,866,716 | 89,333                   | 1,956,049        
|       |             |            |               |                   |           |                          |                  
|11     | Will        | 138.447    | 08/20/91      |                   | 289,914   | 20,376                   | 310,290          
|       |             | (138.447)  | 05/03/93      |                   |           |                          |                  
|       |             |            |               |                   |           |                          |                  

-9-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

September 30, 2004 (unaudited)

(3) Investment Properties (continued)

|       | Gross Acres | Purchase/ | Initial Costs | Costs Capitalized | Costs of  | Total Remaining Costs of | Current Year Gain
|------ | ----------- | --------- | ------------- | ----------------- | --------- | ------------------------ | -----------------
|Parcel | Illinois    | Purchased | Sales         |                   | Original  | Acquisition              | Total            
|#      | County      | (Sold)    | Date          |                   | Costs     | Costs                    | Costs            
|       |             |           |               |                   |           |                          |                  
|12 (c) | Will        | 44.732    | 08/20/91      | $                 | -         | -                        | -                
|       |             | (44.732)  | 09/16/02      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|13     | Will        | 6.342     | 09/23/91      |                   | 139,524   | 172                      | 139,696          
|       |             | (6.342)   | 05/03/93      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|14     | Kendall     | 44.403    | 09/03/91      |                   | 888,060   | 68,210                   | 956,270          
|       |             | (15.392)  | 04/16/01      |                   |           |                          |                  
|       |             | (14.2110) | Var 2002      |                   |           |                          |                  
|       |             | (13.6000) | 04/11/03      |                   |           |                          |                  
|       |             | (1.2000)  | 02/19/04      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|15     | Kendall     | 100.364   | 09/04/91      |                   | 1,050,000 | 52,694                   | 1,102,694        
|       |             | (5.000)   | 09/01/93      |                   |           |                          |                  
|       |             | (11.000)  | 12/01/94      |                   |           |                          |                  
|       |             | (84.364)  | 08/14/98      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|16     | McHenry     | 168.905   | 09/13/91      |                   | 1,402,058 | 69,731                   | 1,471,789        
|       |             | (168.905) | 08/03/01      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|17     | Kendall     | 3.462     | 10/30/91      |                   | 435,000   | 22,326                   | 457,326          
|       |             | (2.113)   | 03/06/01      |                   |           |                          |                  
|       |             | (1.349)   | 08/23/02      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|18     | McHenry     | 139.1697  | 11/07/91      |                   | 1,160,301 | 58,190                   | 1,218,491        
|       |             |           |               |                   |           |                          |                  
|19     | Kane        | 436.236   | 12/13/91      |                   | 4,362,360 | 321,250                  | 4,683,610        
|       |             | (436.236) | 05/16/01      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|20     | Kane &      |           |               |                   |           |                          |                  
|       | Kendall     | 400.129   | 01/31/92      |                   | 1,692,623 | 101,318                  | 1,793,941        
|       |             | (21.138)  | 06/30/99      |                   |           |                          |                  

-10-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

September 30, 2004 (unaudited)

(3) Investment Properties (continued)

|       | Gross Acres | Purchase/ | Initial Costs | Costs Capitalized | Costs of  | Total Remaining Costs of | Current Year Gain
|------ | ----------- | --------- | ------------- | ----------------- | --------- | ------------------------ | -----------------
|Parcel | Illinois    | Purchased | Sales         |                   | Original  | Acquisition              | Total            
|#      | County      | (Sold)    | Date          |                   | Costs     | Costs                    | Costs            
|       |             |           |               |                   |           |                          |                  
|21     | Kendall     | 15.013    | 05/26/92      | $                 | 250,000   | 23,844                   | 273,844          
|       |             | (1.000)   | 03/16/99      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|22     | Kendall     | 391.959   | 10/30/92      |                   | 3,870,000 | 283,186                  | 4,153,186        
|       |             | (10.000)  | 01/06/94      |                   |           |                          |                  
|       |             | (5.538)   | 01/05/96      |                   |           |                          |                  
|       |             | (2.400)   | 07/27/99      |                   |           |                          |                  
|       |             | (73.395)  | Var 2001      |                   |           |                          |                  
|       |             | (136.000) | 08/14/02      |                   |           |                          |                  
|       |             | (34.1400) | 05/27/03      |                   |           |                          |                  
|       |             | (99.09)   | 01/09/04      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|23     | Kendall     | 133.2074  | 10/30/92      |                   | 3,231,942 | 251,373                  | 3,483,315        
|       |             | (11.525)  | 07/16/93      |                   |           |                          |                  
|       |             | (44.070)  | Var 1995      |                   |           |                          |                  
|       |             | (8.250)   | Var 1996      |                   |           |                          |                  
|       |             | (2.610)   | Var 1997      |                   |           |                          |                  
|       |             | (10.6624) | Var 1998      |                   |           |                          |                  
|       |             | (5.8752)  | Var 1999      |                   |           |                          |                  
|       |             | (49.0120) | Var 2000      |                   |           |                          |                  
|       |             | (.2028)   | Var 2001      |                   |           |                          |                  
|       |             | (1.0000)  | Var 2002      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|23A(a) | Kendall     | .2676     | 10/30/92      |                   | 170,072   | 12,641                   | 182,713          
|       |             | (.2676)   | 03/16/93      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|24     | Kendall     | 3.908     | 01/21/93      |                   | 645,000   | 56,316                   | 701,316          
|       |             | (3.908)   | 04/16/01      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  
|24A(b) | Kendall     | .406      | 01/21/93      |                   | 155,000   | 13,533                   | 168,533          
|       |             | (.406)    | 04/16/01      |                   |           |                          |                  
|       |             |           |               |                   |           |                          |                  

-11-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

September 30, 2004 (unaudited)

(3) Investment Properties (continued)



|       | Gross Acres | Purchase/ | Initial Costs | Costs Capitalized | Costs of   | Total Remaining Costs of | Current Year Gain
|------ | ----------- | --------- | ------------- | ----------------- | ---------- | ------------------------ | -----------------
|Parcel | Illinois    | Purchased | Sales         |                   | Original   | Acquisition              | Total            
|#      | County      | (Sold)    | Date          |                   | Costs      | Costs                    | Costs            
|       |             |           |               |                   |            |                          |                  
|25     | Kendall     | 656.687   | 01/28/93      |                   | 1,625,000  | 82,536                   | 1,707,536        
|       |             | (656.687) | 10/31/95      |                   |            |                          |                  
|       |             |           |               |                   |            |                          |                  
|26 (d) | Kane        | 89.511    | 03/10/93      | $                 | 1,181,555  | 89,312                   | 1,270,867        
|       |             | (2.108)   | Var 1999      |                   |            |                          |                  
|       |             | (34.255)  | Var 2000      |                   |            |                          |                  
|       |             | (7.800)   | Var 2001      |                   |            |                          |                  
|       |             | (29.1200) | Var 2002      |                   |            |                          |                  
|       |             | (11.3100) | Var 2003      |                   |            |                          |                  
|       |             | (4.9180)  | 01/28/04      |                   |            |                          |                  
|       |             |           |               |                   |            |                          |                  
|27     | Kendall     | 83.525    | 03/11/93      |                   | 984,474    | 54,846                   | 1,039,320        
|       |             |           |               |                   |            |                          |                  
|28 (c) | Kendall     | 50.0000   | 09/16/02      |                   | 661,460    | 22,976                   | 684,436          
|       |             |           |               |                   |            |                          |                  
|       |             |           |               | $                 | 38,810,025 | 2,504,276                | 41,314,301       

-12-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 2004
(unaudited)

(3) Investment Properties (continued)

1. Included in the purchase of Parcel 23 was a newly constructed 2,500 square foot house. The house was sold in March 1993.
2. Included in the purchase of Parcel 24 was a 2,400 square foot office building. The building was sold in 2001.
3. On September 16, 2002, the Partnership completed a tax-deferred exchange of Parcels 9 and 12 for 50 acres in Kendall County (Parcel 28).
4. As of December 31, 2003, the Partnership recorded a $561,359 impairment loss on land relating to Parcel 26. The remaining cost of Parcel 26 exceeded the projected sales proceeds on the remaining lots and accordingly, the Partnership has recorded the impairment loss to reduce the remaining cost of Parcel 26 to the projected sales proceeds. As of September 30, 2004, the total gain recorded, net of the impairment loss, from the sales of Parcel 26 lots was approximately $493,000.
5. Reconciliation of investment properties owned:



|                         |   | September 30, | December 31,
|------------------------ | - | ------------- | ------------
|                         |   | 2004          | 2003        
|                         |   |               |             
|Balance at January 1,    | $ | 21,019,622    | 22,590,721  
|Additions during period  |   | 2,667,706     | 1,249,231   
|Impairment loss on land  |   | -             | (561,359)   
|Sales during period      |   | (5,795,222)   | (2,258,971) 
|                         |   |               |             
|Balance at end of period | $ | 17,892,106    | 21,019,622  

(4) Rental Income

The Partnership has determined that all leases relating to the farm parcels are operating leases. Accordingly, rental income is reported when earned.

As of September 30, 2004, the Partnership had leases of generally one year in duration, for approximately 1,236 acres of the approximately 1,544 acres owned.

-13-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 2004
(unaudited)

(5) Mortgage Loans Receivable

Mortgage loans receivable are the result of sales of Parcels, in whole or in part. The Partnership has recorded a deferred gain on these sales. The deferred gain will be recognized over the life of the related mortgage loan receivable as principal payments are received.

|                                     |          |               |           |            |            | Accrued    |          
|------------------------------------ | -------- | ------------- | --------- | ---------- | ---------- | ---------- | ---------
|                                     |          |               |           | Principal  | Principal  | Interest   | Deferred 
|                                     |          |               |           | Balance    | Balance    | Receivable | Gain     
|Parcel                               | Maturity | Interest Rate |           | 09/30/04   | 12/31/03   | 09/30/04   | 09/30/04 
|                                     |          |               |           |            |            |            |          
|5 & 19                               | 07/01/11 | 6.00%         | $         | 14,133,954 | 14,795,872 | 218,579    | 8,263,531
|                                     |          |               |           |            |            |            |          
|15                                   | 07/31/05 | 9.00%         |           | 1,208,378  | 1,208,378  | 336,712    | -        
|                                     |          |               |           |            |            |            |          
|                                     |          |               |           | 15,342,332 | 16,004,250 | 555,291    | 8,263,531
|                                     |          |               |           |            |            |            |          
|Less allowance for doubtful accounts |          | 1,208,378     | 1,208,378 | 336,712    | -         
|                                     |          |               |           |            |            |            |          
|                                     |          |               | $         | 14,133,954 | 14,795,872 | 218,579    | 8,263,531

On May 16, 2001, the Partnership sold 189 acres of Parcel 5 and 436 acres of Parcel 19 for $17,500,000 and recorded deferred gain of $10,203,634. The Partnership received a deferred down payment note in the amount of $1,500,000, due December 31, 2001. The note had an interest rate of 6%, however the note provided for the interest to be waived if the principal was paid in full by December 1, 2001. The Partnership received payment of the deferred down payment note on December 1, 2001 and recognized $875,923 of deferred gain. The Partnership also received an installment note in the amount of $16,000,000 at the time of closing. The installment note matures July 1, 2011 and has an interest rate of 6%. The remaining deferred gain will be recognized as payments are received.



-14-

INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 2004
(unaudited)





-15-

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward looking statements. These factors include, among other things, the ability to obtain annexation and zoning approvals required to develop our properties; the approval of local governing bodies to develop our properties; successful lobbying of local "no growth" or limited development homeowner groups; adverse changes in real estate, financing and general economic or local conditions; eminent domain proceedings; changes in the environmental conditions or changes in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner.

We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 405 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

Critical Accounting Policies

On December 12, 2001, the Securities and Exchange Commission issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies." A critical accounting policy is one that would materially effect our operations or financial condition, and requires management to make estimates or judgements in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and mortgage loans receivable and revenue recognition. These judgements often result from the need to make estimates about the effect of matters that are inherently uncertain. The purpose of the FRR is to provide investors with an understanding of how management forms these policies. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP. GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgements known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value. If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected capital expenditures and sales prices. The aforementioned factors are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole. Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.

-16-

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property.

Cost Allocation - We use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

Valuation of Mortgage Loans Receivable - On a quarterly basis, we conduct an analysis to ensure that the carrying value of each mortgage loan receivable is recoverable from the borrower. If we determine all or a portion of the receivable is not collectible, we would be required to record an allowance for doubtful accounts equal to the amount estimated to be uncollectible.

In determining the value of mortgage loans receivable, management considers projected sales proceeds available and expenses related to the property associated with the mortgage. Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.

The valuation and possible subsequent allowance for doubtful accounts is a significant estimate that can and does change based on management's continuous process of analyzing each mortgage loan receivable.

Revenue Recognition - We recognize income from the sale of land parcels in accordance with Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate".

Liquidity and Capital Resources

On October 25, 1989, we commenced an offering of 30,000 (subject to increase to 60,000) limited partnership units or units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. On October 24, 1991, we terminated our offering of units, with total sales of 50,476.17 units, at $1,000 per unit, resulting in $50,476,170 in gross offering proceeds, not including the general partner's capital contribution of $500. All of the holders of these units were admitted to the partnership. Our limited partners share in their portion of benefits of ownership of our real property investments according to the number of units held.

We used $41,314,301 of gross offering proceeds to purchase, on an all-cash basis, 27 parcels of undeveloped land and two buildings. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties. Three of the parcels were purchased during 1990, sixteen during 1991, four during 1992, and four during 1993. On September 16, 2002, we completed a tax-deferred exchange of Parcels 9 and 12 for 50 acres in Kendall County (Parcel 28). As of September 30, 2004, we have had multiple sales and exchange transactions through which we have disposed of the buildings and approximately 2,986 acres, or 66%, of the approximately 4,530 acres originally owned. As of September 30, 2004, cumulative distributions have totaled $55,065,834 to the limited partners and $7,488,195 to the general partner. Of the $55,065,834 distributed to the limited partners, $54,344,834 was net sales proceeds, which exceeds the original capital, and $721,000 was from operations. As of September 30, 2004, we have used $22,801,630 of working capital for rezoning and other activities. Such amounts have been capitalized and are included in investment properties.

-17-

Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of September 30, 2004, we own, in whole or in part, 12 parcels, the majority of which are leased to local farmers and are generating sufficient cash flow from leases to cover property taxes and insurance.

At September 30, 2004, we had cash and cash equivalents of $9,483,596, which is available to be used for our costs and liabilities, cash distributions to partners and other activities with respect to some or all of our land parcels.

During the nine months ended September 30, 2004 we have received net sales proceeds of approximately $21,800,000 from the sales of Parcels 1, 8, 14, 22 and 26. On March 26, 2004, we paid distributions totaling $15,000,000, which includes $10,888,098 paid to the limited partners and $4,111,902 paid to the general partner. In addition to these sales which occurred during the first and second quarters of 2004, we anticipate future additional sales of over 336 acres of Parcels 3, 6, 8, 10, 18, 20 and 27. Undistributed net sales proceeds will be used to cover our operations, including property upgrades. We will evaluate our cash needs throughout the year to determine future distributions.

We plan to enhance the value of our land through pre-development activities such as rezoning, annexation and land planning. We have already been successful in, or are in the process of, pre-development activity on several of our land investments. Parcel 1 was annexed to the Village of Huntley and zoned for residential and commercial development and was sold in February 2004. Parcels 14, 17 and 24 were rezoned for commercial and multi-family uses. In February, 2004 the remaining 1.2 acres of Parcel 14 was sold. Parcel 26 was developed for single-family homes and as of December 31, 2003, 155 of the 165 lots have already closed. The remaining 10 lots were sold in January 2004. Parcel 20 has been granted rezoning which will permit additional land to be useable for development. We are in zoning and planning discussions for Parcels 3 and 27. We have completed our final planning on Parcels 4 and 18 and marketing has begun on these parcels.

Transactions with Related Parties

Our general partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the general partner and its affiliates relating to our administration. Such costs of $46,712 and $55,087 are included in professional services to affiliates and general and administrative expenses to affiliates for the nine months ended September 30, 2004 and 2003, respectively, of which $8,611 and $8,354 was unpaid as of September 30, 2004 and December 31, 2003, respectively.

An affiliate of our general partner performed marketing and advertising services for us and was reimbursed for direct costs. Such costs of $39,702 and $19,957 have been incurred and paid and are included in marketing expenses to affiliates for the nine months ended September 30, 2004 and 2003, respectively, all of which was paid at September 30, 2004 and December 31, 2003.

An affiliate of our general partner performed property upgrades, rezoning, annexation and other activities to prepare our land investments for sale and was reimbursed for salaries and direct costs. For the nine months ended September 30, 2004, we incurred $163,859 of such costs. The affiliate did not recognize a profit on any project. Such costs are included in investment properties, of which $61,751 and $36,913 was unpaid as of September 30, 2004 and December 31, 2003, respectively.

Results of Operations

Income from the sale of investment properties of $21,810,441 and cost of investment properties sold of $5,795,222 for the nine months ended September 30, 2004 is the result of the sale of 80 acres of Parcel 8, the sale of Parcel 1, 1 acre of Parcel 14, 99 acres of Parcel 22 and the sale of the remaining lots at the Sugar Grove parcel (Parcel 26). The sales activity for the nine months ended September 30, 2004 is the result of favorable zoning and a change in our marketing approach to target homebuilders, commercial users and land developers.

-18-

During 2001, we sold 189 acres of Parcel 5 and 436 acres of Parcel 19 for $17,500,000 and recorded deferred gain of $10,203,634. We received a deferred down payment note in the amount of $1,500,000, due December 31, 2001. The note had an interest rate of 6%, however the note provided for the interest to be waived if the principal was paid in full by December 1, 2001. We received payment of the deferred down payment note on December 1, 2001 and recognized $875,923 of deferred gain. We also received an installment note in the amount of $16,000,000 at the time of closing. The installment note matures July 1, 2011 and has an interest rate of 6%. During 2004, we received principal payments totaling $661,918 and recognized deferred gain of $387,530. The remaining deferred gain will be recognized as payments are received.

As of September 30, 2004, we owned 12 parcels of land consisting of approximately 1,544 acres. Of the approximately 1,544 acres owned, 1,236 acres are tillable, leased to local farmers and generate sufficient cash flow to cover property taxes, insurance and other miscellaneous expenses. Rental income was $103,564 and $136,244 for the nine months ended September 30, 2004 and 2003, respectively. Rental income continues to decrease due to a decrease in the tillable acres as a result of sales.

Professional services to non-affiliates were $54,126 and $42,723 for the nine months ended September 30, 2004 and 2003, respectively. Professional services to non-affiliates increased in 2004 due to an increase in legal and accounting services as a result of sales activity.

General and administrative expenses to non-affiliates were $166,484 and $77,798 for the nine months ended September 30, 2004 and 2003, respectively. The increase in 2004 is due to accrued state taxes payable as a result of the land sales in 2004.

Marketing expenses to non-affiliates were $31,926 and $57,160 for the nine months ended September 30, 2004 and 2003, respectively. In 2003 and continuing into 2004, we changed our marketing approach to target homebuilders, industrial users and land developers through direct mailings, newspaper and trade publication advertising and an enhanced website.

Land operating expenses to non-affiliates were $40,706 and $50,805 for the nine months ended September 30, 2004 and 2003, respectively. These costs primarily include real estate tax expense, ground maintenance and insurance expense on the parcels owned and have decreased as a result of land sales.



The velocity of the developer's individual lot sales was slower than was originally projected and consequently, the developer's carrying costs were higher. As a result of the slower lot sales, the net sale proceeds available to us are lower than anticipated. As of September 30, 2004 and December 31, 2003, we have recorded an allowance for doubtful accounts of $1,208,378 and $336,712 relating to the mortgage receivable and accrued interest, respectively, relating to the sale of Parcel 15 and have written off the related deferred gain of $747,454.

-19-

Our general partner guaranteed the third party development loans owed by the LLC. In reviewing the development's financial situation, our general partner determined that it would be in its best interest to have an affiliate acquire the interest in the limited liability company. The general partner and its affiliates concluded that they could better control the continuing costs to complete the development and would therefore have the best opportunity to limit their exposure under the guarantee agreements and possibly recover a portion of the amount owed. An affiliate of our general partner contributed approximately $1,500,000 to acquire the interests in the LLC. Our general partner contributed approximately $500,000 to pay off the debt under its guarantee of the LLC loans. The affiliate of the general partner will complete the development and sale of this project. Based on our review of the development's financial situation in early 2004, we do not anticipate receiving any additional proceeds and anticipate we will write off these receivables in 2004. However, the write-off will not take place until such time as we are certain that no further proceeds will become available to reduce the amount of the receivables. Therefore, it is possible that the write-off will not occur until the latter part of 2004. Our limited partners received distributions that equated to the parcel capital plus approximately a 6% return per annum on the parcel capital through the date of the distribution.

Off-Balance Sheet Arrangements, Contractual Obligations, Liabilities and Contracts and Commitments

None

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4 Controls and Procedures

Our general partner conducted, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information that is required to be disclosed in the periodic reports that we must file with the Securities and Exchange Commission.

There were no changes in our internal controls over financial reporting that occurred during the nine months ended September 30, 2004 that materially affected, or are reasonably likely to materially affect, our internal control of financial reporting.

PART II - Other Information

Items 1 through 5 are omitted because of the absence of conditions under which they are required.

Item 6: Exhibits and Reports on Form 8-K

(a)  Exhibits:

31.1 Rule 13a-14(a)/15d-14(a) Certification by principal executive officer

31.2 Rule 13a-14(a)/15d-14(a) Certification by principal financial officer

32.1 Section 1350 Certification by principal executive officer

32.2 Section 1350 Certification by principal financial officer

(b)  Reports on Form 8-K:

None

-20-

SIGNATURES

Pursuant to the requirements 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.



|      | INLAND LAND APPRECIATION FUND II, L.P.   
|----- | -----------------------------------------
|      |                                          
|By:   | Inland Real Estate Investment Corporation
|      | General Partner                          
|      |                                          
|      |                                          
|      | /S/ BRENDA G. GUJRAL                     
|      |                                          
|By:   | Brenda G. Gujral                         
|      | President                                
|Date: | November 12, 2004                        
|      |                                          
|      |                                          
|      | /S/ GUADALUPE GRIFFIN                    
|      |                                          
|By:   | Guadalupe Griffin                        
|      | Vice President                           
|Date: | November 12, 2004                        
|      |                                          
|      |                                          
|      | /S/ KELLY TUCEK                          
|      |                                          
|By:   | Kelly Tucek                              
|      | Vice President and                       
|      | principal financial officer              
|Date: | November 12, 2004