UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                 PLACECITYWASHINGTON, STATED.C. POSTALCODE20549

                                    FORM 10-Q




(Mark One)


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


For the quarterly period ended September 15, 2006


                                       OR


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



                         COMMISSION FILE NUMBER 0-17015

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



                     Delaware                                     13-3446500
------------------------------------------------             -------------------
(State or other jurisdiction of incorporation or              (I.R.S. Employer
                  organization)                              Identification No.)

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



Registrant's telephone number, including area code (212) 317-5700


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

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

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





<PAGE>

                         PART I - Financial Information

Item 1. Financial Statements

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                             September 15,     March 15,
                                                                                 2006            2006
                                                                             ------------    ------------
                                                                             (Unaudited)      (Audited)
<S>                                                                          <C>             <C>
                                     ASSETS

Operating Assets

  Property and equipment, at cost, net of accumulated depreciation of
    $50,939,481 and $66,711,988, respectively                                $ 35,688,545    $ 56,381,985
  Cash and cash equivalents                                                     6,100,490       3,760,882
  Cash held in escrow                                                           3,538,134       5,774,684
  Accounts receivable - tenants                                                   542,883         277,088
  Deferred costs, net of accumulated amortization of $809,209 and
    $823,279, respectively                                                        877,037       1,186,099
  Other assets                                                                  2,602,145         735,984
                                                                             ------------    ------------

Total operating assets                                                         49,349,234      68,116,722
                                                                             ------------    ------------

Assets from discontinued operations (Note 5)
  Property and equipment held for sale, net of accumulated depreciation
     of $22,126,201 and $17,769,300, respectively                              20,451,411      10,392,625
  Net assets held for sale                                                      5,616,246       4,968,693
                                                                             ------------    ------------
Total assets from discontinued operations                                      26,067,657      15,361,318
                                                                             ------------    ------------

Total assets                                                                 $ 75,416,891    $ 83,478,040
                                                                             ============    ============

                        LIABILITIES AND PARTNERS' DEFICIT

Operating Liabilities

  Mortgage notes payable                                                     $ 42,282,801    $ 60,626,619
  Accounts payable                                                              4,294,768       2,115,469
  Accrued interest payable                                                      6,208,698       5,963,620
  Security deposits payable                                                       238,814         363,306
  Due to local general partners and affiliates                                 16,571,547      20,258,730
  Due to general partners and affiliates                                        8,037,383       7,839,189
                                                                             ------------    ------------

Total operating liabilities                                                    77,634,011      97,166,933
                                                                             ------------    ------------

Liabilities from discontinued operations (Note 5)
  Mortgage notes payable of assets held for sale                               20,825,091      16,677,628
  Net liabilities held for sale (including minority interest)                   7,726,416       4,339,358
                                                                             ------------    ------------
Total liabilities from discontinued operations                                 28,551,507      21,016,986
                                                                             ------------    ------------

Minority interests                                                               (703,205)       (692,096)
                                                                             ------------    ------------

Commitments and contingencies (Note 6)

Partners' deficit:
  Limited partners (15,987.5 BACs issued and outstanding)                     (29,081,949)    (32,990,826)
  General partners                                                               (983,473)     (1,022,957)
                                                                             ------------    ------------


Total partners' deficit                                                       (30,065,422)    (34,013,783)
                                                                             ------------    ------------

Total liabilities and partners' deficit                                      $ 75,416,891    $ 83,478,040
                                                                             ============    ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                    Three Months Ended             Six Months Ended
                                                       September 15,                 September 15,
                                                --------------------------    --------------------------
                                                    2006          2005*           2006          2005*
                                                -----------    -----------    -----------    -----------
<S>                                             <C>            <C>            <C>            <C>
Operations:

Revenues
Rental income                                   $ 3,379,273    $ 3,297,044    $ 6,684,296    $ 6,647,252
Other                                               106,914         73,228        190,110        137,158
                                                -----------    -----------    -----------    -----------
                                                  3,486,187      3,370,272      6,874,406      6,784,410
                                                -----------    -----------    -----------    -----------

Expenses
General and administrative                          427,064        457,048      1,098,493        985,075
General and administrative - related parties
  (Note 2)                                          280,910        481,068        618,067        895,808
Repairs and maintenance                           1,065,122        897,026      1,941,190      2,036,460
Operating and other                                 367,528        386,917      1,277,920      1,027,537
Taxes                                               179,095        170,926        349,377        350,311
Insurance                                           169,202        159,685        347,208        349,829
Financial                                           996,607        943,232      2,004,944      1,973,695
Depreciation and amortization                       752,407        772,583      1,509,446      1,544,362
                                                -----------    -----------    -----------    -----------

Total expenses from operations                    4,237,935      4,268,485      9,146,645      9,163,077
                                                -----------    -----------    -----------    -----------

Loss from operations before minority interest      (751,748)      (898,213)    (2,272,239)    (2,378,667)

Minority interest in loss of subsidiaries
  from operations                                     2,066          2,137          3,817          5,815
                                                -----------    -----------    -----------    -----------

Loss from operations                               (749,682)      (896,076)    (2,268,422)    (2,372,852)

Discontinued Operations:
Income (loss) from discontinued operations
  (including gain (loss) on sale of
  properties) (Note 5)                            6,783,427     (2,072,297)     6,216,783       (241,314)
                                                -----------    -----------    -----------    -----------
Net income (Loss)                               $ 6,033,745    $(2,968,373)   $ 3,948,361    $(2,614,166)
                                                ===========    ===========    ===========    ===========

Loss from operations - limited partners         $  (742,185)   $  (887,115)   $(2,245,738)   $(2,349,123)
Income (loss) from discontinued operations
  (including gain (loss) on sale of
  properties) - limited partners                  6,715,593     (2,051,574)     6,154,615       (238,901)
                                                -----------    -----------    -----------    -----------
Income (loss) - limited partners                $ 5,973,408    $(2,938,689)   $ 3,908,877    $(2,588,024)
                                                ===========    ===========    ===========    ===========

Number of BACs outstanding                         15,987.5       15,987.5       15,987.5       15,987.5
                                                ===========    ===========    ===========    ===========

Loss from operations per BAC                    $    (46.42)   $    (55.49)   $   (140.47)   $   (146.94)
Income (loss) from discontinued operations
  per BAC                                            420.05        (128.32)        384.96         (14.94)
                                                -----------    -----------    -----------    -----------

Net income (loss) per BAC                       $    373.63    $   (183.81)   $    244.49    $   (161.88)
                                                ===========    ===========    ===========    ===========
</TABLE>

*  Reclassified for comparative purposes

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                           LIBERTY TAX CREDIT PLUS L.P
                                AND SUBSIDIARIES
             Consolidated Statement of Changes in Partners' Deficit
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                           Limited          General
                                             Total         Partners         Partner
                                         ------------    ------------    ------------
<S>                                      <C>             <C>             <C>
Partners' deficit - March 16, 2006       $(34,013,783)   $(32,990,826)   $ (1,022,957)

Net income                                  3,948,361       3,908,877          39,484
                                         ------------    ------------    ------------

Partners' deficit - September 15, 2006   $(30,065,422)   $(29,081,949)   $   (983,473)
                                         ============    ============    ============
</TABLE>


           See accompanying notes to consolidated financial statements

                                       4
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                Increase (decrease) in Cash and Cash Equivalents
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                       September 15,
                                                                               ----------------------------
                                                                                   2006            2005
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
Net income (loss)                                                              $  3,948,361    $ (2,614,166)

Adjustments to reconcile net income (loss) to net cash provided by (used in)
  operating activities:
  Gain on sale of properties                                                     (8,665,605)     (4,513,348)
  Loss on impairment of fixed assets                                                      0       2,710,000
  Depreciation and amortization                                                   2,103,513       3,396,495
  Minority interest in loss of subsidiaries                                       1,775,608         271,081
  (Increase) decrease in accounts receivable - tenants                             (529,665)         71,042
  Increase in other assets                                                       (2,108,539)       (964,681)
  Increase in accounts payable                                                    3,590,033       1,813,519
  Increase in accrued interest payable                                              577,982         684,646
  Decrease in security deposits payable                                             (28,858)        (61,975)
  Increase (decrease) in due to general partners and affiliates                      64,599        (155,023)
  Decrease (increase) in cash held in escrow                                        223,317      (1,434,502)
                                                                               ------------    ------------

Net cash provided by (used in) operating activities                                 950,746        (796,912)
                                                                               ------------    ------------

Cash flows from investing activities:

  Decrease in cash held in escrow                                                   156,466       1,188,263
  Proceeds from sale of investments                                              18,800,000       7,884,459
  Costs paid relating to sale of properties                                      (3,411,585)       (222,016)
  Improvements to property and equipment                                           (145,851)       (445,371)
                                                                               ------------    ------------

Net cash provided by investing activities                                        15,399,030       8,405,335
                                                                               ------------    ------------

Cash flows from financing activities:

  Repayments of mortgage notes                                                  (14,064,736)     (3,887,653)
  Increase in due to local general partners and affiliates                          523,849         769,309
  Decrease in due to local general partners and affiliates                         (176,418)       (278,008)
  Decrease in capitalization of consolidated subsidiaries attributable to
    minority interest                                                                (7,292)       (144,867)
  Distribution                                                                            0      (1,938,121)
                                                                               ------------    ------------

  Net cash used in financing activities                                         (13,724,597)     (5,479,340)
                                                                               ------------    ------------

  Net increase in cash and cash equivalents                                       2,625,179       2,129,083

  Cash and cash equivalents at beginning of period                                4,006,542       4,779,438
                                                                               ------------    ------------

  Cash and cash equivalents at end of period*                                  $  6,631,721    $  6,908,521
                                                                               ============    ============

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

  Decrease in property and equipment, net of accumulated depreciation          $  8,717,315    $  9,161,412
  Decrease in mortgage notes payable                                               (131,619)     (9,062,104)
  Decrease in due to general partners and affiliates                                      0         (40,000)
  Decrease in due to local general partner and affiliates                          (704,510)       (664,051)
  Decrease in cash held in escrow                                                 1,591,635       3,943,256
  Decrease in rents receivable                                                      277,796          20,699
  Decrease in other assets                                                           98,525          98,174
  (Decrease) increase in accounts payable                                        (1,392,219)        640,420
  Decrease in accrued interest payable                                              (61,500)       (707,888)
  Decrease in security deposits payable                                            (133,625)        (36,559)
  Decrease in deferred cost                                                         301,816          66,349
  Decrease in capitalization of consolidated subsidiaries attributable to
  minority interest                                                              (1,840,804)       (270,613)

* Cash  and  cash  equivalents,   end  of  period,  includes   cash  and   cash
  equivalents  from   discontinued   operations   of  $531,231   and   $207,137,
  respectively.
</TABLE>

           See accompanying notes to consolidated financial statements


                                       5
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 15, 2006
                                   (Unaudited)


Note 1 - General

The  consolidated  financial  statements for the six months ended  September 15,
2006 and 2005,  include  the  accounts  of  Liberty  Tax Credit  Plus L.P.  (the
"Partnership")  and  16 and  23  subsidiary  partnerships  (each  a  "subsidiary
partnership" or "Local Partnership"),  respectively, in which the Partnership is
a  limited  partner.  Through  the  rights of the  Partnership  and/or a general
partner of the  Partnership (a "General  Partner"),  which General Partner has a
contractual  obligation  to act on behalf  of the  Partnership,  to  remove  the
general partners of each subsidiary  partnership (the "Local General  Partners")
and to approve certain major operating and financial decisions,  the Partnership
has a  controlling  financial  interest  in  the  subsidiary  partnerships.  All
intercompany  accounts and transactions  with the subsidiary  partnerships  have
been eliminated in consolidation.

For financial  reporting  purposes,  the  Partnership's  fiscal  quarter ends on
September 15. All subsidiary  partnerships  have fiscal quarters ending June 30.
Accounts of the  subsidiary  partnerships  have been  adjusted for  intercompany
transactions from July 1 through September 15. The Partnership's quarter ends on
September 15 in order to allow  adequate time for the  subsidiary  partnerships'
financial  statements to be prepared and consolidated.  The books and records of
the Partnership are maintained on the accrual basis of accounting, in accordance
with accounting  principles  generally  accepted in the United States of America
("GAAP").

In the opinion of the General  Partners,  the accompanying  unaudited  financial
statements  contain  all  adjustments   (consisting  only  of  normal  recurring
adjustments)   necessary  to  present  fairly  the  financial  position  of  the
Partnership  as of  September  15,  2006 and  March 15,  2006,  the  results  of
operations  for the three and six months ended  September  15, 2006 and 2005 and
cash flows for the six months ended  September 15, 2006 and 2005.  However,  the
operating results and cash flows for the six months ended September 15, 2006 may
not be indicative of the results for the year.

Certain  information  and  note  disclosures  which  are  normally  included  in
financial  statements  prepared  in  accordance  with GAAP have been  omitted or
condensed. These consolidated financial statements should be read in conjunction
with the financial  statements and notes thereto  included in the  Partnership's
Annual Report on Form 10-K for the period ended March 15, 2006.

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

The  Partnership's  investment in each  subsidiary  partnership  is equal to the
respective  subsidiary  partnership's  partners'  equity less minority  interest
capital,  if any.  Losses  attributable  to minority  interests which exceed the
minority interests' investments in the subsidiary partnerships have been charged
to the Partnership.  There were no such losses for both the three and six months
ended September 15, 2006 and  approximately  $1,300,000 of aggregate  losses for
both the three and six months ended  September 15, 2005. In  consolidation,  all
subsidiary  partnership losses are included in the Partnership's capital account
except for losses allocated to minority interest capital.


Note 2 - Related Party Transactions

An affiliate of the General  Partners  has a 1% interest,  as a special  limited
partner,  in each of the  subsidiary  partnerships.  An affiliate of the General
Partners also has a minority interest in certain subsidiary partnerships.

The costs  incurred to related  parties  from  operations  for the three and six
months ended September 15, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>
                                                          Three Months Ended    Six Months Ended
                                                            September 15,         September 15,
                                                         -------------------   -------------------
                                                           2006       2005*      2006       2005*
                                                         --------   --------   --------   --------
<S>                                                      <C>        <C>        <C>        <C>
Partnership management fees (a)                          $116,139   $222,750   $270,639   $448,000
Expense reimbursement (b)                                  42,897    139,776    102,862    209,069
Local administrative fee (d)                                3,125      2,343      6,250      5,687
                                                         --------   --------   --------   --------
Total general and administrative-General Partners         162,161    364,869    379,751    662,756
                                                         --------   --------   --------   --------
Property management fees incurred to affiliates of the
  local general partners (c)                              118,749    116,199    238,316    233,052
                                                         --------   --------   --------   --------
Total general and administrative-related parties         $280,910   $481,068   $618,067   $895,808
                                                         ========   ========   ========   ========
</TABLE>

* Reclassified for comparative purpose.


                                       6
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 15, 2006
                                   (Unaudited)


The costs incurred to related parties from discontinued operations for the three
and six months ended September 15, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>
                                                          Three Months Ended    Six Months Ended
                                                            September 15,         September 15,
                                                         -------------------   -------------------
                                                           2006       2005*      2006       2005*
                                                         --------   --------   --------   --------
<S>                                                      <C>        <C>        <C>        <C>
Local administrative fee (d)                             $  3,318   $  8,657   $  6,636   $ 17,313
                                                         --------   --------   --------   --------
Total general and administrative-General Partners           3,318      8,657      6,636     17,313
                                                         --------   --------   --------   --------
Property management fees incurred to affiliates of the
  local general partners (c)                               46,904    106,099     94,999    237,198
                                                         --------   --------   --------   --------
Total general and administrative-related parties         $ 50,222   $114,756   $101,635   $254,511
                                                         ========   ========   ========   ========
</TABLE>

* Reclassified for comparative purposes.

(a) The General  Partners are entitled to receive a partnership  management fee,
after payment of all Partnership expenses,  which together with the local annual
administrative  fees  will not  exceed a maximum  of 0.5% per annum of  invested
assets (as  defined in the  Partnership's  Amended  and  Restated  Agreement  of
Limited Partnership ("Partnership Agreement")), for administering the affairs of
the  Partnership.  The  partnership  management  fee,  subject to the  foregoing
limitation,  will be determined by the General Partners in their sole discretion
based upon their review of the Partnership's investments. Partnership management
fees owed to the General  Partners  amounting to  approximately  $7,785,000  and
$7,697,000  were accrued and unpaid as of September 15, 2006 and March 15, 2006,
respectively.

(b) The  Partnership  reimburses the General  Partners and their  affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the  Partnership's  behalf.  The amount of reimbursement  from the
Partnership is limited by the provisions of the Partnership  Agreement.  Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These   services   include  site  visits  and   evaluations  of  the  subsidiary
partnerships' performance. Expense reimbursements and asset monitoring fees owed
to Related Credit Properties L.P., a General Partner, amounting to approximately
$146,000 and $111,000 were accrued and unpaid as of September 15, 2006 and March
15, 2006, respectively.

The General Partners have allowed for the accrual without payment of the amounts
set forth in (a) and (b) but are under no obligation to continue to do so.

(c)  Property  management  fees  incurred  by  the  subsidiary  partnerships  in
operations  amounted to $233,914  and $359,985 and $576,657 and $750,142 for the
three and six months ended September 15, 2006 and 2005,  respectively.  Of these
fees,  $165,653  and  $222,298  and  $333,315  and  $470,250  were  incurred  to
affiliates of the local general partners, which include $46,904 and $106,099 and
$94,999 and $237,198 of fees relating to discontinued operations.

(d) Liberty  Associates  III L.P.,  a General  Partner  and the special  limited
partner  of  the  subsidiary  partnerships,  is  entitled  to  receive  a  local
administrative fee of up to $2,500 per year from each subsidiary partnership.


Note 3 - Sale of Properties

The Partnership is currently in the process of disposing of its investments.  As
of September  15, 2006,  the  Partnership  had disposed of 20 of its 31 original
investments and has entered into agreements to sell the property and the related
assets and liabilities of one Local  Partnership and the  Partnership's  limited
partnership  interest in a second Local  Partnership  (see Note 4). No assurance
can  be  given  as  to  whether  or  when  these  sales  will  actually   occur.
Subsequently,  on October 1, 2006, the Partnership sold its limited  partnership
interest in one Local Partnership (see Note 7).

On August 31, 2006, the  Partnership  sold its limited  partnership  interest in
Alameda Towers Associates,  L.P. ("Alameda Towers") to the Local General Partner
for a sales price of $2,092,490. The Partnership received proceeds of $92,490 on
September  5,  2006 and the  remaining  $2,000,000  is to be paid in  guaranteed
payments  payable on certain dates through  December 31, 2008.  Because  Alameda
Towers was sold to a related party of the Local  Partnership,  the sale resulted
in a  non-cash  contribution  to the Local  Partnership  from the Local  General
Partnership of approximately  $30,000.  Such contribution flows through minority
interest  as a  result  of  the  write-off  of the  basis  in  the  property  of
approximately  $2,062,000 and the $2,092,490 cash received from the sale,  which
will be recognized on the  Partnership's  Quarterly  Report on Form 10-Q for the
quarter ended December 15, 2006. The sale resulted in the liquidation of Alameda
Towers.

On June 5,  2006,  the  property  and the  related  assets  and  liabilities  of
Willoughby/Wycoff  Housing  Associates,  L.P.  ("Willoughby")  were  sold  to an
unaffiliated  third  party  purchaser  for a  sales  price  of  $4,800,000.  The
Partnership  received  $28,346  as a  distribution  from  this  sale  after  the
repayment of mortgages,  other  liabilities,  closing costs and distributions to
minority  interest of approximately  $4,772,000.  The sale resulted in a gain of
approximately  $2,785,000  resulting  from the write-off of the deficit basis in
the property at the date of the sale.  The sale resulted in the  liquidation  of
Willoughby.

                                       7
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 15, 2006
                                   (Unaudited)


On May 1, 2006,  the property and the related  assets and  liabilities  of Grand
Concourse  Housing  Associates,   L.P.  ("Grand  Concourse")  were  sold  to  an
unaffiliated  third  party  purchaser  for a  sales  price  of  $4,937,500.  The
Partnership  received  $798,886  as a  distribution  from  this  sale  after the
repayment of mortgages,  other  liabilities,  closing costs and distributions to
minority  interest of approximately  $4,139,000.  The sale resulted in a gain of
approximately  $2,104,000  resulting  from the write-off of the deficit basis in
the property at the date of the sale.  The sale resulted in the  liquidation  of
Grand Concourse.

On May 1, 2006, the property and the related assets and liabilities of Concourse
Artists  Housing  Associates,   L.P.  ("Concourse  Artists")  were  sold  to  an
unaffiliated  third  party  purchaser  for a  sales  price  of  $1,797,500.  The
Partnership  received  $262,106  as a  distribution  from  this  sale  after the
repayment of mortgages,  other  liabilities,  closing costs and distributions to
minority  interest of approximately  $1,535,000.  The sale resulted in a gain of
approximately  $672,000 resulting from the write-off of the deficit basis in the
property  at the date of the  sale.  The sale  resulted  in the  liquidation  of
Concourse Artists.

On May 1, 2006,  the property and the related  assets and  liabilities  of Robin
Housing  Associates,  L.P. ("Robin Housing") were sold to an unaffiliated  third
party  purchaser  for a sales  price of  $7,265,000.  The  Partnership  received
$1,743,029  as a  distribution  from this sale after the repayment of mortgages,
other  liabilities,  closing  costs and  distributions  to minority  interest of
approximately  $5,522,000.   The  sale  resulted  in  a  gain  of  approximately
$3,115,000  resulting from the write-off of the deficit basis in the property at
the date of the sale. The sale resulted in the liquidation of Robin Housing.

On September 15, 2005, the Partnership sold its limited partnership  interest in
Bayridge Associates,  L.P. ("Bayridge") to the Local General Partner for a sales
price of $1,125,000.  The Partnership  received proceeds of $1,113,587 from this
sale after payment of closing costs of approximately  $11,000.  Because Bayridge
was sold to a related  party of the Local  Partnership,  the sale  resulted in a
non-cash contribution to the Local Partnership from the Local General Partner of
approximately $5,849,000. Such contribution flows through minority interest as a
result of the write-off of the deficit  basis in the property of $4,735,000  and
the  $1,113,587  cash received from the sale,  which was  recognized  during the
quarter ended March 15, 2006. The sale resulted in the liquidation of Bayridge.

On July 27, 2005,  the property and the related  assets and  liabilities of Penn
Alto  Associates,  L.P. ("Penn Alto") were sold to an  unaffiliated  third party
purchaser for a sales price of $1,625,000.  The proceeds were used for repayment
of mortgages,  other liabilities and closing costs of approximately  $1,625,000.
During the quarter ended  September 15, 2005,  in accordance  with  Statement of
Financial  Accounting  Standards  No. 144 ("SFAS No. 144")  "Accounting  for the
Impairment  of  Disposal  of  Long-Lived  Assets",  the  Partnership  deemed the
building  impaired and wrote it down to its fair value which  resulted in a loss
on impairment of $850,000.  The sale resulted in a loss of approximately $63,000
resulting  from the  write-off  of the basis in the  property at the date of the
sale which was  recognized  during the quarter  ended March 15,  2006.  The sale
resulted in the liquidation of Penn Alto.

On June 8, 2005, the Partnership  sold its limited  partnership  interest in Fox
Glenn  Investors,  L.P.  ("Fox Glenn") to the Local General  Partner for a sales
price of $1,400,000.  The Partnership  received  proceeds of $200,000 and a note
receivable  for  $1,200,000  that was paid in full on February 9, 2006 from this
sale.  Because Fox Glenn was sold to a related  party of the Local  Partnership,
the sale resulted in a non-cash  contribution to the Local  Partnership from the
Local General  Partner of  approximately  $3,126,000.  Such  contribution  flows
through  minority  interest as a result of the write-off of the deficit basis in
the property of  approximately  $1,726,000 and the $1,400,000 cash received from
the sale, which was recognized during the quarter ended March 15, 2006. The sale
resulted in the liquidation of Fox Glenn.

On June 2, 2005,  the  Partnership  sold its  limited  partnership  interest  in
Lancaster  Towers  Associates,  LTD  ("Lancaster")  to an affiliate of the Local
General Partner for a sales price of $449,750. The Partnership received proceeds
of $445,500 from this sale after the payment of closing  costs of  approximately
$4,000  from the sales  price.  During  the  quarter  ended  June 15,  2005,  in
accordance with Statement of Financial  Accounting Standards No. 144 "Accounting
for the  Impairment  of Disposal of  Long-Lived  Asset"  ("SFAS No.  144"),  the
Partnership  deemed the  building  impaired  and wrote it down to its fair value
which resulted in a loss on impairment of $1,860,000. Because Lancaster was sold
to a related  party of the Local  Partnership,  the sale  resulted in a non-cash
distribution  to the  Local  Partnership  from  the  Local  General  Partner  of
approximately  $271,000.  Such distribution flows through minority interest as a
result of the write-off of the basis in the property of approximately  $271,000.
The sale resulted in the liquidation of Lancaster.

On March 29, 2005, the property and the related assets and liabilities of Regent
Street  Associates,  L.P. ("Regent  Street") were sold to an unaffiliated  third
party  purchaser for the  assumption of the  outstanding  debt plus an incentive
payment of $100,000.  The Partnership  received  $100,000 from this transaction.
The sale originally  resulted in a gain of approximately  $1,436,000,  resulting
from the  write-off  of the  deficit  basis  in the  property  of  approximately
$1,336,000  and the $100,000  cash  received from the sale. An adjustment to the
gain of approximately $206,000 was recognized during the quarter ended March 31,
2006,  resulting  in an overall  gain of  $1,230,000.  The sale  resulted in the
liquidation of Regent Street.

On February 17, 2005, the Partnership's  limited partnership interest in Redwood
Villa  Associates  ("Redwood") was sold to the Local General Partner for a sales
price of $60,000. The Partnership received proceeds of $59,400 from this sale. A
gain of approximately $1,763,000 was originally recognized on the sale resulting
from the  write-off  of the  deficit  basis  in the  property  of  approximately
$1,704,000  and the $59,400 cash  received  from the sale.  However,  during the
quarter  ended  March  31,  2006,  a  determination  was made  that the sale was
actually to a related party of the Local Partnership, and a reclassification was
made from gain on sale to a contribution to the Local Partnership from the Local
General  Partner of  approximately  $1,789,000  including an  adjustment  to the
original gain of approximately $26,000 recognized during the quarter ended March
31, 2006. Such contribution flows through minority  interest.  The sale resulted
in the liquidation of Redwood.


                                       8
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 15, 2006
                                   (Unaudited)


On January 5, 2005, the property and the related assets and  liabilities of Lund
Hill  Associates,  L.P. ("Lund Hill") were sold to an unaffiliated  thirty party
purchaser  for  a  sales  price  of   $6,500,000.   The   Partnership   received
approximately $3,369,000 as a distribution from this sale after the repayment of
mortgages,  other liabilities and closing costs of approximately $3,131,000. The
sale resulted in a gain of approximately $1,345,000 resulting from the write-off
of the deficit basis in the property.  The sale resulted in the  liquidation  of
Lund Hill.


Note 4 - Assets Held for Sale

On June 26, 2006,  the  Partnership  entered into an assignment  and  assumption
agreement  to sell its  limited  partnership  interest in Shiloh  Grove  Limited
Partnership  ("Shiloh Grove") to an affiliate of the Local General Partner for a
sales price of $149,990.  The sales documents have been executed and the initial
deposit funds are being held in escrow.  The closing is expected to occur in the
quarter  ending  December 15, 2006. No assurance can be given that the sale will
actually  occur.  Shiloh  Grove  is being  held as an asset  held for sale as of
September  15,  2006.  As of June  30,  2006,  Shiloh  Grove  had  property  and
equipment, at cost, of approximately  $19,552,000,  accumulated  depreciation of
approximately   $10,761,000  and  mortgage  debt  of  approximately  $9,494,000.
Subsequently,  on October 1, 2006, the Partnership sold its limited  partnership
interest in Shiloh Grove (see Note 7).

On March 15, 2006,  United-Pennsylvanian,  L.P.  ("United  Penn") entered into a
purchase and sale  agreement  to sell the  property  and the related  assets and
liabilities  to an affiliate of the Local  General  Partner for a sales price of
$500,000 plus the assumption of the mortgage debt. The sales documents have been
executed and the initial deposit funds are being held in escrow.  The closing is
expected to occur in the quarter  ending  December 15, 2006. No assurance can be
given that the sale will actually  occur.  United Penn is being held as an asset
held for sale as of  September  15, 2006.  As of June 30, 2006,  United Penn had
property  and  equipment,  at cost,  of  approximately  $5,966,000,  accumulated
depreciation  of  approximately  $4,291,000  and mortgage debt of  approximately
$3,120,000.


Note 5 - Discontinued Operations

The following table summarizes the financial  position of the Local Partnerships
that are classified as  discontinued  operations  because the  respective  Local
Partnerships  were classified as assets held for sale. As of September 15, 2006,
Alameda  Towers,  Concourse  Artists,  Grand  Concourse,  Robin Housing , Shiloh
Grove, United Penn and Willoughby were classified as discontinued  operations in
the  consolidated   financial  statements.   As  of  March  15,  2006,  Bayridge
Associates,  L.P. ("Bayridge"),  2108 Bolton Drive Associated,  L.P. ("Bolton"),
Concourse Artists, Fox Glenn, Grand Concourse,  Lancaster,  Lund Hill, Penn Alto
Associates ("Penn Alto"), Redwood, Regent Street, Robin Housing, United Penn and
Willoughby  were  classified  as  discontinued  operations  on the  consolidated
balance sheets.

Consolidated Balance Sheets of Discontinued Operations:
<TABLE>
<CAPTION>
                                                 September 15,    March 15,
                                                     2006           2006
                                                  -----------   -----------
<S>                                               <C>           <C>
Assets
  Property and equipment, net of
    accumulated depreciation of $22,126,201 and
    $17,796,300, respectively                     $20,451,411   $10,392,625
  Cash and cash equivalents                           531,231       245,660
  Cash held in escrow                               4,386,551     4,121,419
  Deferred costs, net of accumulated
    amortization of $47,071 and $482,608,
    respectively                                      276,061       309,138
  Other assets                                        422,403       292,476
                                                  -----------   -----------
Total assets                                      $26,067,657   $15,361,318
                                                  ===========   ===========

Liabilities
  Mortgage notes payable                          $20,825,091   $16,677,628
  Accounts payable and other liabilities            3,619,718     3,367,790
  Due to local general partners and
    affiliates                                      4,056,698       726,594
  Due to general partners and affiliates               50,000       183,595
  Minority interest                                         0        61,379
                                                  -----------   -----------
Total liabilities                                 $28,551,507   $21,016,986
                                                  ===========   ===========
</TABLE>

The  following  table   summarizes  the  results  of  operations  of  the  Local
Partnerships that are classified as discontinued  operations.  For the three and
six months ended September 15, 2006, Alameda Towers,  Concourse  Artists,  Grand
Concourse,  Robin Housing and Willoughby which were sold during the current year
and Shiloh Grove and United Penn which were  classified as assets held for sale,
were all classified as  discontinued  operations on the  consolidated  financial
statements.  For the three and six months ended  September 15, 2005 and in order

                                       9
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 15, 2006
                                   (Unaudited)


to present  comparable  results for the three and six months ended September 15,
2006, Alameda Towers, Concourse Artists, Grand Concourse,  Robin Housing, Shiloh
Grove,   United  Penn  and  Willoughby   were  all  classified  as  discontinued
operations. In addition, Bayridge, Bolton, Fox Glenn, Lancaster, Lund Hill, Penn
Alto, Redwood and Regent Street, which were sold during the year ended March 15,
2006,  were  all  classified  as  discontinued  operations  on the  consolidated
financial statements.

Consolidated Statements of Discontinued Operations:
<TABLE>
<CAPTION>
                                                           Three Months Ended               Six Months Ended
                                                              September 15,                   September 15,
                                                      ----------------------------    ----------------------------
                                                          2006            2005*           2006            2005*
                                                      ------------    ------------    ------------    ------------
<S>                                                   <C>             <C>             <C>             <C>
Revenues:

Rental income                                         $  1,579,594    $  3,198,220    $  3,708,395    $  6,577,555
Other                                                       26,213         109,291          72,735         150,715
Gain (loss) on sale of properties                        8,676,605         (30,840)      8,665,605       4,513,348
                                                      ------------    ------------    ------------    ------------
Total revenue                                           10,282,412       3,276,671      12,446,735      11,241,618
                                                      ------------    ------------    ------------    ------------

Expenses:

General and administrative                                 204,482         464,885         699,991       1,226,588
General and administrative-related parties (Note 2)         50,222         114,756         101,635         254,511
Repairs and maintenance                                    523,860         925,344       1,181,875       1,645,008
Operating                                                  116,631         475,668         650,698       1,106,912
Taxes                                                       54,315         155,664         114,533         297,822
Insurance                                                  131,061         190,776         278,516         414,088
Interest                                                   384,894         857,856         829,212       1,698,974
Depreciation and amortization                              251,845         861,679         594,067       1,852,133
Loss on impairment of fixed assets                               0         850,000               0       2,710,000
                                                      ------------    ------------    ------------    ------------

Total expenses                                           1,717,310       4,896,628       4,450,527      11,206,036
                                                      ------------    ------------    ------------    ------------

Income (loss) before minority interest                   8,565,102      (1,619,957)      7,996,208          35,582
Minority interest in loss (income) of subsidiaries
  from discontinued operations                          (1,781,675)       (452,340)     (1,779,425)       (276,896)
                                                      ------------    ------------    ------------    ------------
Net income (loss) from discontinued operations
  (including gain (loss) on sale of properties)       $  6,783,427    $ (2,072,297)   $  6,216,783    $   (241,314)
                                                      ============    ============    ============    ============

Income (loss) - limited partners from discontinued
  operations (including gain (loss) on sale of
  properties)                                         $  6,715,593    $ (2,051,574)   $  6,154,615    $   (238,901)
                                                      ============    ============    ============    ============

Number of BACs outstanding                                15,987.5        15,987.5        15,987.5        15,987.5
                                                      ============    ============    ============    ============

Income (loss) from discontinued operations
  (including gain (loss) on sale of properties) per
  BAC                                                 $     420.05    $    (128.32)   $     384.96    $     (14.94)
                                                      ============    ============    ============    ============

<CAPTION>

Cash flows from Discontinued Operations:

                                                                            Six Months Ended
                                                                              September 15,
                                                                      ----------------------------
                                                                          2006            2005*
                                                                      ------------    ------------
<S>                                                                   <C>             <C>
Net cash used in operating activities                                 $ (2,947,513)   $ (2,071,924)
                                                                      ------------    ------------
Net cash provided by investing activities                             $  6,549,923    $  8,451,745
                                                                      ------------    ------------
Net cash used in financing activities                                 $(11,537,556)   $ (2,343,603)
                                                                      ------------    ------------
</TABLE>

* Reclassified for comparative purposes.

                                       10
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 15, 2006
                                   (Unaudited)


Note 6 - Commitments and Contingencies

a)  Subsidiary Partnerships - Going Concern

Magnolia Arms Associates, LTD ("Magnolia Arms")
-----------------------------------------------
Magnolia Arms made the first seven monthly payments on its mortgage in 2005, but
has  been in  default  since  August  of 2005  due to  operating  deficits.  The
mortgagee can take  possession of the Property,  collect the rents directly from
the  tenants and  foreclose  on the  Property.  There can be no  assurance  that
Magnolia  Arms  will be able to cure the  default.  The  mortgage  payable  is a
current liability as of June 30, 2006. Because of these circumstances,  there is
substantial  doubt  regarding  whether the Local  Partnership  can continue as a
going concern. The Partnership's investment in Magnolia Arms was written down to
zero by prior years' losses and the minority  interest balance was approximately
$45,000 and $47,000 at September 15, 2006 and March 15, 2006, respectively.  The
net loss after  minority  interest for Magnolia Arms  amounted to  approximately
$96,000  and  $193,000  for the  quarters  ended  September  15,  2006 and 2005,
respectively.

Quality Hill Historic  District-Phase  II-A, L.P. ("Quality Hill")
------------------------------------------------------------------
The financial  statements  of Quality Hill have been  prepared  assuming it will
continue  as a going  concern.  Quality  Hill has had  negative  cash flows from
operating  activities  for the past  several  years.  Quality  Hill is trying to
obtain  extensions for its mortgage  notes payable,  and is not expected to have
operating  cash flow to meet the  financial  obligations  of its mortgage  notes
coming  due.  This  situation  raises  substantial  doubt  about its  ability to
continue as a going concern.

During  2005,  Quality  Hill  entered  into a  Modification  Agreement  with the
Missouri  Housing  Development  Commission  ("MHDC") which extended the maturity
date of the permanent  nonrecourse  financing for the Quality Hill-Cordova Hotel
Apartments,  which is one of the two  projects  included  in  Quality  Hill,  to
December 2006. The balance of this note as of December 31, 2005 was $424,800.

During 2005,  Quality Hill entered into  negotiations  with both the Hall Family
Foundation  of  Kansas   ("Foundation")   and  Kansas  City  Downtown   Minority
Development  Corporation  ("DMDC")  to extend  the  maturity  dates of each note
payable to  December  2006.  The  combined  balance of the  Foundation  notes is
$2,126,426 and was due in full in December 2005 and the combined  balance of the
DMDC notes was $735,000  ($225,000 was due in December 2005 and $510,000 was due
in May 2005). As of December 31, 2005, Quality Hill had not been granted such an
extension  by either  lender.  Subsequent  to December  31,  2005,  Quality Hill
Received a one year extension on the Foundation note.

As of  September  15,  2006,  the total of these  three  notes,  $3,286,266,  is
included as a current liability in mortgage notes payable.

These items raise  substantial doubt about Quality Hill's ability to continue as
a going concern.  The Partnership's  investment in Quality Hill has been written
down to zero by prior  years'  losses  and the  minority  interest  balance  was
approximately  $0 at both  September  15, 2006 and March 15, 2006.  The net loss
after minority interest for Quality Hill amounted to approximately  $148,000 and
$182,000 for the quarters ended September 15, 2006 and 2005, respectively.

Willoughby
----------
The financial  statements of Willoughby have been prepared assuming that it will
continue as a going  concern.  Willoughby  has had  operating  losses and equity
deficiencies  that raise  substantial  doubt  about its ability to continue as a
going concern. The Partnership's  investment in Willoughby has been written down
to  zero  by  prior  years'  losses  and  the  minority   interest  balance  was
approximately  $0 and  $257,000  at  September  15,  2006 and  March  31,  2006,
respectively.  The net loss after minority  interest for  Willoughby  (excluding
gain on sale of approximately  $2,786,000) amounted to approximately $31,000 and
$183,000 for the quarters ended  September 15, 2006 and 2005,  respectively.  On
June 5, 2006, the property and the related assets and  liabilities of Willoughby
were sold (see Note 3).

b)  Uninsured Cash and Cash Equivalents

The  Partnership  maintains  its cash and cash  equivalents  in  various  banks.
Accounts  at  each  bank  are  guaranteed  by  the  Federal  Deposit   Insurance
Corporation up to $100,000.

c)  Cash Distributions

Cash distributions from the Local Partnerships to the Partnership are restricted
by the provisions of the respective Local Partnership agreements and/or the U.S.
Department of Housing and Urban Development ("HUD"). Such cash distributions are
typically made from surplus cash flow.

d)  Tax Credits

A portion of the low income housing tax credits ("Tax Credits") could be subject
to  recapture  in  future  years  if (i) a  Local  Partnership  ceases  to  meet
qualification  requirements,  (ii) there is a decrease in the qualified basis of
the  Local  Partnership  property  or (iii)  there is a  reduction  in the Local
Partnership  interest in the property at any time during the 15-year period (the
"Compliance  Period")  commencing  at the  beginning of the period that entitles
qualified  BAC  holders  to Tax  Credits,  generally  ten years from the date of
investment  or, if later,  the date the property is leased to qualified  tenants
("Tax Credit  Period").  As of December 31, 2003, the Tax Credit Period for each
Local Partnership had expired.  The Compliance Periods continue through December
31,  2008 with  respect  to the  properties  depending  upon when the Tax Credit
Periods commenced.

                                       11
<PAGE>

                          LIBERTY TAX CREDIT PLUS L.P.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 15, 2006
                                   (Unaudited)


e)  Other

Greenleaf Associates, L.P. ("Greenleaf")
----------------------------------------
A former tenant brought suit against  Greenleaf's on-site manager for damages of
$100,000. An amended complaint does not specify an amount of damages. The former
tenant claims  violation of the 14th  Amendment,  false arrest,  obstruction  of
justice  and civil  conspiracy.  Management  intends to  vigorously  contest the
matter.  An evaluation of the likelihood of an unfavorable  outcome and estimate
of the  amount  of  possible  loss  cannot  be made at this  early  stage of the
proceedings.

State Street 86 Associates, L.P. ("State Street")
-------------------------------------------------
The Camden  Redevelopment  Agency has  designated  the  Cramer  Hill  Waterfront
Redevelopment  Agency as a  possible  future  redevelopment  project.  This area
includes Centennial Village, a 200-unit apartment project that State Street owns
and operates.  There have been various lawsuits involving this redevelopment and
at this time there is no further  information  as to whether or not the Property
will be purchased or acquired by eminent domain.

Other
-----
The  Partnership  is subject to the risks  incident to potential  losses arising
from the management and ownership of improved real estate.  The  Partnership can
also be affected by poor economic conditions generally, however no more than 27%
of the  properties are located in any single state.  There are also  substantial
risks associated with owning properties  receiving  government  assistance,  for
example the possibility that Congress may not appropriate funds to enable HUD to
make rental assistance payments. HUD also restricts annual cash distributions to
partners  based on  operating  results and a  percentage  of the owners'  equity
contribution.  As of  September  15,  2006,  there  are ten  Local  Partnerships
subsidized by HUD. The Partnership  cannot sell or  substantially  liquidate its
investments  in  subsidiary  partnerships  during  the period  that the  subsidy
agreements are in existence, without HUD's approval.  Furthermore, there may not
be market demand for apartments at full market rents when the rental  assistance
contracts expire.


Note 7 - Subsequent Event

On October 1, 2006, the  Partnership  sold its limited  partnership  interest in
Shiloh Grove to an affiliate of the Local  General  Partner for a sales price of
$149,990.  The Partnership  received  proceeds of $49,990 on October 3, 2006 and
the remaining  $100,000 is to be paid in guaranteed  payments payable on certain
dates through April 1, 2008. Because Shiloh Grove was sold to a related party of
the Local Partnership, the sale resulted in a non-cash contribution to the Local
Partnership  from the Local General Partner of  approximately  $2,750,000.  Such
contribution flows through minority interest as a result of the write-off of the
deficit basis in the property of approximately  $2,600,000 and the $149,990 cash
received from the sale,  which will be recognized  on the  Partnership's  Annual
Report on Form 10-K for the year ended March 15, 2007.  The sale resulted in the
liquidation  of Shiloh  Grove.  Shiloh Grove is  classified as an asset held for
sale as of September 15, 2006 (see Note 4).

                                       12
<PAGE>

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

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

The Partnership's  capital was originally invested in 31 Local Partnerships.  As
of September 15, 2006, the properties and the related assets and  liabilities of
thirteen Local Partnerships and the limited partnership  interest in seven Local
Partnerships   were  sold.  For  a  discussion  of  these  sales  of  the  Local
Partnerships see Note 3 to the consolidated  financial  statements  contained in
Item 1. In addition,  as of September 15, 2006, the Partnership has entered into
agreements to sell the property and the related  assets and  liabilities  of one
Local Partnership and the Partnership's limited partnership interest in a second
Local Partnership (see Note 4 in Item 1). Subsequently,  on October 1, 2006, the
Partnership sold its limited partnership  interest in one Local Partnership (see
Note 7 in Item 1).

Off Balance Sheet Arrangements
------------------------------
The Partnership has no off-balance sheet arrangements.

Tabular disclosure of Contractual Obligations
---------------------------------------------
The Partnership  discloses in Item 2 in the Partnership's  Annual Report on Form
10-K for the year ended March 15, 2006,  the  Partnership's  commitments to make
future  payments under its debt  agreements and other  contractual  obligations.
There are no material  changes to such disclosure or amounts as of September 15,
2006.

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

The  Partnership's  primary  sources  of funds  included:  (i)  working  capital
reserves;  (ii)  interest  earned on the working  capital  reserves;  (iii) cash
distributions from operations of the Local Partnerships; and (iv) sales proceeds
and  distributions.  Such funds are  available  to meet the  obligations  of the
Partnership.   During  the  six  months  ended  September  15,  2006  and  2005,
distributions   from   operations   of  the  Local   Partnerships   amounted  to
approximately $18,000 and $68,000,  respectively.  Additionally,  during the six
months ended September 15, 2006 and 2005, the Partnership received approximately
$2,832,000 and $446,000 distributions of proceeds from sales.

For the six months ended  September 15, 2006,  cash and cash  equivalents of the
Partnership and its  consolidated  Local  Partnerships  increased  approximately
$2,625,000.  This  increase is  attributable  to net cash  provided by operating
activities  ($951,000),  a decrease in cash held in escrow relating to investing
activities ($156,000), proceeds from sale of investments ($18,800,000) and a net
increase in due to local general  partners and affiliates  relating to financing
activities  ($347,000)  which  exceeded  improvements  to property and equipment
($146,000),  costs paid relating to sale of properties ($3,412,000),  repayments
of mortgage notes ($14,065,000) and a decrease in capitalization of consolidated
subsidiaries  attributable  to  minority  interest  ($7,000).  Included  in  the
adjustments  to  reconcile  the net  income to net cash  provided  by  operating
activities is depreciation and  amortization of  approximately  ($2,104,000) and
gain on sale of properties of approximately ($8,666,000).

Total  expenses for the three and six months ended  September 15, 2006 and 2005,
excluding   depreciation   and   amortization,    interest   and   general   and
administrative-related parties, totaled $2,208,011,  $2,071,602,  $5,014,188 and
$4,749,212, respectively.

Accounts  payable as of September 15, 2006 and March 15, 2006,  were  $4,294,768
and $2,115,469,  respectively. Accounts payable are short term liabilities which
are expected to be paid from operating cash flows,  working capital  balances at
the Local  Partnership  level,  Local  General  Partner  advances and in certain
circumstances  advances  from the  Partnership.  Because the  provisions  of the
secondary  loans defer the payment of accrued  interest of the respective  Local
Partnerships,   the   Partnership   believes  it  (and  the   applicable   Local
Partnerships) has sufficient  liquidity and ability to generate cash and to meet
existing and known or reasonably  likely future cash  requirements over both the
short and long term.  Included in accounts  payable as of September 15, 2006 and
March 15, 2006 are  approximately  $2,066,000  and $0 of deferred  revenue  from
sales, respectively. In addition, accounts payable from discontinued operations,
as of September  15, 2006 and March 15,  2006,  totaled  $301,143 and  $282,628,
respectively.

Accrued  interest  payable  as of  September  15,  2006 and March  15,  2006 was
$6,208,698 and $5,963,620, respectively. Accrued interest payable represents the
accrued  interest on all mortgage  loans,  which  include  primary and secondary
loans. Certain secondary loans have provisions such that interest is accrued but
not payable  until a future date.  The  Partnership  anticipates  the payment of
accrued  interest on the  secondary  loans  (which  make up the  majority of the
accrued  interest  payable  amount  and which have been  accumulating  since the
Partnership's  investment in the respective Local Partnership) will be made from
future  refinancings  or sales  proceeds of the respective  Local  Partnerships.
Furthermore,  each Local Partnership's  mortgage notes are collateralized by the
land and buildings of the respective Local Partnership,  and are without further
recourse  to  the  Partnership.  In  addition,  accrued  interest  payable  from
discontinued  operations,  as of September 15, 2006 and March 31, 2006,  totaled
$3,181,896 and $2,910,492, respectively.

Partnership  management  fees and  expense  reimbursements  owed to the  General
Partners  amounting to approximately  $7,930,000 and $7,808,000 were accrued and
unpaid as of September  15, 2006 and March 15, 2006,  respectively.  Without the
General   Partners'   continued  accrual  without  payment  of  the  partnership
management  fees,  the  Partnership  will  not  be in a  position  to  meet  its
obligations.  The General  Partners have allowed for the accrual without payment
of a portion of the  partnership  management fees but are under no obligation to
continue to do so.

A  working  capital  reserve  of  approximately  $5,061,000  remained  unused at
September 15, 2006.

The  Partnership  is not  expected  to have  access  to  additional  sources  of
financing.

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

For a discussion of contingencies affecting certain Local Partnerships, see Note
6 in Item 1. Since the maximum loss the  Partnership  would be liable for is its
net  investment in the  respective  Local  Partnerships,  the  resolution of the
existing   contingencies   is  not  anticipated  to  impact  future  results  of
operations,  liquidity or financial  condition in a material way.  However,  the
Partnership's  loss of its  investment  in a Local  Partnership  may  result  in
recapture of Tax Credits if the  investment is lost before the expiration of the
applicable compliance period.

                                       13
<PAGE>

Management is not aware of any trends or events,  commitments  or  uncertainties
which have not  otherwise  been  disclosed  that  will,  or are likely to impact
liquidity in a material way.  Management  believes the only impact would be from
laws  that  have not yet been  adopted.  The  portfolio  is  diversified  by the
location of the  properties  around the United States so that if one area of the
country is experiencing  downturns in the economy,  the remaining  properties in
the  Partnership's   portfolio  may  be  experiencing  upswings.   However,  the
geographic  diversification  of the portfolio may not protect  against a general
downturn in the national economy.

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

In  preparing  the  consolidated  financial  statements,   management  has  made
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting periods.  Actual results could differ
from those  estimates.  Set forth below is a summary of the accounting  policies
that  management  believes are critical to the  preparation of the  consolidated
financial  statements.  The summary should be read in conjunction  with the more
complete discussion of the Partnership's  accounting policies included in Note 2
to the consolidated  financial  statements in the Partnership's Annual Report on
Form 10-K for the year ended March 15, 2006.

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

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price,  acquisition fees and expenses, and any other costs incurred
in acquiring the  properties.  The cost of property and equipment is depreciated
over their estimated useful lives using accelerated and  straight-line  methods.
Expenditures  for repairs and  maintenance  are charged to expense as  incurred;
major  renewals  and  betterments  are  capitalized.  At the time  property  and
equipment  are  retired  or  otherwise  disposed  of,  the cost and  accumulated
depreciation  are  eliminated  from  the  assets  and  accumulated  depreciation
accounts and the profit or loss on such disposition is reflected in earnings.

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

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

During the six months ended September 15, 2006, the Partnership has not recorded
any loss on impairment of assets or reduction to estimated  fair value.  Through
September 15, 2006, the Partnership has recorded approximately  $2,710,000 as an
aggregate loss on impairment of assets or reduction to estimated fair value.

At the time management  commits to a plan to dispose of assets,  said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets  are  classified  as  property  and  equipment-held  for sale and are not
depreciated.  As of September 15, 2006 and March 15, 2006, the  Partnership  has
recorded  property and equipment net of accumulated  depreciation of $20,451,411
and $10,392,625, respectively, as held for sale.

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

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

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

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

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

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

The results of operations for the three and six months ended  September 15, 2006
and 2005, consisted primarily of the results of the Partnership's  investment in
the consolidated Local  Partnerships,  excluding the results of its discontinued
operations  which are not reflected in the following  discussion  (see Note 5 in
Item 1).

Rental income increased  approximately 2% and less than 1% for the three and six
months  ended  September  15, 2006 as compared to the  corresponding  periods in
2005, primarily due to rental rate increases at the Local Partnerships partially
offset by increases in rental discounts and concessions at one Local Partnership
and an increase in vacancies at a second Local Partnership.

                                       14
<PAGE>

Other income increased  approximately  $34,000 and $53,000 for the three and six
months  ended  September  15, 2006 as compared to the  corresponding  periods in
2005,  primarily due to an increase in interest income earned at the Partnership
level due to higher cash balances resulting from sales.

Total   expenses,   excluding   general   and   administrative,    general   and
administrative-related parties, operating and repairs and maintenance,  remained
fairly  consistent with an increase of  approximately  2% and a decrease of less
than 1% for the three and six months ended September 15, 2006 as compared to the
corresponding periods in 2005.

General and administrative expenses increased approximately $113,000 for the six
months ended September 15, 2006 as compared to the corresponding period in 2005,
primarily due to an increase in management salaries at one Local Partnership, an
increase in auditing fees, legal expenses and miscellaneous  expenses related to
the sale of properties at the Partnership level and a tax reimbursement received
in 2005 also at the Partnership level.

General and  administrative - related parties expenses  decreased  approximately
$200,000 and $278,000 for the three and six months ended  September  15, 2006 as
compared to the  corresponding  periods in 2005,  primarily due to a decrease in
partnership management fees and expense reimbursement charges resulting from the
sales of properties at the Partnership level.

Operating and other expenses increased approximately $250,000 for the six months
ended  September  15,  2006 as  compared  to the  corresponding  period in 2005,
primarily  due to an increase in gas and  electric  use and costs at three Local
Partnerships.

Repair and maintenance expenses increased  approximately  $168,000 for the three
months ended September 15, 2006 as compared to the corresponding period in 2005,
primarily  due to a billing delay from vendors at one Local  Partnership  and an
increase in repairs and  maintenance  contracts,  including  groundskeeping  and
elevator  maintenance,  at a second  Local  Partnership  partially  offset  by a
decrease in expenses related to equipment purchase at a third Local Partnership.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

The  Partnership  has  mortgage  notes  that are  payable in  aggregate  monthly
installments  including  principal  and interest at rates varying from 1% to 12%
per annum.  The Partnership does not believe there is a material risk associated
with the  various  interest  rates  associated  with the  mortgage  notes as the
majority  of  the  Local  Partnership  mortgage  notes  have  fixed  rates.  The
Partnership currently discloses in Item 8, Note 3 to the financial statements in
the Partnership's  Annual Report on Form 10-K for the year ended March 15, 2006,
the fair value of the mortgage notes payable.

The Partnership does not have any other market risk sensitive instruments.

Item 4.  Controls and Procedures

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

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

                                       15
<PAGE>

                           PART II. OTHER INFORMATION



Item 1.  Legal Proceedings - None

Item 1A. Risk Factors - No changes

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds - None

Item 3.  Defaults upon Senior Securities - None

Item 4.  Submission of Matters to a Vote of Security Holders - None

Item 5.  Other Information

         On July 7, 2006, SCM Special Fund,  LLC,  MPF-NY 2006,  LLC, MPF Senior
         Note  Program I, LP, MPF Flagship  Fund 11, LLC and MPF DeWaay  Premier
         Fund  3,  LLC  (collectively,  the  "Offerors")  filed a  Tender  Offer
         Statement on Schedule TO (the  "Schedule  TO") with the  Securities and
         Exchange  Commission (the "SEC") with respect to an unsolicited  tender
         offer (the  "Offer") to purchase up to 3,197.50  Beneficial  Assignment
         Certificates ("Units") representing  assignments of limited partnership
         interests  in the  Partnership  at a price of $125 per  Unit,  less the
         amount of any distributions  declared or made with respect to the Units
         between July 7, 2006 and August 8, 2006 or such other date to which the
         Offer  may be  extended.  The  Offerors  are not  affiliated  with  the
         Partnership or its General Partners.

         On July 21, 2006,  the  Partnership  and its General  Partners  filed a
         Solicitation/Recommendation  Statement on Schedule 14D-9 (the "Schedule
         14D-9")  with  the SEC,  as  required  under  Section  14(d)(4)  of the
         Securities Exchange Act of 1934. In the Schedule 14D-9, the Partnership
         and its General Partners stated that they express no opinion and remain
         neutral with respect to the Offer.

         On August 25,  2006,  the  Offerors  filed the Final  Amendment  to the
         Schedule TO with the SEC. In the Final Amendment, the Offerors reported
         that they received  tenders by unitholders of a total of 466 Units.  As
         stated in the Schedule 14D-9,  however,  the General  Partners will not
         approve the  transfer of those  units to the  Offerors  and permit such
         transfers  to be concluded  unless and until the  Offerors  provide the
         Partnership  with a legal opinion letter and an indemnity,  in form and
         substance  satisfactory to the Partnership and its counsel,  addressing
         certain tax and other matters relating to the Offer.

Item 6.  Exhibits

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

                                       16
<PAGE>


                                   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.


                          LIBERTY TAX CREDIT PLUS L.P.
                          ----------------------------
                                  (Registrant)


                            By:  RELATED CREDIT PROPERTIES L.P.,
                                 a General Partner


                                 By:  Related Credit Properties Inc.,
                                      its General Partner


Date: October 12, 2006
      ----------------
                                      By:  /s/ Alan P. Hirmes
                                           ------------------
                                           Alan P. Hirmes,
                                           President and Chief Executive Officer
                                           (Principal Executive and Financial
                                           Officer)


Date: October 12, 2006
      ----------------
                                      By:  /s/ Glenn F. Hopps
                                           ------------------
                                           Glenn F. Hopps,
                                           Treasurer
                                           (Principal Accounting Officer)


                                 By:  LIBERTY ASSOCIATES III, L.P.,
                                      a General Partner


                                      By:  Related Credit Properties L.P.,
                                           its General Partner


                                           By:  Related Credit Properties Inc.,
                                                its General Partner


Date: October 12, 2006
      ----------------
                                           By:  /s/ Alan P. Hirmes
                                                ------------------
                                                Alan P. Hirmes,
                                                President and Chief Executive
                                                Officer
                                                (Principal Executive and
                                                Financial Officer)


Date: October 12, 2006
      ----------------
                                           By:  /s/ Glenn F. Hopps
                                                ------------------
                                                Glenn F. Hopps,
                                                Treasurer
                                                (Principal Accounting Officer)
<PAGE>

                                                                    Exhibit 31.1


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


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

     1.  I have  reviewed  this  quarterly  report on Form  10-Q for the  period
         ending September 15, 2006 of the Partnership;

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

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

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

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

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

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

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

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

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

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



         Date: October 12, 2006
               ----------------
                                           By:  /s/ Alan P. Hirmes
                                                ------------------
                                                Alan P. Hirmes,
                                                Principal Executive Officer and
                                                Principal Financial Officer


<PAGE>


                                                                    Exhibit 32.1


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


In  connection  with the  Quarterly  Report of Liberty Tax Credit Plus L.P. (the
"Partnership")  on Form 10-Q for the period  ending  September 15, 2006 as filed
with the  Securities  and  Exchange  Commission  ("SEC") on the date hereof (the
"Report"),  I,  Alan  P.  Hirmes,  Principal  Executive  Officer  and  Principal
Financial Officer of Related Credit Properties L.P. and Liberty Associates III,
L.P., the general  partners of the Partnership,  certify,  pursuant to 18 U.S.C.
Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002, that:


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


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

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



By:  /s/ Alan P. Hirmes
     ------------------
     Alan P. Hirmes
     Principal Executive Officer and Principal Financial Officer
     October 12, 2006