--------------------------------------------------------------------------------

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ------------------



                                   FORM 10-QSB


                               ------------------



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


                For the quarterly period ended September 30, 2005


                               ------------------



                         Commission file number 0-11973


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
             Organized pursuant to the Laws of the State of Maryland


                               ------------------



        Internal Revenue Service - Employer Identification No. 52-1321492

                 11200 Rockville Pike, Rockville, Maryland 20852

                                 (301) 468-9200


                               ------------------





Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 | |




--------------------------------------------------------------------------------
<PAGE>



                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2005



                                                                           Page
                                                                           ----

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Balance Sheets
           - September 30, 2005 and December 31, 2004.....................   1

         Statements of Operations and Accumulated Losses
           - for the three and nine months ended September 30, 2005
           and 2004 ......................................................   2

         Statements of Cash Flows
           - for the nine months ended September 30, 2005 and 2004........   3

         Notes to Financial Statements
           - September 30, 2005 and 2004..................................   4

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations......................................  14

Item 3.  Controls and Procedures..........................................  18


Part II - OTHER INFORMATION

Item 3.  Defaults Upon Senior Securities..................................  18

Item 5.  Other Information................................................  19

Item 6.  Exhibits.........................................................  20

Signature.................................................................  21


<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                                 BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>
                                                                                      September 30,   December 31,
                                                                                          2005           2004
                                                                                      ------------    ------------
                                                                                       (Unaudited)
<S>                                                                                   <C>             <C>
Investment in partnerships held for sale ..........................................   $  1,628,784    $  1,491,380
Cash and cash equivalents .........................................................      4,242,683      15,311,566
Sales proceeds receivable .........................................................        472,612         832,879
Other assets ......................................................................            368             572
                                                                                      ------------    ------------

   Total assets ...................................................................   $  6,344,447    $ 17,636,397
                                                                                      ============    ============




                        LIABILITIES AND PARTNERS' CAPITAL



Due on investments in partnerships ................................................   $  1,400,000    $  1,400,000
Accrued interest payable ..........................................................      2,846,762       2,752,262
Accounts payable and accrued expenses .............................................        184,280         138,537
Disposition fees payable to related party .........................................           --         1,210,408
                                                                                      ------------    ------------

   Total liabilities ..............................................................      4,431,042       5,501,207
                                                                                      ------------    ------------

Commitments and contingencies

Partners' capital:

  Capital paid in:
    General Partners ..............................................................          2,000           2,000
    Limited Partners ..............................................................     50,015,000      50,015,000
                                                                                      ------------    ------------

                                                                                        50,017,000      50,017,000

  Less:
    Accumulated distributions to partners .........................................    (25,765,791)    (15,293,973)
    Offering costs ................................................................     (5,278,980)     (5,278,980)
    Accumulated losses ............................................................    (17,058,824)    (17,308,857)
                                                                                      ------------    ------------

      Total partners' capital .....................................................      1,913,405      12,135,190
                                                                                      ------------    ------------

      Total liabilities and partners' capital .....................................   $  6,344,447    $ 17,636,397
                                                                                      ============    ============

</TABLE>
                   The accompanying notes are an integral part
                         of these financial statements.

                                       -1-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS

                             AND ACCUMULATED LOSSES

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     For the three months ended       For the nine months ended
                                                            September 30,                   September 30,
                                                    ----------------------------    ----------------------------
                                                        2005             2004           2005            2004
                                                    ------------    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>             <C>
Share of income from partnerships ...............   $    139,366    $    159,852    $    486,675    $  1,228,378
                                                    ------------    ------------    ------------    ------------

Other revenue and expenses:

  Revenue:
    Interest and other ..........................         32,361           9,080          94,083          17,816
                                                    ------------    ------------    ------------    ------------

  Expenses:
    Interest ....................................         31,500          31,500          94,500          94,500
    General and administrative ..................        105,060          74,170         296,300         243,827
    Management fee ..............................         62,499          62,499         187,497         187,497
    Professional fees ...........................         25,495          35,625         119,816         106,875
    Amortization of deferred costs ..............           --             3,521            --            10,564
                                                    ------------    ------------    ------------    ------------

                                                         224,554         207,315         698,113         643,263
                                                    ------------    ------------    ------------    ------------

      Total other revenue and expenses ..........       (192,193)       (198,235)       (604,030)       (625,447)
                                                    ------------    ------------    ------------    ------------

(Loss) income before gain on disposition of
  investment in partnerships ....................        (52,827)        (38,383)       (117,355)        602,931

(Loss) gain on disposition of investments
  in partnerships, net of disposition fees ......         (6,510)           --           367,388            --
                                                    ------------    ------------    ------------    ------------

Net (loss) income ...............................        (59,337)        (38,383)        250,033         602,931

Accumulated losses, beginning of period .........    (16,999,487)    (28,492,375)    (17,308,857)    (29,133,689)
                                                    ------------    ------------    ------------    ------------

Accumulated losses, end of period ...............   $(17,058,824)   $(28,530,758)   $(17,058,824)   $(28,530,758)
                                                    ============    ============    ============    ============


Net (loss) income allocated
  to General Partners (1.51%) ...................   $       (896)   $       (580)   $      3,776    $      9,104
                                                    ============    ============    ============    ============

Net (loss) income allocated
  to Initial and Special Limited Partners (1.49%)   $       (884)   $       (572)   $      3,725    $      8,984
                                                    ============    ============    ============    ============

Net (loss) income allocated
  to Additional Limited Partners (97%) ..........   $    (57,557)   $    (37,231)   $    242,532    $    584,843
                                                    ============    ============    ============    ============

Net (loss) income per unit of
  Additional Limited Partner Interest,
  based on 49,910 units outstanding .............   $      (1.15)   $      (0.75)   $       4.86    $      11.72
                                                    ============    ============    ============    ============

</TABLE>

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

                                       -2-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    For the nine months ended
                                                                                          September 30,
                                                                                   ----------------------------
                                                                                       2005            2004
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
Cash flows from operating activities:
  Net income ...................................................................   $    250,033    $    602,931

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships ..........................................       (486,675)     (1,228,378)
    Gain on distribution of investments in partnerships, net of disposition fees       (255,043)           --
    Additional gain on disposition of investment in partnerships ...............       (112,345)           --
    Loss on sale proceeds receivable ...........................................         15,733            --
    Amortization of deferred costs .............................................           --            10,564

    Changes in assets and liabilities:
      Decrease (increase) in other assets ......................................            204             (93)
      Increase in accrued interest receivable on advances ......................         (1,122)           --
      Increase in accrued interest payable .....................................         94,500          94,500
      Increase (decrease) in accounts payable and accrued expenses .............         45,743          (1,372)
                                                                                   ------------    ------------

        Net cash used in operating activities ..................................       (448,972)       (521,848)
                                                                                   ------------    ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships ...................................        350,393       1,165,200
  Proceeds from disposition of investment in partnership .......................      1,012,685            --
  Collection of sale proceeds receivable .......................................        456,879            --
  Additional proceeds from disposition of investment in partnership ............           --               591
  Payment of disposition fees to related party .................................     (1,968,050)           --
                                                                                   ------------    ------------

        Net cash (used in) provided by investing activities ....................       (148,093)      1,165,791
                                                                                   ------------    ------------

Cash flows used in financing activities:
  Distribution to Additional Limited Partners ..................................     (9,867,848)           --
  Tax distribution on behalf of Additional Limited Partners ....................       (603,970)           --
                                                                                   ------------    ------------

        Net cash used in financing activities ..................................    (10,471,818)           --
                                                                                   ------------    ------------

Net (decrease) increase in cash and cash equivalents ...........................    (11,068,883)        643,943

Cash and cash equivalents, beginning of period .................................     15,311,566       2,979,778
                                                                                   ------------    ------------

Cash and cash equivalents, end of period .......................................   $  4,242,683    $  3,623,721
                                                                                   ============    ============
</TABLE>

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

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


1.   BASIS OF PRESENTATION

     In the opinion of C.R.I.,  Inc. (CRI), the Managing  General  Partner,  the
accompanying unaudited financial statements reflect all adjustments,  consisting
of normal recurring accruals, necessary for a fair presentation of the financial
position of Capital Realty Investors-II Limited Partnership (the Partnership) as
of September 30, 2005,  and the results of its operations for the three and nine
months ended September 30, 2005 and 2004, and its cash flows for the nine months
ended  September 30, 2005 and 2004.  The results of  operations  for the interim
periods ended September 30, 2005, are not necessarily  indicative of the results
to be expected for the full year.

     The  accompanying  unaudited  financial  statements  have been  prepared in
conformity with accounting principles generally accepted in the United States of
America (US GAAP) and with the instructions to Form 10-QSB.  Certain information
and accounting policies and footnote  disclosures normally included in financial
statements  prepared in conformity  with US GAAP have been  condensed or omitted
pursuant to such instructions.  These condensed  financial  statements should be
read in conjunction with the financial  statements and notes thereto included in
the Partnership's annual report on Form 10-KSB at December 31, 2004.

     In December  2003,  the Financial  Accounting  Standards  Board issued FASB
Interpretation  No. 46  (revised  December  2003) (FIN 46-R),  Consolidation  of
Variable  Interest  Entities.  FIN 46-R clarifies the  application of Accounting
Research Bulletin 51, Consolidated  Financial  Statements,  for certain entities
that do not  have  sufficient  equity  at risk for the  entity  to  finance  its
activities without additional  subordinated financial support from other parties
or in which equity  investors do not have the  characteristics  of a controlling
financial interest  ("variable interest  entities").  Variable interest entities
within  the  scope of FIN 46-R  will be  required  to be  consolidated  by their
primary  beneficiary.  The primary  beneficiary of a variable interest entity is
determined  to be the party that  absorbs a majority  of the  entity's  expected
losses,  receives  a  majority  of its  expected  returns,  or both.  The  Local
Partnerships  in which the  Partnership  invested were formed by  individuals or
entities  unrelated  to the  Partnership  or  its  affiliates.  The  Partnership
purchased  limited partner  interests in existing,  operating  partnerships with
unaffiliated  managing  general  partners.  An affiliate of the Managing General
Partner also purchased a general  partner  interest in the majority of the Local
Partnerships.  Neither the Partnership nor the affiliate of the Managing General
Partner  received  development  fees at or near  the  time  of  investment.  The
Managing  General  Partner has  evaluated  the Local  Partnerships  in which the
Partnership  is invested and has  determined  that the equity holders as a group
held  sufficient  equity at risk in the  operating  Local  Partnerships  and the
equity investors have the  characteristics of controlling  financial interest in
accordance  with the  provisions of FIN 46-R. The Managing  General  Partner has
therefore determined that the investments in Local Partnerships are not variable
interest  entities  subject  to  consolidation  by  the  Partnership  under  the
provisions of FIN 46-R.


2.   PLAN OF LIQUIDATION AND DISSOLUTION

     On February 4, 2004, the  Partnership  filed a Definitive  Proxy  Statement
pursuant to Section 14(a) of the Securities  Exchange Act of 1934, and mailed it
to Limited Partners to solicit consents for approval of the following:

                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


2.   PLAN OF LIQUIDATION AND DISSOLUTION - Continued

(1)  The sale of all of the  Partnership's  assets  and the  dissolution  of the
     Partnership  pursuant to a Plan of  Liquidation  and  Dissolution,  and the
     amendment of the Partnership's  Limited Partnership Agreement to permit the
     Managing  General  Partner,   CRI,  to  be  eligible  to  receive  property
     disposition  fees from the  Partnership  on the same basis as such fees may
     currently be paid to Local General  Partners,  real estate brokers or other
     third party intermediaries employed to sell Partnership properties,  to the
     extent that CRI markets and sells the Partnership's  properties  instead of
     such persons (a "Disposition Fee");

(2)  The amendment of the Partnership's  Limited Partnership Agreement to permit
     CRI to be eligible to receive a partnership  liquidation  fee in the amount
     of $500,000,  payable only if the Managing General Partner is successful in
     liquidating all of the Partnership's  investments within 36 months from the
     date the liquidation is approved [March 22, 2004], in recognition  that one
     or more of the properties in which the Partnership  holds an interest might
     not be  saleable  to  parties  not  affiliated  with the  respective  Local
     Partnership  due to the amount and/or terms of their  current  indebtedness
     (the "Partnership Liquidation Fee"); and

(3)  To authorize the Managing General Partner, in its sole discretion, to elect
     to extend the period  during  which  Consents  of Limited  Partners  may be
     solicited and voted,  but not beyond sixty (60) days from the date that the
     Consent Solicitation Statement was sent to the Limited Partners.

The matters for which consent was solicited are collectively  referred to as the
"Liquidation."

     The record date for voting was  December  31,  2003,  and the final  voting
deadline  was March 22,  2004.  A  tabulation  of votes  received  by the voting
deadline follows.

<TABLE>
<CAPTION>

                                    FOR                  AGAINST                ABSTAIN                 TOTAL
                             ------------------     ------------------     -------------------     -------------------
                             Units of               Units of               Units of                Units of
                             limited                limited                limited                 limited
                             partner                partner                partner                 partner
Description                  interest   Percent     interest   Percent     interest    Percent     Interest    Percent
-----------                  --------   -------     --------   -------     --------    -------     --------    -------
<S>                          <C>        <C>         <C>        <C>         <C>         <C>         <C>         <C>
Sale, dissolution and
  Disposition Fee             28,699     57.6%       1,264       2.5%         268        0.5%       30,231      60.6%

$500,000 Partnership
  Liquidation Fee             25,841     51.8%       3,546       7.1%         844        1.7%       30,231      60.6%

Extension of
  solicitation period         27,975     56.1%       1,767       3.5%         489        1.0%       30,231      60.6%

</TABLE>

     There can be no assurance that the Liquidation  will be completed  pursuant
to the Plan of Liquidation and Dissolution.

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


3.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

a.   Due on investments in partnerships and accrued interest payable
     ---------------------------------------------------------------

                                    Westgate
                                    --------

     The Partnership defaulted on its one remaining purchase money note, related
to Westgate  Limited Dividend Housing  Association  (Westgate),  on September 1,
2003,  when the note (as extended)  matured and was not paid. The default amount
included   principal  and  accrued   interest  of  $1,400,000  and   $2,584,492,
respectively.  As of  November  8,  2005,  principal  and  accrued  interest  of
$1,400,000  and  $2,861,002,  respectively,  were due. In  conjunction  with the
approved Plan of Liquidation  and Dissolution of the  Partnership,  the Managing
General  Partner is currently  negotiating  the sale of the property  related to
Westgate.  The sale is  scheduled  to close in the second  quarter of 2006.  The
noteholders  have  agreed to accept the  proceeds  of such sale as a  discounted
payoff  of the  purchase  money  note's  principal  and  accrued  interest.  The
discounted  payoff would result in cancellation  of  indebtedness  income to the
Limited  Partners,  which  would  be  taxed  at a  federal  tax rate of up to 35
percent. There can be no assurance that a sale of Westgate and discounted payoff
of the purchase money note will occur.

     Interest expense on the Partnership's Westgate purchase money note for each
of the three and nine month  periods  ended  September  30,  2005 and 2004,  was
$31,500 and $94,500  respectively.  The accrued interest payable on the purchase
money note of  $2,846,762  and  $2,752,262 as of September 30, 2005 and December
31, 2004, respectively, is in default.

     Due to  the  possible  sale  of  the  property  related  to  Westgate,  the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property  purchase costs,  which totaled $472,395
and $486,187 as of September 30, 2005 and December 31, 2004,  respectively,  has
been   reclassified  to  investment  in  partnerships   held  for  sale  in  the
accompanying balance sheets.

b.   Advance to Local Partnership
     ----------------------------

                                 Four Winds West
                                 ---------------

     In  October  2004,  the  Partnership  advanced  $25,000  to Four Winds West
Company,  Ltd., (Four Winds West) to assist with current cash requirements.  For
financial reporting purposes, the Partnership reduced this advance to zero as of
December 31, 2004, as a result of losses at the related Local Partnership level.

c.   Completed sales
     ---------------

                                    Arrowhead
                                    ---------

     On November 17, 2004, the  Partnership's  interest in Arrowhead  Apartments
Associates (Arrowhead) was sold. Gross cash proceeds received by the Partnership
totaled  $1,156,495.  The sale resulted in net gain on disposition of investment
in partnerships of $698,210 for financial  statement  purposes and in total gain
of $6,082,297 for federal tax purposes in 2004. In accordance  with the terms of
the  Partnership  Agreement,  in December 2004 the Managing  General Partner was
paid a  disposition  fee of  $432,824  related  to the sale.  The fee was netted
against the related gain on disposition of investment in partnerships.  In 2005,
the  Partnership  accrued  $85,298 for additional  cash proceeds  expected to be
received  upon the  release  of escrow  reserves,  of which  fifty  percent  was
received in August  2005.  The  remaining  $42,649,  held in escrow is due to be
released upon the anniversary date of November 17, 2005.

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


3.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                  Mercy Terrace
                                  -------------

     On June 6, 2005,  the  Partnership's  interest in Mercy Terrace  Associates
(Mercy Terrace) was sold.  Gross proceeds  received by the  Partnership  totaled
$1,012,685.  The sale  resulted  in net gain on  disposition  of  investment  in
partnerships of $255,043 for financial  statement  purposes and in total gain of
$7,155,425 for federal tax purposes in 2005. In accordance with the terms of the
Partnership  Agreement,  in June 2005 the  Managing  General  Partner was paid a
disposition fee of $757,642  related to the sale. The fee was netted against the
related gain on disposition of investment in partnerships.

                                    Moorings
                                    --------

     On November 17, 2004,  the  Partnership's  interest in Moorings  Apartments
Associates  (Moorings) was sold. Gross cash proceeds received by the Partnership
totaled $366,943.  The sale resulted in net loss on disposition of investment in
partnerships of $120,694 for financial  statement  purposes and in total gain of
$6,216,291 for federal tax purposes in 2004. In accordance with the terms of the
Partnership Agreement,  in December 2004 the Managing General Partner was paid a
disposition fee of $462,417 related to the sale. In 2005 the Partnership accrued
$27,047 for additional cash proceeds expected to be received upon the release of
escrow  reserves,  of which fifty  percent  was  received  in August  2005.  The
remaining $13,523 held in escrow is due to be released upon the anniversary date
of November 17, 2005.

                                 Country Place I
                                 ---------------

     On December  29, 2004,  the  Partnership's  interest in  Blackburn  Limited
Partnership  (Country  Place I) was sold.  Gross cash  proceeds  received by the
Partnership in 2004 totaled $6,821,935.  In addition,  at December 31, 2004, the
Partnership  accrued  $504,604 for cash proceeds to be received in 2005 upon the
release of escrow  reserves,  which were posted as security for the purchaser to
claim any monetary damages as a result of any breach of the  representations and
warranties  made by the seller within one year after closing.  The sale resulted
in net gain on  disposition  of investment  in  partnerships  of $6,565,858  for
financial  statement  purposes and in total gain of $11,060,421  for federal tax
purposes in 2004. In accordance with the terms of the Partnership agreement,  in
January 2005 the Managing General Partner was paid a disposition fee of $743,366
related to the sale.  The fee was accrued and netted against the related gain on
disposition of investment in  partnerships at December 31, 2004. In August 2005,
fifty percent of the escrow reserves were released.  The remaining $252,302 held
in escrow is due to be released upon the anniversary date of December 29, 2005.

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


3.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                Country Place II
                                ----------------

     On December  29,  2004,  the  Partnership's  interest  in Second  Blackburn
Limited Partnership (Country Place II) was sold. Gross cash proceeds received by
the Partnership in 2004 totaled $4,438,748.  In addition,  at December 31, 2004,
the Partnership  accrued  $328,275 for cash proceeds to be received in 2005 upon
the release of escrow reserves,  which were posted as security for the purchaser
to claim any monetary damages as a result of any breach of  representations  and
warranties  made by the seller within one year after closing.  The sale resulted
in net gain on  disposition  of investment  in  partnerships  of $4,288,096  for
financial  statement  purposes and in total gain of  $6,846,454  for federal tax
purposes in 2004. In accordance with the terms of the Partnership agreement,  in
January 2005 the Managing General Partner was paid a disposition fee of $467,042
related to the sale.  The fee was accrued and netted against the related gain on
disposition of investment in  partnerships at December 31, 2004. In August 2005,
fifty percent of the escrowed  reserves were  released.  The remaining  $164,138
held in escrow is due to be released upon the  anniversary  date of December 29,
2005.

d.   Assets held for sale
     --------------------

                                   Chevy Chase
                                   -----------

     In December  2004, a contract  for the sale of the property  owned by Chevy
Chase Park, Ltd. (Chevy Chase) was signed.  The property is currently  scheduled
to be sold by the end of November  2005.  The  Partnership's  basis in the Local
Partnership,  along with net unamortized  acquisition fees and property purchase
costs,  which  totaled  $1,143,822  and  $992,626 as of  September  30, 2005 and
December  31,  2004,  respectively,  has been  reclassified  to  investments  in
partnerships held for sale in the accompanying balance sheets.

                                 Posada Vallarta
                                 ---------------

     The Partnership  recently approved the sale of the property owned by Posada
Associates Limited Partnership (Posada Vallarta). The sale is scheduled to close
in the fourth quarter of 2005. There is no assurance that a sale of the property
will occur.

                                    Westgate
                                    --------

     The Partnership's basis in Westgate,  along with the net unamortized amount
of  acquisition  fees and property  purchase  costs are  disclosed in Note 3.a.,
above.


                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


3.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued


                Four Winds West, Golden Acres, Orangewood Plaza,
                ------------------------------------------------
                                 and Troy Manor
                                 --------------

     In accordance  with its approved Plan of Liquidation and  Dissolution,  the
Partnership  is  actively  marketing  its  remaining  four  investments  in  the
following Local Partnerships:

     1)   Four Winds West Company, Ltd. (Four Winds West)

     2)   Chowchilla Elderly Associates, Ltd. (Golden Acres)

     3)   Orangewood Plaza Limited Partnership (Orangewood Plaza)

     4)   Troy Apartments Ltd. (Troy Manor)

     The Partnership's  net unamortized  amount of acquisition fees and property
purchase  costs  relating  to Four Winds  West,  which  totaled  $12,567 at both
September 30, 2005 and December 31, 2004, has been reclassified to investment in
partnerships  held  for sale in the  accompanying  balance  sheets.  There is no
assurance that the sale of any or all of these four investments will occur.


                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


3.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

e.   Summarized financial information
     --------------------------------

     Combined   statements  of  operations   for  the  seven  and  twelve  Local
Partnerships  in which the Partnership was invested as of September 30, 2005 and
2004,  respectively,  follow.  The combined  statements  have been compiled from
information  supplied  by the  management  agents  of  the  properties  and  are
unaudited.  The information for each of the periods is presented  separately for
those Local Partnerships  which have positive  investment basis (equity method),
and for those Local  Partnerships  which have cumulative losses in excess of the
amount of the  Partnership's  investments  in those Local  Partnerships  (equity
method  suspended).  Appended  after  the  combined  statements  is  information
concerning the Partnership's  share of income from partnerships  related to cash
distributions  recorded  as income,  and related to the  Partnership's  share of
income from Local Partnerships.

<TABLE>
<CAPTION>
                                         COMBINED STATEMENTS OF OPERATIONS
                                                    (Unaudited)

                                                                     For the three months ended
                                                                           September 30,
                                                  -----------------------------------------------------------
                                                             2005                             2004
                                                  -----------------------------------------------------------
                                                    Equity                            Equity
                                                    Method       Suspended            Method       Suspended
                                                  ----------     ----------         ----------     ----------
         <S>                                      <C>            <C>                <C>            <C>
         Number of Local Partnerships                 2              5                  4              8
                                                      =              =                  =              =

         Revenue:
           Rental                                 $  560,950     $  799,228         $1,525,216     $2,512,053
           Other                                      13,192         89,407             58,648         72,673
                                                  ----------     ----------         ----------     ----------

             Total revenue                           574,142        888,635          1,583,864      2,584,726
                                                  ----------     ----------         ----------     ----------

         Expenses:
           Operating                                 355,564        462,565            675,334      1,532,367
           Interest                                  (10,446)       293,148            213,732        943,914
           Depreciation and amortization              89,232        192,454            205,573        447,683
                                                  ----------     ----------         ----------     ----------

             Total expenses                          434,350        948,167          1,094,639      2,923,964
                                                  ----------     ----------         ----------     ----------

         Net income (loss)                        $  139,792     $  (59,532)        $  489,225     $ (339,238)
                                                  ==========     ==========         ==========     ==========

         Cash distributions                       $       --     $       --         $       --     $       --
                                                  ==========     ==========         ==========     ==========

         Cash distributions recorded
           as reduction of investments
           in partnerships                        $       --     $       --         $       --     $       --
                                                  ==========     ==========         ==========     ==========

         Cash distributions recorded
           as income                              $       --     $       --         $       --     $       --

         Partnership's share of
           Local Partnership net income              139,366             --            159,440             --

         Miscellaneous                                    --             --                 --            412
                                                  -----------------------------------------------------------

         Share of income from partnerships                $139,366                         $159,852
                                                          ========                         ========

</TABLE>

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


3.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>
                                                                 For the nine months ended
                                                                       September 30,
                                                  ------------------------------------------------------------
                                                            2005                               2004
                                                  ------------------------          --------------------------
                                                    Equity                            Equity
                                                    Method       Suspended            Method       Suspended
                                                  ----------     ----------         ----------     -----------
         <S>                                      <C>            <C>                <C>            <C>
         Number of Local Partnerships                 2              5                  4              8
                                                      =              =                  =              =

         Revenue:
           Rental                                 $1,704,555     $2,397,683         $4,481,492     $ 7,536,164
           Other                                      36,491        268,221            124,031         218,019
                                                  ----------     ----------         ----------     -----------

             Total revenue                         1,741,046      2,665,904          4,605,523       7,754,183
                                                  ----------     ----------         ----------     -----------

         Expenses:
           Operating                               1,094,196      1,387,694          2,321,255       4,597,103
           Interest                                  (31,337)       879,443            641,192       2,831,746
           Depreciation and amortization             267,697        577,363            616,722       1,343,056
                                                  ----------     ----------         ----------     -----------

             Total expenses                        1,330,556      2,844,500          3,579,169       8,771,905
                                                  ----------     ----------         ----------     -----------


         Net income (loss)                        $  410,490     $ (178,596)        $1,026,354     $(1,017,722)
                                                  ==========     ==========         ==========     ===========

         Cash distributions                       $  273,327     $   77,066 (1)     $  986,287     $   178,913
                                                  ==========     ==========         ==========     ===========

         Cash distributions recorded
           as reduction of investments
           in partnerships                        $  273,327     $       --         $  957,414     $        --
                                                  ==========     ==========         ==========     ===========

         Cash distributions recorded
           as income                              $       --     $   77,066 (1)     $   28,873     $   178,913

         Partnership's share of Local
           Partnership net income                    409,609             --          1,020,001              --

         Miscellaneous                                    --             --                 --             591
                                                  ------------------------------------------------------------

         Share of income from partnerships               $486,675                          $1,228,378
                                                         ========                          ==========
</TABLE>

     (1)  Includes Mercy Terrace sold June 2005.

     Cash  distributions  received from Local Partnerships which have investment
basis (equity method) are recorded as a reduction of investments in partnerships
and as cash  receipts  on the  respective  balance  sheets.  Cash  distributions
received from Local  Partnerships  which have cumulative losses in excess of the
amount of the  Partnership's  investments  in those Local  Partnerships  (equity
method  suspended)  are  recorded  as share of income from  partnerships  on the
respective  statements  of  operations  and as cash  receipts on the  respective
balance sheets.  As of September 30, 2005 and 2004, the  Partnership's  share of
cumulative  losses to date for the five of the  seven  and  eight of the  twelve
Local  Partnerships,  respectively,  exceeded  the  amount of the  Partnership's
investments  in  those  Local   Partnerships  by  $9,488,093  and   $21,236,242,
respectively.  As the Partnership has no further  obligation to advance funds or
provide financing to these Local  Partnerships,  the excess losses have not been
reflected in the accompanying financial statements.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


4.   RELATED PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to reimburse the Managing  General  Partner for its direct expenses
in connection with managing the  Partnership.  The Partnership  paid $52,896 and
$192,866  for the  three  and nine  month  periods  ended  September  30,  2005,
respectively,  and $55,584  and  $176,440  for the three and nine month  periods
ended  September  30, 2004,  respectively,  to the Managing  General  Partner as
direct  reimbursement of expenses  incurred on behalf of the  Partnership.  Such
expenses are included in general and administrative expenses in the accompanying
statements of operations.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is  obligated  to pay the  Managing  General  Partner an annual  management  fee
(Management  Fee) after all other  expenses  of the  Partnership  are paid.  The
Partnership  paid the Managing  General  Partner a Management Fee of $62,499 for
each of the three month periods ended  September 30, 2005 and 2004, and $187,497
for each of the nine month periods ended September 30, 2005 and 2004.

     In  accordance  with the  terms of a  Definitive  Proxy  Statement  for the
Liquidation and Dissolution of the Partnership,  which was approved on March 22,
2004,  by holders of a majority of the Units of Limited  Partner  Interest,  the
Managing  General  Partner  may  receive  property  disposition  fees  from  the
Partnership  on the same  basis  as such  fees  may  currently  be paid to Local
General  Partners,  real  estate  brokers or other  third  party  intermediaries
employed  to sell  Partnership  properties,  to the extent  that CRI markets and
sells the Partnership's  properties  instead of such persons.  In addition,  the
Managing General Partner may receive a partnership liquidation fee in the amount
of $500,000,  payable  only if the Managing  General  Partner is  successful  in
liquidating all of the Partnership's  investments within 36 months from the date
the liquidation is approved,  in recognition  that one or more of the properties
in which the Partnership  holds an interest might not be saleable to parties not
affiliated with the respective Local  Partnership due to the amount and/or terms
of their  current  indebtedness.  In  accordance  with the terms of the  amended
Partnership  Agreement,  in December 2004 the Managing  General Partner was paid
disposition  fees of $895,241  related to the sales of Arrowhead  and  Moorings,
which were netted  against the related  gain on  disposition  of  investment  in
partnerships at December 31, 2004. In January 2005, the Managing General Partner
was paid  disposition  fees in the amount of $1,210,408  related to the sales of
Country Place I and II in December  2004,  which were accrued and netted against
the related gain on disposition of investments in  partnerships  at December 31,
2004. In June 2005, the Managing  General  Partner was paid a disposition fee of
$757,642  related to the sale of Mercy  Terrace,  which was netted  against  the
related gain on disposition of investments in partnerships.

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           September 30, 2005 and 2004

                                   (Unaudited)


5. CASH DISTRIBUTIONS

     On January 31, 2005, the Partnership made a cash distribution of $9,582,720
($192 per Unit) to Additional  Limited Partners who were holders of record as of
December 31, 2004.  The  distribution  consisted of proceeds  received  from the
sales of the Partnership's interests in Arrowhead, Moorings, Country Place I and
Country Place II. On April 7, 2005, the Partnership  made a tax  distribution of
$603,970  (approximately  $17.50  per  Unit) on  behalf  of  Additional  Limited
Partners who are not residents of Maryland.  On July 12, 2005,  the  Partnership
made a cash  distribution  of $285,128  ($17.50 per Unit) to Additional  Limited
Partners who were  holders of record and  Maryland  residents as of December 31,
2004. The  distributions  consisted of proceeds from the sale of Country Place I
and Country Place II.

                                      # # #

                                      -13-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations


     Capital  Realty  Investors-II   Limited   Partnership's  (the  Partnership)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  section  is  based  on  the  financial   statements,   and  contains
information  that  may  be  considered  forward  looking,  including  statements
regarding  the effect of  governmental  regulations.  Actual  results may differ
materially from those  described in the forward  looking  statements and will be
affected  by  a  variety  of  factors  including  national  and  local  economic
conditions,  the  general  level of  interest  rates,  governmental  regulations
affecting  the  Partnership  and  interpretations  of  those  regulations,   the
competitive  environment in which the Partnership operates, and the availability
of working capital.

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

     The  Partnership has disclosed its selection and application of significant
accounting  policies in Note 1 of the notes to financial  statements included in
the  Partnership's  annual  report on Form  10-KSB at  December  31,  2004.  The
Partnership accounts for its investments in partnerships (Local Partnerships) by
the equity  method  because the  Partnership  is a limited  partner in the Local
Partnerships.  As such,  the  Partnership  has no control over the selection and
application  of  accounting  policies,  or the use of  estimates,  by the  Local
Partnerships.  Environmental  and operational  trends,  events and uncertainties
that  might  affect the  properties  owned by the Local  Partnerships  would not
necessarily have a significant  impact on the  Partnership's  application of the
equity method of accounting, since the equity method has been suspended for five
Local  Partnerships  which have cumulative losses in excess of the amount of the
Partnership's investments in those Local Partnerships.

                          New Accounting Pronouncement
                          ----------------------------

     In December  2003,  the Financial  Accounting  Standards  Board issued FASB
Interpretation  No. 46  (revised  December  2003) (FIN 46-R),  Consolidation  of
Variable  Interest  Entities.  FIN 46-R clarifies the  application of Accounting
Research Bulletin 51, Consolidated  Financial  Statements,  for certain entities
that do not  have  sufficient  equity  at risk for the  entity  to  finance  its
activities without additional  subordinated financial support from other parties
or in which equity  investors do not have the  characteristics  of a controlling
financial interest  ("variable interest  entities").  Variable interest entities
within  the  scope of FIN 46-R  will be  required  to be  consolidated  by their
primary  beneficiary.  The primary  beneficiary of a variable interest entity is
determined  to be the party that  absorbs a majority  of the  entity's  expected
losses,  receives  a  majority  of its  expected  returns,  or both.  The  Local
Partnerships  in which the  Partnership  invested were formed by  individuals or
entities  unrelated  to the  Partnership  or  its  affiliates.  The  Partnership
purchased  limited partner  interests in existing,  operating  partnerships with
unaffiliated  managing  general  partners.  An affiliate of the Managing General
Partner also purchased a general  partner  interest in the majority of the Local
Partnerships.  Neither the Partnership nor the affiliate of the Managing General
Partner  received  development  fees at or near  the  time  of  investment.  The
Managing  General  Partner has  evaluated  the Local  Partnerships  in which the
Partnership  is invested and has  determined  that the equity holders as a group
held  sufficient  equity at risk in the  operating  Local  Partnerships  and the
equity investors have the  characteristics of controlling  financial interest in
accordance  with the  provisions of FIN 46-R. The Managing  General  Partner has
therefore determined that the investments in Local Partnerships are not variable
interest  entities  subject  to  consolidation  by  the  Partnership  under  the
provisions of FIN 46-R.

                       Plan of Liquidation and Dissolution
                       ------------------------------------

     On February 4, 2004, the Partnership  filed a Definitive  Proxy  Statement,
pursuant to Section  14(a) of the  Securities  Exchange Act of 1934,  to solicit
consent for, among other things, the sale of all of the Partnership's assets and
the  dissolution  of the  Partnership  pursuant  to a Plan  of  Liquidation  and
Dissolution.  As of the voting  deadline,  March 22, 2004, the holders of 28,699
units of limited partner interest (57.6%) voted "for" such sale and dissolution.
See Note 3 of the notes to  financial  statements  contained  in Part I, Item 1,
hereof,  for additional  information  concerning  the sale of the  Partnership's
limited partner interests in four Local Partnerships in 2004.

                                      -14-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations - Continued


                                     General
                                     -------

     Some of the rental properties owned by the Local  Partnerships are financed
by state housing agencies.  The Managing General Partner has sold or refinanced,
and will continue to sell certain  properties  pursuant to programs developed by
these agencies. These programs may include opportunities to sell a property to a
qualifying purchaser who would agree to maintain the property as low to moderate
income housing.  The Managing General Partner continues to monitor certain state
housing  agency  programs,  and/or  programs  provided  by certain  lenders,  to
ascertain  whether the properties would qualify within the parameters of a given
program and whether these programs would provide an appropriate economic benefit
to the Limited Partners of the Partnership.

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of  project-based  Section 8 Rental Housing  Assistance  Payments
(HAP)  provided by the U.S.  Department of Housing and Urban  Development  (HUD)
pursuant  to Section 8 HAP  contracts.  Current  legislation  allows all expired
Section 8 HAP contracts  with rents at less than 100% of fair market rents to be
renewed for up to one year.  Expiring  Section 8 HAP  contracts  with rents that
exceed  100% of fair market  rents  could be renewed for up to one year,  but at
rents  reduced  to 100% of fair  market  rents  (Mark-to-Market).  All  expiring
Section 8 HAP  contracts  with rents  exceeding  comparable  market  rents,  and
properties  with mortgage  loans insured by the Federal  Housing  Administration
(FHA), became subject to the Mark-to-Market legislation.

     Mark-to-Market (M2M) implementation will reduce rental income at properties
that are currently  subsidized  at  higher-than-market  rental  rates,  and will
therefore  lower cash flow  available to meet  mortgage  payments and  operating
expenses.  In some instances,  a property will be able to meet its existing debt
service  payments  after the  reduction  in rental  income.  In this  case,  the
property  may enter  the M2M  "Lite"  program,  which  would not  require a debt
restructuring.  In the remaining  instances,  the affected  property may undergo
debt restructuring  according to terms determined by an individual  property and
operations  evaluation.  This would  involve  reducing the first  mortgage  loan
balance to an amount  supportable  by the  property's  operations,  taking  into
account the property's operating expenses and reduced income. The balance of the
amount  written  down from the  first  mortgage  loan  would be  converted  to a
non-performing but accruing (soft) second mortgage loan. When the existing first
mortgage loan is bifurcated  into a first and second  mortgage  loan,  the newly
created second  mortgage loan will accrue  interest at a below-market  rate. The
Internal  Revenue  Service issued a ruling in July 1998, that concluded that the
below-market  rate of interest would not generate  additional  ordinary  income.
Each property subject to M2M will be affected in a different  manner,  and it is
difficult  to  predict  the  exact  form  of  restructuring,  or  potential  tax
liabilities to the Limited Partners, at this time. All properties, upon entering
the M2M program  (excluding  M2M Lite),  are required to enter into an agreement
restricting the property's use to affordable housing for 30 years.

     Finally, under HUD's "Mark-up-to-Market"  program, properties with expiring
Section 8 HAP  contracts  that are located in high-rent  areas as defined by HUD
are eligible for rent increases  which would be necessary to bring Section 8 HAP
contract  rents in line with market rate rents.  For  properties  that enter the
program and have interest rate  subsidized FHA loans,  the rents are adjusted to
take into  account  the  benefits  the  property is already  receiving  from the
below-market  interest rate by means of a HUD-determined  adjustment factor. The
purpose of this program is to provide  incentives to owners of  properties  with
expiring  Section 8 HAP contracts not to convert these properties to market rate
housing.

                                      -15-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations - Continued


     In return for  receiving  market  rate rents under  Mark-up-to-Market,  the
property  owner must enter into a five year  conditional  Section 8 HAP contract
with HUD,  subject  to the  annual  availability  of  funding  by  Congress.  In
addition,  property  owners who enter into the  Mark-up-to-  Market  program may
receive  increased  cash flow as the limited  dividend  will be  increased in an
amount equal to the increase in gross rental revenues.

     Chevy Chase Park, Ltd. (Chevy Chase) has a Section 8 HAP contract  covering
100% of its apartment  units which expired in September  2000. The Section 8 HAP
contract  has been  renewed  annually.  The  property  owned  by Chevy  Chase is
scheduled to be sold by the end of November 2005.

     As of  September  30,  2005,  the  carrying  amount  of  the  Partnership's
investments in Local  Partnerships with Section 8 HAP contracts  expiring in the
next 12 months was $1,119,637.

     The Managing  General  Partner  continues to seek  strategies  to deal with
affordable  housing  requirements.  While the Managing  General  Partner  cannot
predict the  outcome for any  particular  property  at this time,  the  Managing
General  Partner will  continue to work with the Local  Partnerships  to develop
strategies that maximize the benefits to investors.

                          Financial Condition/Liquidity
                          -----------------------------

     The Partnership's liquidity, with unrestricted cash resources of $4,242,683
as of September 30, 2005, along with anticipated  future cash distributions from
the Local  Partnerships,  is  expected  to be  adequate  to meet its current and
anticipated operating cash needs. As of November 8, 2005, there were no material
commitments for capital  expenditures.  The Managing  General Partner  currently
intends  to retain all of the  Partnership's  remaining  undistributed  cash for
operating  cash  reserves  pending  further  distributions  under  its  Plan  of
Liquidation and Dissolution.

     The  Partnership's  remaining  obligation with respect to its investment in
Westgate  Limited  Dividend  Housing  Association  (Westgate),  in the form of a
nonrecourse purchase money note which matured September 1, 2003, has a principal
balance of  $1,400,000  plus accrued  interest of $2,846,762 as of September 30,
2005,  and is payable in full upon the earliest of: (I) sale or  refinancing  of
the respective Local Partnership's rental property;  (ii) payment in full of the
respective Local Partnership's permanent loan; or (iii) maturity.

     The  purchase  money note,  which is  nonrecourse  to the  Partnership,  is
secured by the Partnership's  interest in the Westgate Local Partnership,  which
owns Westgate. The underlying property does not have sufficient appreciation and
equity to enable the Partnership to pay the purchase money note's  principal and
accrued  interest.  In  conjunction  with the approved Plan of  Liquidation  and
Dissolution  of the  Partnership,  the  Managing  General  Partner  is  actively
marketing  Westgate for sale. The noteholders have agreed to accept the proceeds
of such sale as a discounted  payoff of the purchase money note's  principal and
accrued  interest.  The  discounted  payoff  would  result  in  cancellation  of
indebtedness  income to the Limited Partners,  which would be taxed at a federal
tax rate of up to 35 percent.  There can be no assurance that a sale of Westgate
and discounted payoff of the purchase money note will occur.

                                      -16-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations - Continued


     The Managing  General Partner has received  consent from a majority of Unit
Holders  for the  liquidation  of the  Partnership.  (See Note 2 of the notes to
financial  statements  contained in Part I, Item 1,  hereof.) It is  anticipated
that  the  Partnership's  obligation,  discussed  above,  would  be  retired  in
conjunction  with  such  Liquidation.   There  can  be  no  assurance  that  the
Liquidation  will  be  completed   pursuant  to  the  Plan  of  Liquidation  and
Dissolution.

     The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient  cash is available for operating  requirements.
For the nine month period ended September 30, 2005, the receipt of distributions
from Local  Partnerships  was adequate to support  operating cash  requirements.
Cash and cash  equivalents  decreased  $11,068,883  during the nine month period
ended September 30, 2005,  primarily as a result of  distributions to Additional
Limited Partners in January 2005 and July 2005, and a tax  distribution  made on
behalf of the  Additional  Limited  Partners in April 2005 and the payment of an
accrued disposition fee.

     On January 31, 2005, the Partnership made a cash distribution of $9,582,720
($192 per Unit) to Additional  Limited Partners who were holders of record as of
December 31, 2004.  The  distribution  consisted of proceeds  received  from the
sales  of  the  Partnership's   interests  in  Arrowhead  Apartments  Associates
(Arrowhead),   Moorings  Apartments  Associates  (Moorings),  Blackburn  Limited
Partnership  (Country Place I) and Second Blackburn Limited Partnership (Country
Place II). On April 7, 2005, the Partnership made a tax distribution of $603,970
(approximately $17.50 per Unit) on behalf of Additional Limited Partners who are
not  residents  of  Maryland.  On July 12,  2005,  the  Partnership  made a cash
distribution of $285,128  ($17.50 per Unit) to Additional  Limited  Partners who
were  holders of record and Maryland  residents  as of December  31,  2004.  The
distributions consisted of proceeds from the sale of Country Place I and Country
Place II.

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

     The  Partnership's  net loss for the three month period ended September 30,
2005,  increased  from the  corresponding  period  in 2004,  primarily  due to a
decrease  in share of income  from  partnerships  and  increases  in general and
administrative  expenses and loss on disposition of investments in partnerships,
partially   offset  by  an  increase  in  interest   revenue  and  decreases  in
professional  fees and  amortization  of  deferred  costs.  Share of income from
partnerships  decreased  in 2005  primarily  due to lower  other  income  at one
property.  General and administrative expenses increased primarily due to higher
reimbursed  payroll costs and expenses  against escrow reserves  relating to the
sales  of  Country  Place  I and  Country  Place  II.  Loss  on  disposition  of
investments in  partnerships  is due to  adjustments  in escrow reserve  amounts
receivable  relating to the sales of Arrowhead  and Moorings.  Interest  revenue
increased in 2005 due to higher  interest  rates.  Professional  fees  decreased
primarily due to lower legal  expenses in 2005.  Amortization  of deferred costs
decreased  to  zero  since  all  of  the  Partnership's   investments  in  Local
Partnerships had been  reclassified to investment in partnerships  held for sale
by the end of 2004.

     The  Partnership's net income for the nine month period ended September 30,
2005,  decreased  from the  corresponding  period  in 2004,  primarily  due to a
decrease  in share of income  from  partnerships  and  increases  in general and
administrative  expenses and professional fees,  partially offset by an increase
in interest  revenue,  a decrease in  amortization  of deferred cost and gain on
disposition  of investments in  partnerships.  Share of income from  partnership
decreased in 2005 primarily due to the sales of the  Partnership's  interests in
four  Local  Partnerships  during  2004.  General  and  administrative  expenses
increased due to higher  reimbursed  payroll costs and expenses  against  escrow
reserves,  partially offset by lower printing costs. Professional fees increased
due to higher audit costs, partially offset by lower legal expenses due to proxy
costs  incurred  in  2004,  but not in  2005.  Amortization  of  deferred  costs
decreased as discussed  above. The increase in gain on disposition of investment
in  partnerships  relates  to  the  sales  of  the  Partnership's  interests  in
Arrowhead, Mercy Terrace and Moorings as discussed in Note 3.c., above.

                                      -17-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations - Continued


     For financial reporting purposes, the Partnership,  as a limited partner in
the Local  Partnerships,  does not record losses from the Local  Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result,  the  Partnership's  share of income from partnerships for the three and
nine month  periods ended  September 30, 2005 did not include  losses of $56,630
and $169,892, respectively, compared to excluded losses of $332,129 and $996,393
for the three and nine month periods ended September 30, 2004, respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during the nine month period ended September 30, 2005.


Item 3. Controls and Procedures

     In October 2005,  representatives  of the Managing  General  Partner of the
Partnership  carried out an  evaluation of the  effectiveness  of the design and
operation of the Partnership's  disclosure controls and procedures,  pursuant to
Exchange Act Rules  13a-15 and 15d-15.  The  Managing  General  Partner does not
expect that the  Partnership's  disclosure  controls and procedures will prevent
all error and all fraud.  A control  system,  no matter how well  conceived  and
operated,  can provide only  reasonable  assurance  that the  objectives  of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource  constraints,  and the benefits of controls must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues have been detected.  These inherent  limitations  include the
realities that judgments in  decision-making  can be faulty, and that breakdowns
can occur  because  of simple  error or  mistake.  The  design of any  system of
controls also is based in part upon certain  assumptions about the likelihood of
future  events,  and there can be no  assurance  that any design will succeed in
achieving its stated goals under all  potential  future  conditions.  Over time,
controls may become inadequate  because of changes in conditions,  or the degree
of compliance  with the policies or procedures may  deteriorate.  Because of the
inherent  limitations in a cost-effective  control system,  misstatements due to
error or  fraud  may  occur  and not be  detected.  Based  on the  October  2005
evaluation,  and subject to the foregoing,  the Principal  Executive Officer and
Principal Financial Officer concluded that the Partnership's disclosure controls
and  procedures are effective as of the end of the period covered by this report
to alert them in a timely  manner to any  material  information  relating to the
Partnership that must be included in the Partnership's periodic SEC filings, and
particularly  during  the  period in which  this  report is being  prepared.  In
addition,  there have been no significant changes in the Partnership's  internal
control over financial  reporting that occurred  during the  Partnership's  most
recent fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Partnership's internal control over financial reporting.


Part II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities

     See Note 3.a. of the notes to  financial  statements  contained  in Part I,
Item 1, hereof,  for  information  concerning the  Partnership's  default on one
purchase money note.

                                      -18-

<PAGE>
Part II. OTHER INFORMATION
Item 5. Other Information


     a.   There  has not been any  information  required  to be  disclosed  in a
          report on Form 8-K during the quarter ended  September  30, 2005,  but
          not reported, whether or not otherwise required by this Form 10-QSB at
          September 30, 2005.

     b.   There is no  established  market for the purchase and sale of units of
          additional  limited  partner  interest  (Units)  in  the  Partnership,
          although various informal  secondary market services exist. Due to the
          limited markets, however, investors may be unable to sell or otherwise
          dispose of their Units.

                             Registered Tender Offer
                             -----------------------

          On January 23, 2004,  Equity  Resource Fund XXII (Equity)  initiated a
          registered  tender  offer to purchase  up to 5,000 of the  outstanding
          Units in the  Partnership at a price of $175 per Unit.  The offer,  as
          extended,  expired  March 23,  2004.  Aside from its  Limited  Partner
          interests  in  the  Partnership,   Equity  is  unaffiliated  with  the
          Partnership  or the Managing  General  Partner.  The price offered was
          determined solely at the discretion of Equity and does not necessarily
          represent the fair market value of each Unit.

          In response to the registered  tender offer,  on February 4, 2004, the
          Managing  General Partner filed Schedule  14D-9.  In that filing,  the
          Managing General Partner  recommended that Limited Partners reject the
          offer because it viewed the offer price as inadequate.

                           Unregistered Tender Offers
                           --------------------------

          On January 26,  2004,  Peachtree  Partners  (Peachtree)  initiated  an
          unregistered  tender  offer to  purchase up to 4.9%  (including  1,525
          Units or 3.1%,  already owned by affiliates) of the outstanding  Units
          in the  Partnership at a price of $175 per Unit less a transfer fee of
          $100 per investor.  The offer  expired March 23, 2004.  Aside from its
          Limited   Partner   interests   in  the   Partnership,   Peachtree  is
          unaffiliated with the Partnership or the Managing General Partner. The
          price offered was determined solely at the discretion of Peachtree and
          does not necessarily represent the fair market value of each Unit.

          In its  Definitive  Proxy  Statement,  dated  February  4,  2004,  the
          Managing General Partner  recommended that Limited Partners reject the
          unregistered  tender  offer  because  it  viewed  the  offer  price as
          inadequate.

                                Cash Distribution
                                -----------------

          On January 31,  2005,  the  Partnership  made a cash  distribution  of
          $9,582,720  ($192 per Unit) to  Additional  Limited  Partners who were
          holders of record as of December 31, 2004. The distribution  consisted
          of proceeds received from the sales of the Partnership's  interests in
          Arrowhead, Moorings, Country Place I and Country Place II. On April 7,
          2005,   the   Partnership   made  a  tax   distribution   of  $603,970
          (approximately  $17.50  per  Unit) on  behalf  of  Additional  Limited
          Partners  who are not  residents of  Maryland.  On July 12, 2005,  the
          Partnership made a cash  distribution of $285,128 ($17.50 per Unit) to
          Additional  Limited  Partners  who were holders of record and Maryland
          residents  as of December  31, 2004.  The  distributions  consisted of
          proceeds from the sale of Country Place I and Country Place II.

                                      -19-

<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits

Exhibit No.       Description

   31.1        Certification  of  Principal  Executive  Officer,  pursuant to 18
               U.S.C.  Section 1350,  as adopted  pursuant to Section 302 of the
               Sarbanes-Oxley Act of 2002.

   31.2        Certification  of  Principal  Financial  Officer,  pursuant to 18
               U.S.C.  Section 1350,  as adopted  pursuant to Section 302 of the
               Sarbanes-Oxley Act of 2002.

   32          Certification  of  Principal   Executive  Officer  and  Principal
               Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

   99          Schedule  13D,  dated July 2, 2004.  (Incorporated  by  reference
               thereto.)

All other Items are not applicable.

                                      -20-

<PAGE>
                                    SIGNATURE


     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                  CAPITAL REALTY INVESTORS-II LIMITED
                                      PARTNERSHIP
                                  ----------------------------------------------
                                  (Registrant)

                                  by:  C.R.I., Inc.
                                       -----------------------------------------
                                       Managing General Partner




November 8, 2005                       by:  /s/ H. William Willoughby
----------------                            ------------------------------------
DATE                                        H. William Willoughby,
                                              Director, President, Secretary,
                                              Principal Financial Officer
                                              and Principal Accounting Officer

                                      -21-