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


                    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 March 31, 2004


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



                         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 MARCH 31, 2004



                                                                           Page

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Balance Sheets
           - March 31, 2004 and December 31, 2003.......................... 1

         Statements of Operations and Accumulated Losses
           - for the three months ended March 31, 2004 and 2003............ 2

         Statements of Cash Flows
           - for the three months ended March 31, 2004 and 2003............ 3

         Notes to Financial Statements
           - March 31, 2004 and 2003....................................... 4

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations....................................... 8

Item 3.  Controls and Procedures........................................... 11


Part II - OTHER INFORMATION

Item 3.  Defaults Upon Senior Securities................................... 12

Item 5.  Other Information................................................. 12

Item 6.  Exhibits and Reports on Form 8-K.................................. 13

Signature.................................................................. 14




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


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                                 BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>
                                                                                        March 31,      December 31,
                                                                                          2004            2003
                                                                                      ------------    ------------
                                                                                       (Unaudited)
<S>                                                                                   <C>             <C>
Investments in and advance to partnerships ........................................   $  1,083,334    $    854,495
Investment in partnership held for transfer .......................................        489,245         508,229
Cash and cash equivalents .........................................................      2,775,720       2,979,778
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $122,931 and $121,219, respectively ..........         55,956          57,667
Property purchase costs,
  net of accumulated amortization of $163,703 and $161,573, respectively ..........         79,968          82,098
Other assets ......................................................................             46              40
                                                                                      ------------    ------------

   Total assets ...................................................................   $  4,484,269    $  4,482,307
                                                                                      ============    ============




                        LIABILITIES AND PARTNERS' CAPITAL



Due on investments in partnerships ................................................   $  1,400,000    $  1,400,000
Accrued interest payable ..........................................................      2,657,762       2,626,262
Accounts payable and accrued expenses .............................................         94,473         145,687
                                                                                      ------------    ------------

   Total liabilities ..............................................................      4,152,235       4,171,949
                                                                                      ------------    ------------

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 .........................................    (15,293,973)    (15,293,973)
    Offering costs ................................................................     (5,278,980)     (5,278,980)
    Accumulated losses ............................................................    (29,112,013)    (29,133,689)
                                                                                      ------------    ------------

      Total partners' capital .....................................................        332,034         310,358
                                                                                      ------------    ------------

      Total liabilities and partners' capital .....................................   $  4,484,269    $  4,482,307
                                                                                      ============    ============

</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
                                                                                 March 31,
                                                                       ----------------------------
                                                                           2004            2003
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
Share of income from partnerships ..................................   $    232,990    $    409,720
                                                                       ------------    ------------

Other revenue and expenses:

  Revenue:
    Interest .......................................................          4,124          11,167
    Gain from extinguishment of debt ...............................             --         670,099
                                                                       ------------    ------------

                                                                              4,124         681,266
                                                                       ------------    ------------

  Expenses:
    Interest .......................................................         31,500          31,500
    General and administrative .....................................         81,973          80,821
    Management fee .................................................         62,499          62,499
    Professional fees ..............................................         35,625          23,250
    Amortization of deferred costs .................................          3,841           6,298
                                                                       ------------    ------------

                                                                            215,438         204,368
                                                                       ------------    ------------

      Total other revenue and expenses .............................       (211,314)        476,898
                                                                       ------------    ------------

Net income .........................................................         21,676         886,618

Accumulated losses, beginning of period ............................    (29,133,689)    (30,121,301)
                                                                       ------------    ------------

Accumulated losses, end of period ..................................   $(29,112,013)   $(29,234,683)
                                                                       ============    ============


Net income allocated to General Partners (1.51%) ...................   $        327    $     13,388
                                                                       ============    ============

Net income allocated to Initial and Special Limited Partners (1.49%)   $        323    $     13,211
                                                                       ============    ============

Net income allocated to Additional Limited Partners (97%) ..........   $     21,026    $    860,019
                                                                       ============    ============

Net income per unit of Additional Limited Partner Interest,
  based on 49,910 units outstanding ................................   $       0.42    $      17.23
                                                                       ============    ============
</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 three months ended
                                                                                   March 31,
                                                                          --------------------------
                                                                             2004           2003
                                                                          -----------    -----------
<S>                                                                       <C>            <C>
Cash flows from operating activities:
  Net income ..........................................................   $    21,676    $   886,618

  Adjustments to reconcile net income to net cash (used in) provided by
    operating activities:
    Share of income from partnerships .................................      (232,990)      (409,720)
    Gain from extinguishment of debt ..................................            --       (670,099)
    Amortization of deferred costs ....................................         3,841          6,298

    Changes in assets and liabilities:
      (Increase) decrease in other assets .............................            (6)       335,758
      Increase in accrued interest payable ............................        31,500         31,500
      Decrease in accounts payable and accrued expenses ...............       (51,214)       (27,766)
                                                                          -----------    -----------

        Net cash (used in) provided by operating activities ...........      (227,193)       152,589
                                                                          -----------    -----------

Cash flows from investing activities:
  Receipt of distributions from partnerships ..........................        23,135        221,443
  Additional proceeds from disposition of investment in partnership ...            --            206
                                                                          -----------    -----------

        Net cash provided by investing activities .....................        23,135        221,649
                                                                          -----------    -----------

Net (decrease) increase in cash and cash equivalents ..................      (204,058)       374,238

Cash and cash equivalents, beginning of period ........................     2,979,778      3,420,489
                                                                          -----------    -----------

Cash and cash equivalents, end of period ..............................   $ 2,775,720    $ 3,794,727
                                                                          ===========    ===========

</TABLE>


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

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2004 and 2003

                                   (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 March 31, 2004,  and the results of its operations and its cash flows for the
three months ended March 31, 2004 and 2003.  The results of  operations  for the
interim  period  ended March 31, 2004,  are not  necessarily  indicative  of the
results  to be  expected  for the full  year.  See Note 3 below for  information
concerning the Partnership's  Definitive Proxy Statement for the Liquidation and
Dissolution of the Partnership.

     The  accompanying  unaudited  financial  statements  have been  prepared in
conformity with accounting principles generally accepted in the United States of
America  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 accounting  principles generally accepted
in the United States of America 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, 2003.

     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 Partnership
must apply the  provisions  of FIN 46-R to all  entities  subject to FIN 46-R no
later than the end of the first  reporting  period that ends after  December 15,
2004 (as of December  31,  2004,  for the  Partnership).  The  Managing  General
Partner is in the process of  determining  what impact,  if any, the adoption of
the provisions of FIN 46-R will have upon the Partnership's  financial condition
and results of operations  related to the  Partnership's  investments in limited
partnerships  (Local  Partnerships),   and  has  complied  with  the  disclosure
requirements  of FIN 46-R in these financial  statements.  As of March 31, 2004,
the  Partnership's  maximum  loss  exposure  related to its  investments  in and
advance to partnerships is limited to the remaining balance of $1,572,579.


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

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

                                    Westgate
                                    --------

     The Partnership  defaulted on its 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 May 4, 2004,  principal and accrued  interest of $1,400,000
and $2,669,413,  respectively, were due. In September 2003, the Managing General
Partner offered to tender the Partnership's interest in Westgate to the purchase
money  noteholders,  in full  satisfaction of the principal and accrued interest
balances due on the purchase  money note.  The trustee for the  noteholders  has
acknowledged receipt of the Managing General Partner's offer, but indicated that
it might take several months to obtain a response from the numerous noteholders.
There is no assurance that the noteholders  will accept the offer, or what other
course of action the noteholders might choose to pursue.

                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The  Partnership's  inability  to pay  the  Westgate  purchase  money  note
principal and accrued interest  balance when due, and the resulting  uncertainty
regarding the Partnership's  continued ownership interest in Westgate,  does not
adversely  impact the  Partnership's  financial  condition  because the purchase
money note is nonrecourse  and secured solely by the  Partnership's  interest in
Westgate.  Therefore,  even though the Partnership's  investment in Westgate has
not produced  sufficient  value to satisfy the related  purchase money note, the
Partnership's  exposure to loss is limited because the amount of the nonrecourse
indebtedness  of the matured  purchase money note exceeds the carrying amount of
the  investment in Westgate.  Thus,  even a complete  loss of the  Partnership's
interest in Westgate  would not have a material  adverse impact on the financial
condition of the Partnership. In the event of a foreclosure or other transfer of
the Partnership's interest, the excess of the nonrecourse  indebtedness over the
carrying  amount of the  Partnership's  investment  in Westgate will result in a
taxable  gain.  This gain will be taxable to Limited  Partners  at a federal tax
rate of up to 25.0%,  as it will reflect  recapture of  depreciation  deductions
claimed in prior years. Additionally,  the Partnership would lose its investment
in Westgate  and,  likewise,  its share of any future cash flow  distributed  by
Westgate from rental operations,  mortgage debt refinancings, or the sale of the
real estate.

     Interest expense on the Partnership's Westgate purchase money note for each
of the three  month  periods  ended March 31, 2004 and 2003,  was  $31,500.  The
accrued interest payable on the purchase money note of $2,657,762 and $2,626,262
as of March 31, 2004, and December 31, 2003, respectively, is in default.

     Due to the possible transfer of the  Partnership's  interest in Westgate to
the noteholders,  the Partnership's  basis in the Local Partnership,  along with
the net unamortized  acquisition fees and property purchase costs, which totaled
$489,245 and $508,229 as of March 31, 2004 and December 31, 2003,  respectively,
has been  reclassified  to  investment in  partnership  held for transfer in the
accompanying balance sheets.

b.   Summarized financial information
     --------------------------------

     Combined  statements of operations for the 12 Local  Partnerships  in which
the Partnership was invested as of March 31, 2004 and 2003, follow. The combined
statements have been compiled from information supplied by the management agents
of the projects and are unaudited.  The  information  for each of the periods is
presented  separately for those Local  Partnerships  which have investment basis
(equity method),  and for those Local  Partnerships for which the  Partnership's
carrying  value is zero (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.

                                       -5-

<PAGE>


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2004 and 2003

                                   (Unaudited)


2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>

                                         COMBINED STATEMENTS OF OPERATIONS
                                                    (Unaudited)

                                                                 For the three months ended
                                                                          March 31,
                                                 -----------------------------------------------------------
                                                            2004                             2003
                                                 -------------------------        --------------------------
                                                   Equity                           Equity
                                                   Method        Suspended          Method        Suspended
                                                 ----------      ----------       ----------      ----------
         <S>                                     <C>             <C>              <C>             <C>
         Number of Local Partnerships                4               8                4               8
                                                     =               =                =               =

         Revenue:
           Rental                                $1,465,404      $2,512,055       $1,424,480      $2,477,771
           Other                                     49,428          72,673           32,578         102,654
                                                 ----------      ----------       ----------      ----------

             Total revenue                        1,514,832       2,584,728        1,457,058       2,580,425
                                                 ----------      ----------       ----------      ----------

         Expenses:
           Operating                                884,465       1,532,367          850,917       1,510,770
           Interest                                 213,731         943,917          216,196         942,108
           Depreciation and amortization            205,574         447,685          200,139         439,379
                                                 ----------      ----------       ----------      ----------

             Total expenses                       1,303,770       2,923,969        1,267,252       2,892,257
                                                 ----------      ----------       ----------      ----------

         Net income (loss)                       $  211,062      $ (339,241)      $  189,806      $ (311,832)
                                                 ==========      ==========       ==========      ==========

         Cash distributions                      $       --      $   23,135       $       --      $  221,443
                                                 ==========      ==========       ==========      ==========

         Cash distributions recorded
           as income                             $       --      $   23,135       $       --      $  221,443

         Partnership's additional share of
           Local Partnership net income             209,855              --          188,070              --

         Miscellaneous                                   --             --               207             --
                                                 -------------------------        -------------------------

         Share of income from partnerships                $232,99                           $409,720
                                                          =======                           ========
</TABLE>

     All of the cash  distributions  recorded as income are included in share of
income from  partnerships  on the  statements of operations  for the  respective
periods,  and are recorded as cash receipts on the respective balance sheets. As
of March 31, 2004 and 2003, the Partnership's share of cumulative losses to date
for eight of the 12 Local Partnerships  exceeded the amount of the Partnership's
investments  in and  advances to those Local  Partnerships  by  $20,571,980  and
$19,216,307,  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.


                                       -6-

<PAGE>


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2004 and 2003

                                   (Unaudited)


3.   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 $64,294 and
$58,214 for the three month periods ended March 31, 2004 and 2003, respectively,
to the Managing General Partner as direct  reimbursement of expenses incurred on
behalf of the  Partnership.  Such  expenses  are  included  in the  accompanying
statements of operations as general and administrative expenses.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to pay the Managing General Partner an annual incentive  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 March 31, 2004 and 2003.

     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.

                                      # # #

                                       -7-

<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,  2003.  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
eight Local  Partnerships in which the  Partnership's  investment  balances have
been reduced to zero.

                          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 Partnership
must apply the  provisions  of FIN 46-R to all  entities  subject to FIN 46-R no
later than the end of the first  reporting  period that ends after  December 15,
2004 (as of December  31,  2004,  for the  Partnership).  The  Managing  General
Partner is in the process of  determining  what impact,  if any, the adoption of
the provisions of FIN 46-R will have on the  Partnership's  financial  condition
and results of operations  related to the  Partnership's  investments in limited
partnerships (Local Partnerships).

                                     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 or refinance,  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,  or to  refinance  a  property,  or to obtain
supplemental  financing.  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.

                                       -8-

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


     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.  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.

     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.

     Four Winds West  Company  Ltd.  (Four  Winds) has a Section 8 HAP  contract
covering 100% of its apartment  units which expires in October 2004.  Four Winds
anticipates  a one-year  renewal of its Section 8 HAP  contract  at  expiration.
Mercy Terrace  Associates  (Mercy Terrace) had a Section 8 HAP contract covering
100% of its apartment  units which expired in November  2003. The Local Managing
General Partner has entered Mercy Terrace into the Mark-to-Market program. It is
not known at this  time what  adjustments,  if any,  will be made to the  rental
amounts or the mortgage loan, as the Local Managing General Partner continues to
negotiate these issues with HUD. Posada Associates Limited  Partnership  (Posada
Vallarta) has a Section 8 HAP contract covering 21% of its apartment units which
expires in February 2005. Posada Vallarta  anticipates a one-year renewal of its
Section 8 HAP contract at expiration.  As of March 31, 2004, the carrying amount
of the  Partnership's  investments  in and advances to Local  Partnerships  with
Section 8 HAP contracts expiring in the next 12 months was $0.

                                       -9-

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


     The Managing  General  Partner  continues to seek  strategies  to deal with
affordable housing policy. 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 $2,775,720
as of March 31, 2004, 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 May 4, 2004,  there were no material
commitments for capital  expenditures.  The Managing  General Partner  currently
intends to retain all of the Partnership's  remaining undistributed cash pending
resolution  of the  Partnership's  remaining  purchase  money  note and  related
accrued interest, for its Plan of Liquidation and Dissolution, and for operating
cash reserves.

     The  Partnership's  remaining  obligation with respect to its investment in
Local  Partnerships,  in the form of a nonrecourse  purchase money note having a
principal  balance of $1,400,000 plus accrued interest of $2,657,762 as of March
31, 2004,  matured on September 1, 2003,  and was not paid.  The purchase  money
note,  which  is  nonrecourse  to the  Partnership,  is  secured  solely  by the
Partnership's interest in the related Local Partnership,  Westgate Tower Limited
Dividend Housing Association (Westgate).  Since the Partnership's  investment in
Westgate has not produced  sufficient  value to satisfy the purchase money note,
the Managing  General  Partner offered to tender the  Partnership's  interest in
Westgate  to  the  purchase  money  noteholders.  See  the  notes  to  financial
statements for additional information concerning this purchase money note.

     The  Partnership's  inability  to pay  the  Westgate  purchase  money  note
principal and accrued interest  balance when due, and the resulting  uncertainty
regarding the Partnership's  continued ownership interest in Westgate,  does not
adversely  impact the  Partnership's  financial  condition  because the purchase
money note is nonrecourse  and secured solely by the  Partnership's  interest in
Westgate.  Therefore,  even though the Partnership's  investment in Westgate has
not produced  sufficient  value to satisfy the related  purchase money note, the
Partnership's  exposure to loss is limited because the amount of the nonrecourse
indebtedness  of the matured  purchase money note exceeds the carrying amount of
the  investment in Westgate.  Thus,  even a complete  loss of the  Partnership's
interest in Westgate  would not have a material  adverse impact on the financial
condition of the Partnership. In the event of a foreclosure or other transfer of
the Partnership's interest, the excess of the nonrecourse  indebtedness over the
carrying  amount of the  Partnership's  investment  in Westgate will result in a
taxable  gain.  This gain will be taxable to Limited  Partners  at a federal tax
rate of up to 25.0%,  as it will reflect  recapture of  depreciation  deductions
claimed in prior years. Additionally,  the Partnership would lose its investment
in Westgate  and,  likewise,  its share of any future cash flow  distributed  by
Westgate from rental operations,  mortgage debt refinancings, or the sale of the
real estate. The Partnership received no cash distributions from Westgate during
2003 and  through  May 4,  2004;  thus in the  event of a  foreclosure  or other
transfer of the  Partnership's  interest,  there  would be no  material  adverse
impact on the cash liquidity of the Partnership.

                                      -10-

<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 in
interest of the Limited Partners for the liquidation of the  Partnership.  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 three month period ended March 31,  2004,  the receipt of  distributions
from Local  Partnerships  and existing cash  resources  were adequate to support
operating cash requirements. Cash and cash equivalents decreased $204,058 during
the three month period ended March 31, 2004,  primarily as a result of cash used
in  operating   activities   exceeding   the  receipt  of   distributions   from
partnerships.  The  primary  use of  cash  in  operating  activities  was to pay
management and professional fees, and general and administrative expenses.

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

     The  Partnership's  net income for the three month  period  ended March 31,
2004,  decreased from the  corresponding  period in 2003,  primarily due to gain
from  extinguishment of debt related to the transfer of one Local Partnership in
2003, by a decrease in share of income from partnerships, a decrease in interest
revenue due to lower cash and cash  equivalent  balances and declining  interest
rates, an increase in professional legal fees, and a nominal increase in general
and  administrative  expenses,   partially  offset  by  a  nominal  decrease  in
amortization  of  deferred   costs.   The  decrease  in  share  of  income  from
partnerships was primarily due to a higher amount of cash distributions recorded
as income (equity method suspended) in the 2003 period than in the 2004 period.

     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 month
periods  ended March 31, 2004 and 2003,  did not include  losses of $332,131 and
$314,829, respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during the three month period ended March 31, 2004.


Item 3. Controls and Procedures

     In April  2004,  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


                                      -11-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 3. Controls and Procedures - Continued


inherent  limitations in a cost-effective  control system,  misstatements due to
error  or  fraud  may  occur  and  not be  detected.  Based  on the  April  2004
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 2.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.


Item 5. Other Information

     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 Offers
                            ------------------------

     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.  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. On March 14, 2003,  Peachtree  initiated an unregistered
tender offer to purchase an unspecified  number of the outstanding  Units in the
Partnership  at a price of $100 per Unit;  the  offer  expired  April 18,  2003.
Peachtree is unaffiliated  with the Partnership or the Managing General Partner.
The prices offered were determined  solely at the discretion of Peachtree and do
not necessarily represent the fair market value of each Unit.

     The  Managing  General  Partner did not  express  any opinion and  remained
neutral  toward the 2003  unregistered  tender  offer for the  purchase of Units
described above, and in its Definitive Proxy Statement,  dated February 4, 2004,
recommended  that Limited  Partners  reject the 2004  unregistered  tender offer
because it viewed the offer price as inadequate.

                                      -12-

<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K

     a.   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.

     b.   No  reports  on Form 8-K were  filed  with the  Commission  during the
          quarter ended March 31, 2004.

All other Items are not applicable.

                                      -13-

<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




May 4, 2004                            by:  /s/ Michael J. Tuszka
-----------                                 ------------------------------------
DATE                                        Michael J. Tuszka
                                              Vice President
                                              and Chief Accounting Officer
                                              (Principal Financial Officer
                                              and Principal Accounting Officer)

                                      -14-