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



                          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, 2006


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



                         Commission file number 0-13523

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


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



        Internal Revenue Service - Employer Identification No. 52-1328767

                 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 [ ]

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





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



                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 2006


                                                                          Page

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets
           - March 31, 2006 and December 31, 2005.........................  1

         Consolidated Statements of Operations and Accumulated Losses
           - for the three months ended March 31, 2006 and 2005...........  2

         Consolidated Statements of Cash Flows
           - for the three months ended March 31, 2006 and 2005...........  3

         Notes to Consolidated Financial Statements
           - March 31, 2006 and 2005......................................  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.................................. 19

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

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

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


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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>

                                                                                        March 31,       December 31,
                                                                                          2006             2005
                                                                                      -------------    -------------
                                                                                       (Unaudited)
<S>                                                                                   <C>              <C>
Investments in partnerships .......................................................   $   2,320,531    $   2,311,722
Investment in partnerships held for sale or transfer ..............................       4,278,528        4,190,405
Investment in partnerships held in escrow .........................................         758,207          760,083
Cash and cash equivalents .........................................................       7,812,954        7,995,351
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $78,435 and $127,877, respectively ...........          68,603          113,319
Property purchase costs,
  net of accumulated amortization of $109,154 and $120,226, respectively ..........          87,408           99,299
Other assets ......................................................................             879            1,400
                                                                                      -------------    -------------

      Total assets ................................................................   $  15,327,110    $  15,471,579
                                                                                      =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships ................................................   $  14,101,081    $  14,101,081
Accrued interest payable ..........................................................      58,539,733       57,269,747
Accounts payable and accrued expenses .............................................         118,033          175,260
                                                                                      -------------    -------------

      Total liabilities ...........................................................      72,758,847       71,546,088
                                                                                      -------------    -------------

Commitments and contingencies

Partners' deficit:

  Capital paid in:
    General Partners ..............................................................           2,000            2,000
    Limited Partners ..............................................................      73,501,500       73,501,500
                                                                                      -------------    -------------

                                                                                         73,503,500       73,503,500

  Less:
    Accumulated distributions to partners .........................................     (16,887,870)     (16,887,870)
    Offering costs ................................................................      (7,562,894)      (7,562,894)
    Accumulated losses ............................................................    (106,484,473)    (105,127,245)
                                                                                      -------------    -------------

      Total partners' deficit .....................................................     (57,431,737)     (56,074,509)
                                                                                      -------------    -------------

      Total liabilities and partners' deficit .....................................   $  15,327,110    $  15,471,579
                                                                                      =============    =============

</TABLE>

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

                                       -1-

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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             AND ACCUMULATED LOSSES

                                   (Unaudited)

<TABLE>
<CAPTION>
                                             For the three months ended
                                                      March 31,
                                           ------------------------------
                                                2006             2005
                                           -------------    -------------
<S>                                        <C>              <C>
Share of income (loss) from partnerships   $      41,329    $     (39,940)
                                           -------------    -------------

Other revenue and  expenses:

  Revenue:
    Gain from extinguishment of debt ...            --          3,387,767
    Interest ...........................          78,865           45,740
                                           -------------    -------------

                                                  78,865        3,433,507
                                           -------------    -------------

  Expenses:
    Interest ...........................       1,269,986        2,106,433
    Management fee .....................          93,750           93,750
    General and administrative .........          70,506           69,064
    Professional fees ..................          40,300           38,750
    Amortization of deferred costs .....           2,880            3,616
                                           -------------    -------------

                                               1,477,422        2,311,613
                                           -------------    -------------

      Total other revenue and expenses .      (1,398,557)       1,121,894
                                           -------------    -------------


Net (loss) income ......................      (1,357,228)       1,081,954

Accumulated losses, beginning of period     (105,127,245)    (129,760,217)
                                           -------------    -------------

Accumulated losses, end of period ......   $(106,484,473)   $(128,678,263)
                                           =============    =============


Net (loss) income allocated
  to General Partners (1.51%) ..........   $     (20,494)   $      16,338
                                           =============    =============

Net (loss) income allocated
  to Initial and Special
  Limited Partners (1.49%) .............   $     (20,223)   $      16,121
                                           =============    =============

Net (loss) income allocated
  to Additional Limited Partners (97%) .   $  (1,316,511)   $   1,049,495
                                           =============    =============

Net (loss) income per unit of
  Additional Limited Partner Interest,
    based on 73,337 units outstanding ..   $      (17.95)   $       14.31
                                           =============    =============

</TABLE>

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

                                       -2-

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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              For the three months ended
                                                                                       March 31,
                                                                             ---------------------------
                                                                                 2006           2005
                                                                             ------------   ------------
<S>                                                                          <C>            <C>
Cash flows from operating activities:
  Net (loss) income ......................................................   $(1,357,228)   $ 1,081,954

  Adjustments to reconcile net (loss) income to net cash used in operating
    activities:
    Share of income from partnerships ....................................       (41,329)        39,940
    Gain from extinguishment of debt .....................................          --       (3,387,767)
    Amortization of deferred costs .......................................         2,880          3,616

    Changes in assets and liabilities:
      Decrease (increase) in other assets ................................           521           (243)
      Increase in accrued interest payable ...............................     1,269,986      2,106,433
      Decrease in accounts payable and accrued expenses ..................       (57,227)       (43,662)
                                                                             -----------    -----------

        Net cash used in operating activities ............................      (182,397)      (199,729)
                                                                             -----------    -----------

Net decrease in cash and cash equivalents ................................      (182,397)      (199,729)

Cash and cash equivalents, beginning of period ...........................     7,995,351      9,135,499
                                                                             -----------    -----------

Cash and cash equivalents, end of period .................................   $ 7,812,954    $ 8,935,770
                                                                             ===========    ===========

</TABLE>

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

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


1.   BASIS OF PRESENTATION

     In the opinion of C.R.I.,  Inc. (CRI), the Managing  General  Partner,  the
accompanying   unaudited   consolidated   financial   statements   reflect   all
adjustments,  consisting  of normal  recurring  accruals,  necessary  for a fair
presentation of the financial  position of Capital Realty  Investors-IV  Limited
Partnership  (the  Partnership)  as of March 31,  2006,  and the  results of its
operations  and its cash flows for the three month  periods ended March 31, 2006
and 2005. The results of operations for the interim period ended March 31, 2006,
are not necessarily indicative of the results to be expected for the full year.

     The  accompanying  unaudited  consolidated  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 consolidated
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  and notes thereto  included in the  Partnership's  annual
report on Form 10-KSB at December 31, 2005.


2.   INVESTMENTS IN PARTNERSHIPS

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

                              Purchase money notes
                              --------------------

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $14,101,081 plus aggregate  accrued interest of
$58,539,733  as of March 31, 2006, are 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  collateral  that  secured  the  purchase  money  notes  related to the
following properties was transferred to the noteholders during 2005.

<TABLE>
<CAPTION>


     Property                            Principal           Date           Disposition
     --------                           -----------      -------------      -----------
     <S>                                <C>              <C>                <C>
     Valley View                        $  920,000       March 2005         Transferred
     Crescent Gardens - First Note         434,000       June 2005          Transferred
     Pilgrim Tower North                 2,065,000       December 2005      Transferred

</TABLE>

                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of May 11, 2006.

<TABLE>
<CAPTION>

                                                                 Accrued Interest
                                                                       As of
      Property                               Principal            March 31, 2006        Maturity
      --------                              -----------          ----------------     -----------
      <S>                                   <C>                  <C>                  <C>
      Crescent Gardens - Second Note        $  434,000              $ 1,586,430         07/31/99
      Westport Village                         840,000                2,381,205         09/01/99
      Pilgrim Tower East                     1,450,000 (1)            4,089,979         11/30/03
      Harborview                             3,000,000                7,843,784         08/01/04
      Cedar Point                            1,320,000                3,409,347         08/30/04
      Thornwood House                        1,775,000                4,407,463         08/30/04
      Jewish Federation                      1,350,000               12,110,523         10/31/04

</TABLE>

      (1) Remaining principal, after partial payment.

     The  purchase  money  note  related  to  Asbury  Tower  Associates  Limited
Partnership  (Asbury Tower) was due to mature on August 31, 2004.  However,  the
noteholder  has agreed to extend  the  maturity  date on a month to month  basis
until  such  time as the  noteholder  provides  a 30 day  advance  notice to the
Partnership.  As of March 31, 2006,  principal  and accrued  interest due on the
purchase money note were  $3,432,081 and  $20,232,958,  respectively.  The Local
Managing  General  Partner is  currently  negotiating  the sale of the  property
related to Asbury Towers to an affiliate. Proceeds from the sale will be used to
partially payoff the purchase money note. The sale is scheduled to close in June
or July, 2006. There is no assurance that the sale of the property will occur.

         Due to the impending sale of the property related to Asbury Tower, the
Partnership's basis in the Local Partnership, along with the net unamortized
amount of acquisition fees and property purchase costs, which totaled $53,727 at
March 31, 2006, have been reclassified to investment in partnerships held for
sale or transfer in the accompanying consolidated balance sheet at that date.

     The remaining  purchase  money note related to  Northridge  Park matures in
2025.  As of March 31,  2006,  principal  and  accrued  interest  balances  were
$500,000 and $2,478,044, respectively.

     The purchase money notes,  which are  nonrecourse to the  Partnership,  are
generally  secured  by  the  Partnership's  interest  in  the  respective  Local
Partnerships.  There is no assurance  that the underlying  properties  will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes'  principal and accrued  interest when due. If a purchase money note
is not paid in accordance with its terms,  the  Partnership  will either have to
renegotiate  the terms of repayment or risk losing its  partnership  interest in
the  respective  Local  Partnership.  In the event  that a  purchase  money note
remains unpaid upon maturity,  the noteholder may have the right to foreclose on
the Partnership's interest in the related Local Partnership.

     The  Partnership's  inability  to pay  certain of the  purchase  money note
principal and accrued interest balances when due, and the resulting  uncertainty
regarding the Partnership's  continued  ownership  interest in the related Local
Partnerships,  does not adversely impact the Partnership's  financial  condition
because the  purchase  money  notes are  nonrecourse  and secured  solely by the
Partnership's interest in the related Local Partnerships.  Therefore, should the
investment in any of the Local  Partnerships  with matured or maturing  purchase
money notes not produce  sufficient  value to satisfy the related purchase money


                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

notes, the  Partnership's  exposure to loss is limited because the amount of the
nonrecourse indebtedness of each of the matured or maturing purchase money notes
exceeds the  carrying  amount of the  investment  in each of the  related  Local
Partnerships.  Thus, even a complete loss of the Partnership's interest in these
Local  Partnerships  would not have a material  adverse  impact on the financial
condition of the Partnership.

     The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note  requirements,  paying off certain  purchase  money  notes at a  discounted
price, extending the due dates of certain purchase money notes,  refinancing the
respective  properties'  underlying  debt, or selling the underlying real estate
and using the  Partnership's  share of the  proceeds to pay or buy down  certain
purchase money note  obligations.  Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these  strategies  will be  successful in the future.  If the
Managing  General  Partner is unable to negotiate  an  extension  or  discounted
payoff,  in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships.  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 the  related  Local
Partnership  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 the Local Partnership and,  likewise,  its share of
any future cash  distributed by the Local  Partnership  from rental  operations,
mortgage debt refinancings, or the sale of the real estate. Of the sixteen Local
Partnerships  in which the  Partnership  is invested as of March 31,  2006,  the
eight  Local  Partnerships  with  associated  purchase  money  notes  which have
matured,  or which mature  through  March 31, 2007,  and which remain  unpaid or
unextended  as of May 11, 2006,  represented  the following  percentages  of the
Partnership's total distributions  received from Local Partnerships and share of
income from Local Partnerships for the immediately preceding two calendar years.

                               Percentage of Total       Partnership's Share of
                              Distributions Received           Loss from
     For the Year Ending      from Local Partnerships      Local Partnerships
     -------------------      -----------------------    ----------------------

     December 31, 2005                 0.0%                   $ (16,243)
     December 31, 2004                 0.0%                   $(297,024)

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity of the Partnership's  debt obligations and to seek solutions
that will provide the most favorable outcome to the Limited  Partners.  However,
there can be no assurance that these strategies will be successful.

     Interest  expense on the  Partnership's  purchase money notes for the three
month  periods ended March 31, 2006 and 2005,  was  $1,269,986  and  $2,106,433,
respectively.  The  accrued  interest  payable on the  purchase  money  notes of
$58,539,733  and  $57,269,747  as of March  31,  2006  and  December  31,  2005,
respectively,  is due 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.

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

                                   Cedar Point
                                   -----------

     The  Partnership  defaulted on its purchase money note related to Southwest
Development  Company (Cedar Point) on August 30, 2004, when the note matured and
was not paid.  The default  amount  included  principal and accrued  interest of
$1,320,000  and  $3,122,592,  respectively.  As of May 11, 2006,  principal  and
accrued  interest of  $1,320,000  and  $3,429,059,  respectively,  were due. The
Partnership has agreed in principle to assign its interest in Cedar Point to the
noteholders  in  satisfaction  of the  nonrecourse  note.  However,  there is no
assurance  that a transfer  of the  Partnership's  interest  in Cedar Point will
occur.

     Due to the impending transfer of the Partnership's  interest in Cedar Point
to the noteholder, the Partnership's basis in the Local Partnership,  along with
the net  unamortized  amount of acquisition  fees and property  purchase  costs,
which totaled $1,871,197 and $1,856,905 at March 31, 2006 and December 31, 2005,
respectively,  has been reclassified to investment in partnerships held for sale
or transfer in the accompanying consolidated balance sheets.

                                Crescent Gardens
                                ----------------

     The  Partnership  defaulted  on its two  purchase  money  notes  related to
Crescent Gardens Associates  (Crescent Gardens) on July 31, 1999, when the notes
matured and were not paid. The default amount included  aggregate  principal and
accrued  interest of $868,000  and  $2,033,388,  respectively.  The  Partnership
successfully  negotiated  an agreement to extend the maturity date of one of the
purchase money notes (First Crescent Note) in the original  principal  amount of
$434,000,  effective October 15, 1999. Pursuant to the extension agreement,  the
Partnership  made payments to the noteholder to be applied  against  accrued but
unpaid  interest.  The  agreement  extended the maturity  date to July 31, 2004,
subject to semi-annual  interest payments,  and reduced the interest rate of the
First Crescent  Note.  The  Partnership  did not make the  semi-annual  interest
payment due in January 2004. In June 2005, one-half of the Partnership's limited
partner  interest in the Local  Partnership was transferred to a designee of its
current noteholder in satisfaction of that note. The transfer of one-half of the
Partnership's  interest in Crescent Gardens resulted in gain from extinguishment
of debt for financial  statement  purposes of  $1,348,879 in 2005,  and in total
gain of $1,840,362  for federal tax purposes in 2005. The  Partnership  has been
contacted  by only one of the holders of the other note (Second  Crescent  Note)
and thus cannot predict the course of action with regard to the Second  Crescent
Note.  As of May 11,  2006,  principal  and accrued  interest  of  $434,000  and
$1,595,733, respectively, were due on the Second Crescent Note. Crescent Gardens
completed mortgage  restructuring under the Mark-to-Market  program during 2003,
and the associated loan restructuring requirements will likely inhibit the local
managing general partner's ability to sell this property. It is anticipated that
the  property  will now  operate at a  break-even  level,  and that  future cash
distributions are highly unlikely.

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

                                 DeAngelis Manor
                                 ---------------

     On March 19,  2002,  DeAngelis  Manor was sold.  Proceeds  received  by the
Partnership  from the sale of the property  were used to pay off, at a discount,
the remaining  purchase money note related to DeAngelis Manor,  although,  as of
May  11,  2006,  the  note  has not  been  canceled  pending  final  receipt  of
accumulated cash from the property's  previous operations and payment thereof to
the purchase money noteholder.  The final  cancellation of the note will have no
financial impact to the Partnership.

                              Harborview Apartments
                              ---------------------

     The Partnership defaulted on its purchase money notes related to Harborview
Apartments Associates (Harborview  Apartments) on August 1, 1999, when the notes
matured and were not paid. The default amount included  aggregate  principal and
accrued  interest of $3,000,000  and  $5,342,321,  respectively.  On October 31,
2000, the Partnership and noteholders  agreed to extend the maturity date of the
purchase money notes to August 1, 2004, and the Partnership placed an assignment
of its interest in Harborview  Apartments  into escrow.  As of May 11, 2006, the
notes were again in default,  and principal  and accrued  interest of $3,000,000
and  $7,888,511,  respectively,  were due. The  noteholders  are  attempting  to
finalize  regulatory  authority for the transfer of interests in satisfaction of
the outstanding  principal and interest  balances.  There is no assurance that a
transfer of the  Partnership's  interest in Harborview to the  noteholders  will
occur.

     Due to the impending  transfer of the Partnership's  interest in Harborview
Apartments to the noteholder,  the Partnership's basis in the Local Partnership,
along with the net unamortized  amount of acquisition fees and property purchase
costs,  which  totaled  $726,300 and $728,176 at March 31, 2006 and December 31,
2005, respectively,  has been reclassified to investment in partnerships held in
escrow in the accompanying consolidated balance sheets.

                                Jewish Federation
                                -----------------

     The  Partnership  defaulted  on its  purchase  money note related to Jewish
Federation  Apartments  Associates (Jewish Federation) on October 31, 2004, when
the note matured and was not paid.  The default  amount  included  principal and
accrued  interest of $1,350,000  and  $10,185,885,  respectively.  As of May 11,
2006,   principal   and  accrued   interest  of  $1,350,000   and   $12,274,391,
respectively,  were due. In January  2006,  the  Partnership  has  delivered  an
assignment of its interest in Jewish  Federation to the  noteholder in escrow in
satisfaction  of the  nonrecourse  note,  pending HUD approval of the  transfer.
However,  there is no assurance that a transfer of the Partnership's interest in
Jewish Federation will occur.

     Due to the  impending  transfer  of the  Partnership's  interest  in Jewish
Federation to the noteholder,  the Partnership's basis in the Local Partnership,
along with the net unamortized  amount of acquisition fees and property purchase
costs,  which  totaled  $31,907 and $31,907 at March 31, 2006 and  December  31,
2005, respectively,  has been reclassified to investment in partnerships held in
escrow in the accompanying consolidated balance sheets.

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

                               Pilgrim Tower East
                               ------------------

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower East  Associates  (Pilgrim Tower East) on December 1, 1999,  when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest  of  $1,650,000  and  $2,719,372,  respectively.  As of May  11,  2006,
principal and accrued interest of $1,450,000 and $4,113,862,  respectively, were
due.  The  Partnership  and  the  noteholder  signed  a  contract  to  sell  the
Partnership's  interest in Pilgrim Tower East to the  noteholder in exchange for
the  outstanding  principal and accrued  interest on the purchase money note and
two  $100,000  payments on the  purchase  money  note,  one of which was paid in
February  2002,  and one of which was paid in January 2003. The contract for the
sale of the  Partnership's  interest  expired in  November  2003,  however,  the
parties are currently negotiating an extension to provide for a closing in 2006.
There is no assurance that a sale of the Partnership's interest in Pilgrim Tower
East will occur.

     Due to the impending  sale of the  Partnership's  interest in Pilgrim Tower
East,  the  Partnership's  basis in the Local  Partnership,  along  with the net
unamortized  amount of  acquisition  fees and  property  purchase  costs,  which
totaled  $39,732  at both  March  31,  2006  and  December  31,  2005,  has been
reclassified  to  investment  in  partnerships  held for sale or transfer in the
accompanying consolidated balance sheets.

                               Pilgrim Tower North
                               -------------------

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower North  Associates  (Pilgrim Tower North) on April 30, 2000,  when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of  $2,165,000  and  $18,922,763,  respectively.  On December 15, 2005,
principal and accrued interest of $2,065,000 and $27,580,538, respectively, were
due. On December 15, 2005, the noteholder purchased the property in exchange for
the principal and accrued  interest  outstanding  on the purchase money note and
assumption of the mortgage note, the flexible  subsidy note and all related debt
associated  with  the  property.  The  sale  of  the  property  related  to  the
Partnership's   investment  in  Pilgrim  Towers  North  resulted  in  gain  from
extinguishment  of debt for financial  statement  purposes of $26,066,904 and in
total gain of  $29,674,645  for federal tax purposes in 2005. In April 2006, the
Partnership  received a cash distribution which will be recorded as other income
for financial  statement  purposes of $32,964 and in other income of $32,964 for
federal tax purposes in 2006.

                                 Thornwood House
                                 ---------------

     The  Partnership  defaulted on its purchase money note related to Thornwood
House Associates (Thornwood House) on August 30, 2004, when the note matured and
was not paid.  The default  amount  included  principal and accrued  interest of
$1,775,000  and  $4,025,568,  respectively.  As of May 11, 2006,  principal  and
accrued  interest of  $1,775,000  and  $4,433,715,  respectively,  were due. The
Partnership  has agreed in principle to assign its interest to the noteholder in
satisfaction  of the  nonrecourse  note.  However,  there is no assurance that a
transfer of the Partnership's interest in Thornwood House will occur.

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2. INVESTMENTS IN PARTNERSHIPS - Continued

     Due to the  impending  transfer of the  Partnerships  interest in Thornwood
House to the noteholder the Partnership's basis in the Local Partnership,  along
with the net unamortized amount of acquisition fees and property purchase costs,
which totaled $654,707 and $660,102 at March 31, 2006 and December 31, 2005, has
been reclassified to investment in partnerships held for sale or transfer in the
accompanying consolidated balance sheets.

                                   Valley View
                                   -----------

     The  Partnership  defaulted on its purchase  money notes  related to Valley
View  Associates  (Valley View) on September 1, 1999, when the notes matured and
were not paid.  The default  amount  included  aggregate  principal  and accrued
interest of $920,000 and $1,788,829,  respectively.  The Partnership was sued by
the  noteholders  but  there  has not been any  legal  action  since  2000.  The
Partnership  and the  noteholders  had agreed in principle that the  Partnership
would deposit  assignments  of its interests in Valley View in escrow,  together
with an option  agreement  pursuant to which the noteholders  could purchase the
interests  for the  outstanding  debt if the  property  were not sold and/or the
notes were not repaid by January 8, 2001. At that time, the Partnership's  basis
in the Local  Partnership  along with the net unamortized  amount of acquisition
fees and property  purchase costs,  which totaled  $37,315,  was reclassified to
investment in partnerships held in escrow.  There had been no communication with
the noteholders  between 2000 and June 2004.  Therefore,  effective December 31,
2003,  the  acquisition  fees  and  property   purchase  costs  which  had  been
reclassified to investment in partnerships held in escrow were returned to their
respective  accounts.  However,  in June 2004, the Partnership was notified that
the  noteholders  were  seeking to implement  the transfer of the  Partnership's
interest in Valley View to the noteholders. The Partnership's interest in Valley
View was  transferred  to the  noteholders  March 18, 2005.  The transfer of the
Partnership's  interest in Valley View resulted in gain from  extinguishment  of
debt for financial  statements purposes of $3,387,767 in 2005, and in total gain
for federal tax purposes of $4,270,053 in 2005.

                                Westport Village
                                ----------------

     The  Partnership  defaulted on its purchase money notes related to Westport
Associates  (Westport  Village) on September 1, 1999, when the notes matured and
were not paid. The default  amount  included  principal and accrued  interest of
$840,000 and $1,615,644, respectively. As of May 11, 2006, principal and accrued
interest of $840,000 and $2,393,873, respectively, were due. The Partnership was
sued by the  noteholders but there has not been any legal action since 2000. The
Partnership  and the  noteholders  had agreed in principle that the  Partnership
would  deposit  assignments  of its  interests  in  Westport  Village in escrow,
together  with an  option  agreement  pursuant  to which the  noteholders  could
purchase the  interests for the  outstanding  debt if the property were not sold
and/or  the  notes  were not  repaid by  January  8,  2001.  At that  time,  the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property  purchase costs,  which totaled $46,989,
was reclassified to investment in partnerships  held in escrow.  However,  there
has been no response from the noteholders concerning implementing the settlement
since 2000.  Therefore,  effective  December 31, 2003, the acquisition  fees and
property   purchase  costs  which  had  been   reclassified   to  investment  in
partnerships held in escrow were returned to their respective accounts.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

b.   Property matters
     ----------------

                                 Chippewa County
                                 ---------------

     In  February,  2006,  the  Partnership  entered into a contract to sell the
property related to Chippewa County Housing Partnership  (Chippewa County).  The
sale is scheduled to close in the third  quarter of 2006.  There is no assurance
that a sale of the property will occur.

     Due to the impending sale of the property related to Chippewa  County,  the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property  purchase costs,  which totaled $512,717
and $511,467 at March 31, 2006 and December  31, 2005,  respectively,  have been
reclassified  to  investment  in  partnerships  held for sale or transfer in the
accompanying consolidated balance sheets.

                               Clearfield Hills II
                               -------------------

     On July 26, 2005, the  Partnership's  interest in Clearfield  Hills II Ltd.
Partnership  (Clearfield  Hills II) was sold.  The sale  resulted in net gain on
disposition of investment in  partnerships  of $936,785 for financial  statement
purposes and a total gain of $1,859,912 for federal income tax purposes in 2005.
In accordance with the terms of the Partnership  Agreement,  in August 2005, the
Managing  General  Partner was paid a disposition  fee of $52,000 related to the
sale.  The fee was netted against the related gain on disposition of investments
in partnerships.

                                 Riverview Manor
                                 ---------------

     In February,  2006, the Partnership entered a contract to sell the property
related to Riverview Manor Co. Limited  Partnership  (Riverview Manor). The sale
is scheduled to close in the third quarter of 2006. There is no assurance that a
sale of the property will occur.

     Due to the impending sale of the property  related to Riverview  Manor, the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property purchase costs, which totaled $1,146,448
and  $1,122,199 at March 31, 2006 and at December 31, 2005,  respectively,  have
been reclassified to investment in partnerships held for sale or transfer in the
accompanying consolidated balance sheets.

c.   Summarized financial information
     --------------------------------

     Combined  statements  of  operations  for the  sixteen and  eighteen  Local
Partnerships  in which the  Partnership  was  invested  as of March 31, 2006 and
2005,  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 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.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued



                                         COMBINED STATEMENTS OF OPERATIONS
                                                    (Unaudited)

<TABLE>
<CAPTION>
                                                                 For the three months ended
                                                                          March 31,
                                                  ------------------------------------------------------------
                                                             2006                            2005
                                                  ------------------------------------------------------------
                                                    Equity                           Equity
                                                    Method        Suspended          Method         Suspended
                                                  ----------      ----------       ----------       ----------
         <S>                                      <C>             <C>              <C>              <C>
         Number of Local Partnerships                  7              9                9                9
                                                       =              =                =                =

         Revenue:
           Rental                                 $1,920,158      $2,747,187       $2,632,040       $2,510,358
           Other                                      94,987         141,023          120,961          111,583
                                                  ----------      ----------       ----------       ----------

             Total revenue                         2,015,145       2,888,210        2,753,001        2,621,941
                                                  ----------      ----------       ----------       ----------

         Expenses:
           Operating                               1,551,812       2,009,299        2,158,520        1,724,758
           Interest                                  112,448         555,805          171,060          502,542
           Depreciation and amortization             309,134         575,287          465,255          518,827
                                                  ----------      ----------       ----------       ----------

             Total expenses                        1,973,394       3,140,391        2,794,835        2,746,127
                                                  ----------      ----------       ----------       ----------

         Net income (loss)                        $   41,751      $ (252,181)      $  (41,834)      $ (124,186)
                                                  ==========      ==========       ==========       ==========

         Partnership's share of Local
           Partnership net income (loss)              41,329              --          (39,940)              --
                                                  --------------------------       ---------------------------

         Share of income (loss) from
           partnerships                                    $41,329                            $(39,940)
                                                           =======                            ========

</TABLE>

     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  consolidated  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 consolidated statements of operations and as cash
receipts on the respective consolidated balance sheets. As of March 31, 2006 and
2005,  the  Partnership's  share of  cumulative  losses  to date for nine of the
sixteen and eighteen Local  Partnerships,  respectively,  exceeded the amount of
the  Partnership's  investments in those Local  Partnerships  by $10,813,567 and
$9,852,738,  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  consolidated  financial
statements.

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 2006 and 2005

                                   (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 $53,065 and
$54,073 for the three month periods ended March 31, 2006 and 2005, 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   consolidated   statements  of
operations.

     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 $93,750 for
each of the three month periods ended March 31, 2006 and 2005.

     In accordance  with the terms of the  Partnership  Agreement,  the Managing
General  Partner  and/or its  affiliates  may receive a fee of not more than two
percent  of the  sale  price  of an  investment  in a Local  Partnership  or the
property  it  owns,  payable  under  certain  conditions  upon  the  sale  of an
investment in a Local  Partnership  or the property it owns.  The payment of the
fee is subject to certain  restrictions,  including the achievement of a certain
level of sale  proceeds  and making  certain  minimum  distributions  to limited
partners.  In August 2005, the Managing  General  Partner was paid a disposition
fee of $52,000,  related to the sale of  Clearfield  Hills II,  which was netted
against the related gain on disposition of investments in partnerships.


4.   CASH DISTRIBUTION

     On December 21, 2005, the Managing General Partner made a cash distribution
of $27,218 to the General Partners and Initial and Special Limited Partners. The
distribution  consisted  of  cash  resources  accumulated  from  operations.  On
December  27, 2005,  the Managing  General  Partner made cash  distributions  of
$1,833,425  ($25 per Unit) to holders  of record as of  December  1,  2005.  The
distributions  consisted of proceeds received from the sale of the Partnership's
interest in Clearfield  Hills II and cash resources  accumulated from operations
and distributions from Local Partnerships.

                                      # # #

                                      -13-

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


     Capital  Realty  Investors-IV   Limited   Partnership's  (the  Partnership)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  section  is  based on the  consolidated  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 consolidated  financial statements
included in the Partnership's annual report on Form 10-KSB at December 31, 2005.
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 nine Local Partnerships which have cumulative losses in excess of the amount
of the Partnership's investments in those Local Partnerships.

                                     General
                                     -------

     Some of the rental properties owned by the Local  Partnerships are financed
by state and federal 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.

     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


                                      -14-

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


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. 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.

     Harborview Apartments Associates  (Harborview) has a Section 8 HAP contract
which expires May 31, 2006. The Section 8 HAP contract covers  substantially all
of  the  apartment  units  in  Harborview.  It is  anticipated  that  the  Local
Partnership  will extend its Section 8 HAP contract for a one-year period at its
expiration.

     Crescent Gardens Associates (Crescent Gardens) has a Section 8 HAP contract
which  expires  July 8,  2006.  The  Section 8 HAP  contract  covers  all of the
apartment  units  in  Crescent  Gardens.   It  is  anticipated  that  the  Local
Partnership  will extend its Section 8 HAP contract for a one-year period at its
expiration.

     Asbury Tower Associates Limited  Partnership (Asbury Tower) has a Section 8
HAP contract which expires January 1, 2007. The Section 8 HAP contract covers 41
percent of the apartment units in Asbury Tower. It is anticipated that the Local
Partnership will extend its Section 8 HAP contract at its expiration.

     As of March 31, 2006, the carrying amount of the Partnership's  investments
in Local  Partnerships  with  Section 8 HAP  contracts  expiring  in the next 12
months was $681,364.

     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 $7,812,954
as of March 31, 2006,  along with  anticipated  future cash  distributions  from
Local  Partnerships,  is  expected  to be  adequate  to  meet  its  current  and
anticipated  operating  cash needs.  As of May 11, 2006,  there were no material
commitments for capital  expenditures.  The Managing  General Partner  currently


                                      -15-

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


intends to retain all of the Partnership's  remaining undistributed cash pending
resolution of the  Partnership's  outstanding  purchase  money notes and related
accrued interest, and for operating cash reserves.

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $14,101,081 plus aggregate  accrued interest of
$58,539,733  as of March 31, 2006, are 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  collateral  that  secured  the  purchase  money  notes  related to the
following properties was transferred to the noteholders during 2005.

     Property                           Principal        Date        Disposition
     --------                          -----------   ------------    -----------

     Valley View                       $  920,000    March 2005      Transferred
     Crescent Gardens - First Note        434,000    June 2005       Transferred
     Pilgrim Tower North                2,065,000    December 2005   Transferred

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of May 11, 2006.

<TABLE>
<CAPTION>
                                                           Accrued Interest
                                                               As of
     Property                            Principal         March 31, 2006          Maturity
     --------                           -----------       ----------------       -----------
     <S>                                <C>               <C>                    <C>
     Crescent Gardens - Second Note     $  434,000           $ 1,586,430           07/31/99
     Westport Village                      840,000             2,381,205           09/01/99
     Pilgrim Tower East                  1,450,000 (1)         4,089,979           11/30/03
     Harborview                          3,000,000             7,843,784           08/01/04
     Cedar Point                         1,320,000             3,409,347           08/30/04
     Thornwood House                     1,775,000             4,407,463           08/30/04
     Jewish Federation                   1,350,000            12,110,523           10/31/04

</TABLE>

     (1) Remaining principal, after partial payment.

     The purchase money note related to Asbury Tower was due to mature on August
31, 2004.  However,  the  noteholder has agreed to extend the maturity date on a
month to month basis until such time as the noteholder provides a 30 day advance
notice to the Partnership.  As of March 31, 2006, principal and accrued interest
due on the purchase money note were  $3,432,081 and  $20,232,958,  respectively.
The Local  Managing  General  Partner is currently  negotiating  the sale of the
property  related to Asbury Towers to an affiliate.  Proceeds from the sale will
be used to partially  payoff the purchase  money note.  The sale is scheduled to
close in June or July, 2006. There is no assurance that the sale of the property
will occur.

     The remaining  purchase  money note related to  Northridge  Park matures in
2025.  As of March 31,  2006,  principal  and  accrued  interest  balances  were
$500,000 and $2,478,044, respectively.

     See the notes to  consolidated  financial  statements  contained in Part I,
Item 1, hereof, for additional information concerning purchase money notes.

                                      -16-

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


     The purchase money notes,  which are  nonrecourse to the  Partnership,  are
generally  secured  by  the  Partnership's  interest  in  the  respective  Local
Partnerships.  There is no assurance  that the underlying  properties  will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes'  principal and accrued  interest when due. If a purchase money note
is not paid in accordance with its terms,  the  Partnership  will either have to
renegotiate  the terms of repayment or risk losing its  partnership  interest in
the  respective  Local  Partnership.  In the event  that a  purchase  money note
remains unpaid upon maturity,  the noteholder may have the right to foreclose on
the Partnership's interest in the related Local Partnership.

     The  Partnership's  inability  to pay  certain of the  purchase  money note
principal and accrued interest balances when due, and the resulting  uncertainty
regarding the Partnership's  continued  ownership  interest in the related Local
Partnerships,  does not adversely impact the Partnership's  financial  condition
because the  purchase  money  notes are  nonrecourse  and secured  solely by the
Partnership's interest in the related Local Partnerships.  Therefore, should the
investment in any of the Local  Partnerships  with matured or maturing  purchase
money notes not produce  sufficient  value to satisfy the related purchase money
notes, the  Partnership's  exposure to loss is limited because the amount of the
nonrecourse indebtedness of each of the matured or maturing purchase money notes
exceeds the  carrying  amount of the  investment  in each of the  related  Local
Partnerships.  Thus, even a complete loss of the Partnership's interest in these
Local  Partnerships  would not have a material  adverse  impact on the financial
condition of the Partnership.

     The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note  requirements,  paying off certain  purchase  money  notes at a  discounted
price, extending the due dates of certain purchase money notes,  refinancing the
respective  properties'  underlying  debt, or selling the underlying real estate
and using the  Partnership's  share of the  proceeds to pay or buy down  certain
purchase money note  obligations.  Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these  strategies  will be  successful in the future.  If the
Managing  General  Partner is unable to negotiate  an  extension  or  discounted
payoff,  in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships.  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 the  related  Local
Partnership  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 the Local Partnership and,  likewise,  its share of
any future cash  distributed by the Local  Partnership  from rental  operations,
mortgage debt refinancings, or the sale of the real estate. Of the sixteen Local
Partnerships  in which the  Partnership  is invested as of March 31,  2006,  the
eight  Local  Partnerships  with  associated  purchase  money  notes  which have
matured,  or which mature  through  March 31, 2007,  and which remain  unpaid or
unextended  as of May 11, 2006,  represented  the following  percentages  of the
Partnership's total distributions  received from Local Partnerships and share of
income from Local Partnerships for the immediately preceding two calendar years.

                              Percentage of Total        Partnership's Share of
                             Distributions Received           Loss from
     For the Year Ended      from Local Partnerships       Local Partnerships
     ------------------      -----------------------     ----------------------

     December 31, 2005                 0.0%                    $ (16,243)
     December 31, 2004                 0.0%                    $(297,243)



                                      -17-

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


     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity of the Partnership's  debt obligations and to seek solutions
that will provide the most favorable outcome to the Limited  Partners.  However,
there can be no assurance that these strategies will be successful.

     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, 2006,  existing cash  resources  were
adequate  to support  operating  cash  requirements.  Cash and cash  equivalents
decreased  $182,397  during the three month period ended March 31, 2006,  due to
operating expenses paid in cash

     On December 21, 2005, the Managing General Partner made a cash distribution
of $27,218 to the General Partners and Initial and Special Limited Partners. The
distribution  consisted  of  cash  resources  accumulated  from  operations.  On
December  27, 2005,  the Managing  General  Partner made cash  distributions  of
$1,833,425  ($25 per Unit) to holders  of record as of  December  1,  2005.  The
distributions  consisted of proceeds received from the sale of the Partnership's
interest in Clearfield  Hills II and cash resources  accumulated from operations
and distributions from Local Partnerships.

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

     The Partnership  recognized net loss for the three month period ended March
31, 2006, compared to net income in the corresponding  period in 2005, primarily
due to  gain  from  extinguishment  of  debt  in  2005.  Share  of  income  from
partnerships  increased in 2006  primarily  due to higher  rental  income at one
property,  the  sale  of one  property  in 2005  and the  loss  from  one  Local
Partnership recorded in 2005, but not in 2006. Interest revenue increased due to
higher rates in 2006.  Interest expense decreased due to the transfer of Pilgrim
Tower North in 2005.  Professional  fees  increased due to higher audit costs in
2006, partially offset by lower legal fees.

     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, 2006 and 2005 did not  include  losses of $282,440  and
$216,354, respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during the three month period ended March 31, 2006.


Item 3. Controls and Procedures

     In April  2006,  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


                                      -18-

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


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  April  2006
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 consolidated  financial  statements contained
in Part I, Item 1, hereof, for information concerning the Partnership's defaults
on certain purchase money notes.


Item 5. Other Information

     There has not been any information  required to be disclosed in a report on
Form 8-K during the quarter ended March 31, 2006,  but not reported,  whether or
not otherwise required by this Form 10-QSB at March 31, 2006.

     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.

     On December 21, 2005, the Managing General Partner made a cash distribution
of $27,218 to the General Partners and Initial and Special Limited Partners. The
distribution  consisted  of  cash  resources  accumulated  from  operations.  On
December  27, 2005,  the Managing  General  Partner made cash  distributions  of
$1,833,425  ($25 per Unit) to holders  of record as of  December  1,  2005.  The
distributions  consisted of proceeds received from the sale of the Partnership's
interest in Clearfield  Hills II and cash resources  accumulated from operations
and distributions from Local Partnerships.


                                      -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.

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-IV LIMITED
                                    PARTNERSHIP
                                  ----------------------------------------------
                                  (Registrant)

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




May 11, 2006                            by:  /s/ H. William Willoughby
------------                                 -----------------------------------
DATE                                         H. William Willoughby,
                                             Director, President, Secretary,
                                               Principal Financial Officer and
                                               Principal Accounting Officer






                                      -21-