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


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



                                   FORM 10-QSB


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



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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002


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



                         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 o






--------------------------------------------------------------------------------
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2002





                                                                           Page

PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheets
               - September 30, 2002 and December 31, 2001.................    1

           Consolidated Statements of Operations and Accumulated Losses
               - for the three and nine months ended September 30, 2002
                 and 2001.................................................    2

           Consolidated Statements of Cash Flows
               - for the nine months ended September 30, 2002 and 2001....    3

           Notes to Consolidated Financial Statements
               - September 30, 2002 and 2001..............................    4

Item 2.    Management's Discussion and Analysis of Financial Condition
               and Results of Operations..................................   19

Item 3.    Controls and Procedures........................................   24


PART II - OTHER INFORMATION

Item 3.    Defaults Upon Senior Securities................................   24

Item 5.    Other Information..............................................   24

Item 6.    Exhibits and Reports on Form 8-K...............................   26

Signature.................................................................   27

Certifications of Quarterly Report Pursuant to 18 U.S.C. Section 1350.....   28




<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
        ---------------------


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS



                                     ASSETS
<TABLE>
<CAPTION>
                                                                                      September 30,    December 31,
                                                                                          2002            2001
                                                                                      -------------    -------------
                                                                                       (Unaudited)
<S>                                                                                   <C>              <C>
Investments in and advances to partnerships .......................................   $  13,219,974    $  13,097,636
Investment in partnerships held for sale or transfer ..............................       3,048,736       10,760,494
Investment in partnerships held in escrow .........................................       3,043,598        3,084,883
Cash and cash equivalents .........................................................       5,066,789        4,816,347
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $213,930 and $249,448, respectively ..........         262,509          332,410
Property purchase costs,
  net of accumulated amortization of $161,664 and $212,838, respectively ..........         190,492          275,379
Other assets ......................................................................             201              163
                                                                                      -------------    -------------

      Total assets ................................................................   $  24,832,299    $  32,367,312
                                                                                      =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships ................................................   $  22,980,081    $  27,732,019
Accrued interest payable ..........................................................      92,081,670       94,666,676
Accounts payable and accrued expenses .............................................         145,421          126,219
                                                                                      -------------    -------------

      Total liabilities ...........................................................     115,207,172      122,524,914
                                                                                      -------------    -------------

Commitments and contingencies

Partners' capital (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 .........................................      (9,746,993)      (9,122,210)
    Offering costs ................................................................      (7,562,894)      (7,562,894)
    Accumulated losses ............................................................    (146,568,486)    (146,975,998)
                                                                                      -------------    -------------

      Total partners' deficit .....................................................     (90,374,873)     (90,157,602)
                                                                                      -------------    -------------

      Total liabilities and partners' deficit .....................................   $  24,832,299    $  32,367,312
                                                                                      =============    =============
</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        For the nine months ended
                                                               September 30,                     September 30,
                                                       ------------------------------    ------------------------------
                                                            2002            2001             2002              2001
                                                       -------------    -------------    -------------    -------------
<S>                                                    <C>              <C>              <C>              <C>
Share of income from partnerships ..................   $   1,571,670    $     972,400    $   2,562,098    $   2,127,350
                                                       -------------    -------------    -------------    -------------

Other revenue and  expenses:

  Revenue:
    Gain from extinguishment of debt ...............       4,118,220        2,141,273        5,873,888       15,169,179
    Interest .......................................          16,774           41,597           49,635          209,656
                                                       -------------    -------------    -------------    -------------

                                                           4,134,994        2,182,870        5,923,523       15,378,835
                                                       -------------    -------------    -------------    -------------

  Expenses:
    Interest .......................................       2,182,498        2,519,698        7,331,459        7,798,365
    Management fee .................................          93,750           93,750          281,250          281,250
    General and administrative .....................          76,927           80,488          241,219          241,463
    Professional fees ..............................          75,820           66,408          206,911          151,658
    Amortization of deferred costs .................           5,641            9,469           17,270           28,406
                                                       -------------    -------------    -------------    -------------

                                                           2,434,636        2,769,813        8,078,109        8,501,142
                                                       -------------    -------------    -------------    -------------

      Total other revenue and expenses .............       1,700,358         (586,943)      (2,154,586)       6,877,693
                                                       -------------    -------------    -------------    -------------

Gain before gain on disposition
  of investment in partnership .....................       3,272,028          385,457          407,512        9,005,043
                                                       -------------    -------------    -------------    -------------

Gain on disposition of investment in partnership ...            --               --               --            676,391
                                                       -------------    -------------    -------------    -------------

Net income .........................................       3,272,028          385,457          407,512        9,681,434

Accumulated losses, beginning of period ............    (149,840,514)    (145,410,818)    (146,975,998)    (154,706,795)
                                                       -------------    -------------    -------------    -------------

Accumulated losses, end of period ..................   $(146,568,486)   $(145,025,361)   $(146,568,486)   $(145,025,361)
                                                       =============    =============    =============    =============


Net income allocated
  to General Partners (1.51%) ......................   $      49,408    $       5,821    $       6,153    $     146,190
                                                       =============    =============    =============    =============

Net income allocated
  to Initial and Special Limited Partners (1.49%) ..   $      48,753    $       5,743    $       6,072    $     144,253
                                                       =============    =============    =============    =============

Net income allocated
  to Additional Limited Partners (97%) .............   $   3,173,867    $     373,893    $     395,287    $   9,390,991
                                                       =============    =============    =============    =============

Net income per unit of Additional Limited
  Partner Interest based on 73,500 units outstanding   $       43.18    $        5.09    $        5.38    $      127.77
                                                       =============    =============    =============    =============
</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 nine months ended
                                                                                         September 30,
                                                                                  ----------------------------
                                                                                      2002            2001
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
Cash flows from operating activities:
  Net income ..................................................................   $    407,512    $  9,681,434

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships .........................................     (2,562,098)     (2,127,350)
    Amortization of deferred costs ............................................         17,270          28,406
    Gain from extinguishment of debt ..........................................     (5,873,888)    (15,169,179)
    Gain on disposition of investment in partnership ..........................           --          (676,391)

    Changes in assets and liabilities:
      Decrease in advances to partnerships ....................................         54,500            --
      Increase in other assets ................................................            (38)         (1,142)
      Increase in accrued interest payable ....................................      7,331,459       7,798,365
      Payment of purchase money note interest .................................        (57,359)       (241,619)
      Increase (decrease) in accounts payable and accrued expenses ............         19,202        (324,960)
                                                                                  ------------    ------------

        Net cash used in operating activities .................................       (663,440)     (1,032,436)
                                                                                  ------------    ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships ..................................        530,784         586,065
  Proceeds from disposition of investments in partnerships, net ...............      5,476,101       1,135,324
  Decrease in sales proceeds receivable .......................................           --         1,545,628
                                                                                  ------------    ------------

        Net cash provided by investing activities .............................      6,006,885       3,267,017
                                                                                  ------------    ------------

Cash flows from financing activities:
  Distribution to Additional Limited Partners .................................       (586,896)       (733,670)
  Distribution to General Partners and Initial and Special Limited Partners ...        (37,887)           --
  Payment of purchase money note principal ....................................       (800,000)           --
  Payoff of purchase money note principal and related interest ................     (3,668,220)     (4,385,324)
                                                                                  ------------    ------------

        Net cash used in financing activities .................................     (5,093,003)     (5,118,994)
                                                                                  ------------    ------------

Net increase (decrease) in cash and cash equivalents ..........................        250,442      (2,884,413)

Cash and cash equivalents, beginning of period ................................      4,816,347       8,049,221
                                                                                  ------------    ------------

Cash and cash equivalents, end of period ......................................   $  5,066,789    $  5,164,808
                                                                                  ============    ============



Supplemental disclosure of cash flow information:
  Cash paid during the period for interest ....................................   $  1,773,642    $  1,166,943
                                                                                  ============    ============
</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

                           September 30, 2002 and 2001

                                   (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 September 30, 2002, and the results of its
operations for the three and nine months ended  September 30, 2002 and 2001, and
its cash  flows for the nine  months  ended  September  30,  2002 and 2001.  The
results of operations for the interim  period ended  September 30, 2002, 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  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  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, 2001.

     In April 2002, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No. 145 (the  Statement),  "Recission  of FASB
Statements  No.  4, 44,  and 64,  ...."  The  Statement  rescinds  Statement  of
Financial  Accounting  Standards No. 4, which required all gains and losses from
extinguishment  of debt to be  aggregated  and, if  material,  classified  as an
extraordinary  item.  Accordingly,  gains from extinguishment of debt previously
reported as extraordinary for the three months ended March 31, 2002, and for the
three and nine months ended  September 30, 2001,  have been  reclassified in the
accompanying   consolidated   statements   of   operations  to  conform  to  the
presentation required by the Statement.


2.   INVESTMENTS IN AND ADVANCES TO 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 $22,980,081 plus aggregate  accrued interest of
$92,081,670  as of September 30, 2002, 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. However, see the discussion relating to Highland Village, below,
for  information  concerning the  outstanding  accrued  interest  balance of the
purchase  money notes  related to  Highland  Village,  even though the  property
related to Highland Village has been sold.


                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The maturity  dates of the purchase  money notes  related to the  following
properties were extended during 2001 and through November 12, 2002

<TABLE>
<CAPTION>
                                                                Original         Extended
         Property                            Principal          Maturity         Maturity
         --------                           -----------         --------        ----------
         <S>                                <C>                 <C>             <C>
         Jewish Federation                  $ 1,350,000         10/31/99         10/31/04 (2)
         Highland Village                     1,100,000 (3)     10/31/99         10/31/04
         Canonsburg House (1)                 1,440,000         12/01/99         01/03/03
         Char House (1)                       1,430,000         12/01/99         01/03/03
         Liberty Tower (1)                    1,340,000         12/01/99         01/03/03
         Pilgrim Tower East                   1,550,000         12/01/99         11/30/03
         Pilgrim Tower North                  2,065,000         04/30/00         11/30/02
</TABLE>

         (1)  Other purchase money notes relating to these properties were paid
              off in October 2001.
         (2)  There were  interim  extensions  to April 30,  2000 and April 30,
              2001.
         (3)  The original  principal,  and a portion of the accrued  interest,
              were paid off out of cash and other proceeds from the sale of the
              property  on April  26,  2002.  However,  the  remaining  accrued
              interest, in the amount of $5,473,123, remains outstanding and is
              subject to receipt of acceleration notice from the purchase money
              noteholder,  as  provided  in the 2001  restructuring  agreement,
              which provided for a five-year extension of the maturity date.


     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of November 12, 2002.

         Property                            Principal          Maturity
         --------                           ----------          --------
         Crescent Gardens                   $  434,000          07/31/99
         Valley View                           920,000          09/01/99
         Westport Village                      840,000          09/01/99
         Wellington Woods                      485,000          12/01/99
         Glenridge Gardens                     665,000          01/01/02 (1)

         (1)  Original maturity was August 1, 1999.



                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The purchase money notes related to the following  properties were paid off
at a discount,  or the  collateral  that  secured  them was  transferred  to the
noteholders, during 2001 and through November 12, 2002.

<TABLE>
<CAPTION>

         Property                            Principal          Date                    Disposition
         --------                           ----------          ----                    -----------
         <S>                                <C>                 <C>                     <C>
         Chippewa County                    $  860,000          January 2001            Paid Off
         Hometown Village                    1,495,000          January 2001            Transferred
         Scoville Center                     1,400,000          January 2001            Transferred
         Cottonwood Park                       975,000          May 2001                Paid Off
         Tradewinds Terrace                    925,000          May 2001                Paid Off
         Riverview Manor                       740,000          July 2001               Paid Off
         Canonsburg House (2)                  100,000          October 2001            Paid Off
         Char House (2)                        100,000          October 2001            Paid Off
         Liberty Tower (2)                     100,000          October 2001            Paid Off
         DeAngelis Manor                       973,571 (1)      March 2002              Paid Off
         Matthew XXV                           978,367 (1)      March 2002              Paid Off
         Lakes of Northdale                  1,500,000          September 2002          (3)
</TABLE>

         (1)  Remaining principal after a partial payoff.
         (2)  Other  purchase  money notes  relating to these  properties  were
              extended to mature in January 2003.
         (3)  Principal  and interest  were  forgiven upon sale of the property
              related to Lakes of Northdale.

     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 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 maturing  purchase money notes exceeds the carrying
amount  of the  investment  in,  and  advances  to,  each of the  related  Local
Partnerships. Thus, even a complete loss of the Partnership's interest in one of
these  Local  Partnerships  would  not have a  material  adverse  impact  on the
financial condition of the Partnership.

     The following  chart presents  information  related to purchase money notes
which have  matured,  have been  extended to mature,  or are scheduled to mature
through September 30, 2003, and which remain unpaid or unextended as of November
12, 2002.  Excluded  from the  following  chart are  purchase  money notes which
matured through September 30, 2002, and which have been paid off, cancelled,  or
extended on or before November 12, 2002.

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>
                                                                        Aggregate                   Carrying Amount
                                             Aggregate                   Accrued                    of Partnership's
                                             Principal                   Interest                   Investments in
                   Number of                  Balance                    Balance                    and Advances to
   Purchase        Underlying                  as of                      as of                     Underlying Local
  Money Note         Local      Percentage   September 30,  Percentage  September 30,  Percentage   Partnerships as of   Percentage
   Maturity       Partnerships   of Total        2002        of Total       2002        of Total    September 30, 2002    of Total
---------------   ------------  ----------   ------------   ---------   ------------   ----------   ------------------   ----------
<S>               <C>           <C>          <C>            <C>         <C>            <C>          <C>                  <C>
3rd Quarter 1999        3           11%      $ 2,194,000         10%    $ 5,414,582         6%         $        --           --
4th Quarter 1999        1            4%          485,000          2%      3,180,534         4%             542,260            3%
1st Quarter 2002        1            4%          665,000          3%      2,762,041         3%                  --           --
4th Quarter 2002        1            4%        2,065,000          9%     17,720,136        19%           2,352,328           12%
1st Quarter 2003        3           11%        4,210,000         18%     16,898,704        18%           2.830,610           15%
                     ----         ----       -----------       ----     -----------      ----          -----------         ----
Total through
 09/30/2003             9           34%      $ 9,619,000         42%    $45,975,997        50%         $ 5,725,198           30%
                     ====         ====       ===========       ====     ===========      ====          ===========         ====
Total, Local
  Partnerships         26 (1)      100%      $22,980,081        100%    $92,081,670       100%         $18,945,173 (2)      100%
                     ====         ====       ===========       ====     ===========      ====          ===========         ====
</TABLE>

(1)  Seventeen of the 26 Local  Partnerships  have related  purchase  money note
     obligations, nine of which mature through September 30, 2003.
(2)  Includes  $2,894,588  and  $2,432,730  for  the  partnerships  reported  as
     investment in  partnerships  held for sale or transfer and  $2,830,610  and
     $2,871,895  reported as  investment in  partnerships  held in escrow on the
     consolidated  balance  sheets at September  30, 2002 and December 31, 2001,
     respectively.


     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, the excess of the
nonrecourse   indebtedness   over  the  carrying  amount  of  the  Partnership's
investment  in the related Local  Partnership  would be deemed  cancellation  of
indebtedness income, which would be taxable to Limited Partners at a federal tax
rate  of  up  to  38.6%.  Additionally,  in  the  event  of a  foreclosure,  the
Partnership  would lose its investment in the Local  Partnership and,  likewise,
its share of any future  cash flow  distributed  by the Local  Partnership  from
rental operations,  mortgage debt refinancings,  or the sale of the real estate.
Of the 26  Local  Partnerships  in  which  the  Partnership  is  invested  as of
September 30, 2002, the nine Local  Partnerships with associated  purchase money
notes which mature, or have been extended to mature, through September 30, 2003,
and which remain unpaid or unextended as of November 12, 2002,  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.

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued


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

     December 31, 2001                15%                         $0
     December 31, 2000                 8%                         $0


     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity  of its 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
and nine month periods ended  September 30, 2002 was $2,182,498 and  $7,331,459,
respectively, and $2,519,698 and $7,798,365 for the three and nine month periods
ended  September 30, 2001,  respectively.  The accrued  interest  payable on the
purchase money notes of $92,081,670 and $94,666,676 as of September 30, 2002 and
December 31, 2001, respectively,  is due on the respective maturity dates of the
purchase money notes or earlier,  in some instances,  if (and to the extent of a
portion thereof) the related Local  Partnership has distributable net cash flow,
as defined in the relevant Local Partnership agreement.

                 Canonsburg House, Char House, and Liberty Tower
                 -----------------------------------------------

     The  Partnership  defaulted  on its six  purchase  money  notes  related to
Canonsburg Housing Associates Limited Partnership (Canonsburg House), Char House
Highrise  Association  Limited  Partnership  (Char  House),  and  Liberty  Tower
Associates  Limited  Partnership  (Liberty  Tower) on  December 1, 1999 when the
notes matured and were not paid. The default amount included aggregate principal
and  accrued   interest  of  $4,510,000  and  $12,951,810,   respectively.   The
Partnership tried to negotiate to extend the maturity date of the purchase money
notes for up to five years.  However,  on  September  8, 2000,  the  Partnership
received  service  of three  suits by the  noteholder  of one of the notes  with
respect to each of the three  partnerships for foreclosure on the  Partnership's
interests.  The Partnership  filed its answers on October 24, 2000,  although it
continued  to  negotiate  with the  plaintiff.  The  Partnership  entered into a
settlement  agreement  on October  22,  2001  pursuant  to which it  obtained an
extension of the maturity date of the three larger notes to January 2003.  Under
the extension agreement,  documents transferring the Partnership's  interests in
Canonsburg  House, Char House and Liberty Tower to the noteholder were placed in
escrow to be released to the  noteholder  upon the  earlier of  occurrence  of a
future  default by the  Partnership  on the  purchase  money notes or January 4,
2003. The Partnership  also negotiated a discounted  payoff of the three smaller
notes,  and the funds  were  released  from  escrow on  October  22,  2001.  The
discounted  payoffs resulted in gain from  extinguishment  of debt of $1,351,664
for financial  statement purposes and in cancellation of indebtedness  income of
$1,351,664 for federal tax purposes in 2001.

     Due to the  possible  transfer of the  Partnership's  interest in the Local
Partnerships  to  the  noteholders,   the  Partnership's   basis  in  the  Local
Partnerships,  along with net unamortized acquisition fees and property purchase
costs,  which totaled  $1,218,704,  $580,160 and  $1,124,184 as of September 30,
2002, and $1,266,732, $568,710 and $1,128,890 as of December 31, 2001,

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

for  Canonsburg  House,  Char House and Liberty Tower,  respectively,  have been
reclassified  to investment in partnerships  held in escrow in the  accompanying
consolidated balance sheets.

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

     The  Partnership  defaulted on its purchase  money note related to Chippewa
County  Housing  Partners  (Chippewa  County)  on  August  1, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of $860,000 and  $2,297,462,  respectively.  In March 2000, in exchange
for a non-refundable  deposit, the noteholders agreed to forbear from exercising
their  remedies until July 1, 2000. In June 2000, in exchange for a further non-
refundable  deposit,   the  noteholders  agreed  to  continue  to  forbear  from
exercising   their  remedies  until  January  4,  2001.  In  January  2001,  the
Partnership paid off the note at a discount.  The discounted  payoff resulted in
gain from  extinguishment of debt of $2,164,719 for financial statement purposes
and in  cancellation  of  indebtedness  income of  $2,164,719  for  federal  tax
purposes in 2001.

                                 Cottonwood Park
                                 ---------------

     The  Partnership  defaulted on its  purchase  money note related to Shawnee
Heights Limited  Partnership  (Cottonwood  Park) on August 1, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of $975,000 and $2,576,421,  respectively. In May 2000, the noteholders
filed suit to  foreclose  on the  Partnership's  interest  in  Cottonwood  Park.
However,  the parties  negotiated an agreement which allowed for a possible sale
of the property. On May 30, 2001, Cottonwood Park was sold. Proceeds received by
the  Partnership  from  the sale of the  property  were  used to pay  off,  at a
discount,  the  purchase  money note  related to  Cottonwood  Park.  The sale of
Cottonwood  Park resulted in gain on disposition of investments in  partnerships
of $719,413 and in gain from  extinguishment of debt of $3,029,351 for financial
statement  purposes  in 2001,  and a total gain of  $4,930,406  for  federal tax
purposes in 2001.

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

     The  Partnership  defaulted  on its two  purchase  money  notes  related to
Crescent Gardens Associates Limited  Partnership  (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 extends the maturity
date up to July 31, 2004, subject to semi-annual interest payments,  and reduces
the interest rate of the First Crescent Note. 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 November 12, 2002, principal and accrued interest of $434,000 and $1,297,320,
respectively,  were due on the Second Crescent Note.  Crescent  Gardens recently
completed  mortgage  restructuring  under the Mark-to- Market  program,  and the
associated  loan  restructuring  requirement  will likely limit the sale of this
property to a not-for-profit  organization.  It is anticipated that the property
will now operate at a break-even  level, and that future cash  distributions are
highly unlikely.

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     The  Partnership  defaulted on its purchase  money notes  related to Natick
Associates  (DeAngelis  Manor) on July 1, 1999,  when the notes matured and were
not paid. The default amount included  aggregate  principal and accrued interest
of $1,015,000 and $2,670,689,  respectively. As of March 19, 2002, principal and
accrued interest of $973,571 and $3,483,307, respectively, were due. On December
4,  2001,  the  Partnership  paid off,  at a  discount,  the  smaller of the two
purchase money notes. The discounted payoff resulted in gain from extinguishment
of  debt  of  $116,659  for  financial   statement  purposes  in  2001,  and  in
cancellation  of  indebtedness  income of $116,659  for federal tax  purposes in
2001.  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 second purchase money note related to DeAngelis Manor, although the note has
not been cancelled  pending  payment of surplus cash through the date of closing
which has not been  released  by the state  regulatory  authority.  The sale and
discounted  payoff resulted in gain from  extinguishment of debt of $623,863 for
financial statement purposes in 2002, and in cancellation of indebtedness income
for federal tax  purposes of  $1,757,146  in 2002.  In March 2002,  the Managing
General Partner was paid a disposition fee of $73,272 relating to the sale.

     Due to the  impending  sale of the  property  related to the  Partnership's
investment in DeAngelis Manor, the Partnership's basis in the Local Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled $4,301,314, was reclassified to investment in partnerships held for sale
in the accompanying consolidated balance sheet at December 31, 2001.

                                Glenridge Gardens
                                -----------------

     The  Partnership  defaulted on its purchase money note related to Glenridge
Development  Company (Glenridge Gardens) on August 1, 1999 when the note matured
and was not paid. The default amount included  principal and accrued interest of
$740,000 and $1,928,809,  respectively.  As of November 12, 2002,  principal and
accrued interest of $665,000 and $2,795,755, respectively, were due. On June 16,
2000, the Partnership  and noteholder  agreed to extend the maturity date of the
purchase money note to January 2001, in exchange for a payment which was applied
to the purchase money note  principal  balance.  Under the extension  agreement,
documents  transferring the  Partnership's  interest in Glenridge Gardens to the
noteholder  were placed in escrow to be released to the noteholder upon a future
default  by the  Partnership.  The  Partnership  reached an  agreement  with the
noteholder in which the noteholder agreed to forbear from taking any action with
respect to the note through  January 3, 2002 in exchange for a payment which was
applied to the purchase money note principal  balance.  As of November 12, 2002,
the purchase money noteholder has not taken action to transfer the Partnership's
interest in Glenridge Gardens.

     Due to the  possible  transfer of the  Partnership's  interest in Glenridge
Gardens to the noteholder,  the net unamortized  amounts of acquisition fees and
property  purchase  costs,  which  totaled  $36,247 at  September  30,  2002 and
December 31, 2001, has been  reclassified to investment in partnerships  held in
escrow in the accompanying consolidated balance sheets.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                Highland Village
                                ----------------

     The  Partnership  defaulted  on its four  purchase  money notes  related to
Highland  Village  Associates  (Highland  Village) on October 31, 1999, when the
notes  matured and were not paid.  The President of the local  managing  general
partner of Highland Village had taken assignment of the four payees' interest in
each of the notes and is the  holder of all of the  notes.  The  default  amount
included   principal  and  accrued   interest  of  $1,100,000  and   $4,123,565,
respectively.  As of November 12, 2002,  accrued interest of $5,473,123 was due.
In  February  2001,  the  Partnership  and the  noteholder  agreed to extend the
maturity date of the purchase money notes to October 31, 2004, provided that the
maturity date of the notes may be accelerated to any earlier date  designated by
the noteholder upon not less than six months' notice to the Partnership from the
noteholder (the "Restructuring Agreement").

     On April 26, 2002, the property  related to Highland  Village was sold to a
limited  partnership  whose general  partner is also the local managing  general
partner of Highland Village.  The sale proceeds to Highland  Village,  after the
purchaser's  assumption of existing mortgage debt,  included $600,000 in cash, a
short term promissory note for $300,000, and a long term purchase money mortgage
note for $400,000. In accordance with the terms of the Restructuring  Agreement,
the proceeds were distributed directly to the noteholder, to be applied first to
principal  until all principal has been repaid  ($1,100,000),  and thereafter to
interest ($200,000) until interest,  including all accrued but previously unpaid
interest, has been paid in full.

     As of November 12, 2002,  the  noteholder has not provided the required six
months' notice to the  Partnership of  acceleration  of the maturity date of the
notes,  and the  Partnership  has not removed the unpaid balance from its books,
even  though  the  nonrecourse  notes  are  essentially  worthless  because  the
collateral that secures them (the  Partnership's  interest in Highland  Village)
has no value since  Highland  Village  sold its only  assets.  As a result,  the
Partnership  stopped  accruing  interest on the notes  effective the date of the
sale of the property on April 26, 2002. The  Partnership  and the noteholder are
discussing an acceleration of the maturity date of the notes.  Upon acceleration
and resulting  cancellation of the notes,  gain from  extinguishment of debt, in
the approximate  amount of $5.5 million,  will be recognized by the Partnership.
There is no assurance that the acceleration will occur.

     Due to the  impending  transfer of the  Partnership's  interest in Highland
Village to the noteholder,  the  Partnership's  basis in the Local  Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled  $26,691 at September 30, 2002, has been  reclassified  to investment in
partnerships held for sale or transfer in the accompanying  consolidated balance
sheet at September 30, 2002.

                                Hometown Village
                                ----------------

     The  Partnership  defaulted on its purchase  money note related to Hometown
Villages Limited Partnership  (Hometown Village) on August 1, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of $1,495,000 and $5,010,398,  respectively. In March 2000, in exchange
for a non-refundable  deposit, the noteholders agreed to forbear from exercising
their  remedies  until July 1, 2000. In June 2000, in exchange for an additional
non-refundable  deposit,  the  noteholders  agreed to continue  to forbear  from


                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

exercising   their  remedies  until  January  4,  2001.  In  January  2001,  the
Partnership's  interest in Hometown  Village was transferred to the noteholders.
The  transfer  of  the  Partnership's   interest  in  Hometown  Village  to  the
noteholders  resulted  in gain from  extinguishment  of debt of  $4,271,262  for
financial statement purposes in 2001, and a total gain of $7,895,814 for federal
tax purposes in 2001.

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

     The purchase money note related to Jewish Federation  Apartments Associates
(Jewish Federation), in the principal amount of $1,350,000, was due to mature on
October  31,  1999.  In 1997,  the  Managing  General  Partner  entered  into an
agreement  with the  noteholder  to extend  the  maturity  date for five  years,
subject to the donation and transfer by the Local  Partnership  of an unimproved
portion of the property to an entity  affiliated with the local managing general
partner  and the  noteholder.  On May 21,  1999,  the  noteholder  extended  the
maturity  date of the purchase  money note to April 30,  2000,  and on April 24,
2000,  the noteholder  further  extended the maturity date to April 30, 2001, to
allow time for the donation and transfer to occur.  In 2000,  the local managing
general  partner  received  U. S.  Department  of  Housing  & Urban  Development
approval  for  the  donation  and  transfer  of the  unimproved  portion  of the
property,  and the  transfer  took place  effective  March 30,  2001.  Upon such
transfer,  the maturity date of the purchase  money note was extended to October
31, 2004, in accordance with the 1997 agreement.

                                   Matthew XXV
                                   -----------

     The  Partnership  defaulted on its purchase money notes related to Diakonia
Associates  (Matthew  XXV) on July 1, 1999,  when the notes matured and were not
paid. The default amount included  aggregate  principal and accrued  interest of
$1,020,000 and  $2,695,752,  respectively.  As of March 19, 2002,  principal and
accrued interest of $978,367 and $3,531,806, respectively, were due. On December
4,  2001,  the  Partnership  paid off,  at a  discount,  the  smaller of the two
purchase money notes. The discounted payoff resulted in gain from extinguishment
of  debt  of  $141,152  for  financial   statement  purposes  in  2001,  and  in
cancellation  of  indebtedness  income of $141,152  for federal tax  purposes in
2001.  On March  19,  2002,  Matthew  XXV was  sold.  Proceeds  received  by the
Partnership  from the sale of the property  were used to pay off, at a discount,
the second purchase money note related to Matthew XXV, although the note has not
been cancelled pending payment of surplus cash through the date of closing which
has not been released by the state regulatory authority. The sale and discounted
payoff resulted in gain from  extinguishment of debt of $1,131,805 for financial
statement  purposes in 2002,  and in  cancellation  of  indebtedness  income for
federal tax purposes of $2,126,281 in 2002. In March 2002, the Managing  General
Partner was paid a disposition fee of $49,743 relating to the sale.

     Due to the  impending  sale of the  property  related to the  Partnership's
investment  in Matthew XXV, the  Partnership's  basis in the Local  Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled $3,929,550, was reclassified to investment in partnerships held for sale
in the accompanying consolidated balance sheet at December 31, 2001.

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower East Associates  Limited  Partnership  (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.  The
Partnership and the noteholder have signed a contract to sell the  Partnership's
interest in Pilgrim Tower East to the  noteholder,  during 2003, in exchange for
the principal and accrued  interest  outstanding  on the purchase money note and
two  payments  in 2002 on the  purchase  money  note,  one of which  was paid in
February 2002. 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  net
unamortized  acquisition fees and property purchase costs, which totaled $39,732
and $44,100, at September 30, 2002 and December 31, 2001, respectively, has been
reclassified  to investment in  partnerships  held for sale in the  accompanying
consolidated balance sheets.

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower North Associates  Limited  Partnership  (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 $12,480,569,  respectively. The
Partnership signed a contract with the noteholder which allows the noteholder to
purchase the property by November  30, 2002 in exchange  for the  principal  and
accrued  interest  outstanding  on the  purchase  money note and  assumption  or
prepayment by the noteholder of the mortgage note, the flexible subsidy note and
all related debt associated with the property in addition to a principal payment
applied to the note,  which was paid in January 2002. There is no assurance that
a sale of the property will occur.

     Due to the  impending  sale of the  property  related to the  Partnership's
investment  in  Pilgrim  Tower  North,  the  Partnership's  basis  in the  Local
Partnership,  along with net unamortized  acquisition fees and property purchase
costs,  which  totaled  $2,409,497  and  $2,485,531,  at September  30, 2002 and
December  31,  2001,  respectively,  has  been  reclassified  to  investment  in
partnerships held for sale in the accompanying consolidated balance sheets.

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

     The Partnership  defaulted on its purchase money notes related to Riverview
Manor Company Limited  Partnership  (Riverview Manor) on September 30, 1999 when
the notes  matured and were not paid.  The  default  amount  included  aggregate
principal and accrued interest of $740,000 and $1,853,014, respectively. On July
23, 2001, the Partnership  paid off the purchase money notes at a discount.  The
discounted payoff resulted in gain from extinguishment of debt of $2,141,273 for
financial  statement purposes in 2001 and in cancellation of indebtedness income
of $2,141,273 for federal tax purposes in 2001.

                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                 Scoville Center
                                 ---------------

     The  Partnership  defaulted on its purchase  money notes  related to Beloit
Housing Partners (Scoville Center) on October 1, 1999 when the notes matured and
were not paid. The default  amount  included  principal and accrued  interest of
$1,400,000  and  $2,123,397,  respectively.  In March 2000,  in  exchange  for a
non-refundable  deposit, the noteholders agreed to forbear from exercising their
remedies  until  July 1, 2000.  In June 2000,  in  exchange  for a further  non-
refundable  deposit,   the  noteholders  agreed  to  continue  to  forbear  from
exercising   their  remedies  until  January  4,  2001.  In  January  2001,  the
Partnership's  interest in Scoville Center was  transferred to the  noteholders.
The transfer of the Partnership's interest in Scoville Center to the noteholders
resulted  in  gain  from  extinguishment  of debt of  $2,698,797  for  financial
statement  purposes  in 2001,  and a total gain of  $5,919,376  for  federal tax
purposes in 2001.

                               Tradewinds Terrace
                               ------------------

     The Partnership  defaulted on its purchase money note related to Tradewinds
West LDHA Limited Partnership (Tradewinds Terrace) on December 3, 1999, when the
note matured and was not paid. The default amount included principal and accrued
interest  of  $925,000  and  $1,228,429,  respectively.  On May  24,  2001,  the
Partnership paid off the note at a discount.  The discounted  payoff resulted in
gain from extinguishment of debt of $863,777 for financial statement purposes in
2001, and in  cancellation  of  indebtedness  income of $863,777 for federal tax
purposes in 2001.

                                   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.  As of November  12, 2002,
aggregate   principal   and  accrued   interest  of  $920,000  and   $2,180,127,
respectively,  were due. The  Partnership  has been sued by the  noteholders for
payment  and  for  confirmation  of  the  transfer  of  the  collateral  to  the
noteholders.  On January 7, 2000, the Partnership  filed a motion to dismiss the
suit.  The  noteholders   subsequently   filed  an  amended   complaint  seeking
confirmation  of the  transfer  of the  collateral  to the  noteholders  but not
seeking payment.  On February 9, 2000, the Partnership filed a motion to dismiss
the amended complaint, which was granted. A further amended complaint and motion
to dismiss have been filed,  but no ruling on the latest motion has been made as
of  November  12,  2002.  The  Partnership  and the  noteholders  have agreed in
principle  that the  Partnership  will deposit  assignments  of its interests in
Valley View in escrow,  together with an option agreement  pursuant to which the
noteholders may purchase the interests for the outstanding  debt if the property
is not sold and/or the notes are not repaid by a future  date to be  negotiated.
There is no assurance that any settlement will be finalized.

     Due to the impending transfer of the Partnership's interest in Valley View,
the net  unamortized  amounts of acquisition  fees and property  purchase costs,
which totaled  $37,315,  at September 30, 2002 and December 31, 2001,  have been
reclassified  to investment in partnerships  held in escrow in the  accompanying
consolidated balance sheets.


                                      -14-

<PAGE>
                CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                Wellington Woods
                                ----------------

     The  Partnership  defaulted on its purchase money notes related to Clarkson
Associates  of  Wellington  Woods  Limited  Partnership  (Wellington  Woods)  on
December 1, 1999,  when the notes matured and were not paid.  The default amount
included  aggregate  principal and accrued  interest of $485,000 and $2,169,679,
respectively.  As of November 12, 2002, aggregate principal and accrued interest
of $485,000 and $3,227,244, respectively, were due.

     The  Partnership  attempted to negotiate with the noteholders to extend the
maturity  date of the  purchase  money note for five years,  in  exchange  for a
partial payment.  In August 2000, one of the purchase money noteholders sued the
Partnership  for  damages  and  foreclosure  of the  security  interests  in the
Wellington  Woods  Local  Partnership.  The  Partnership  offered  to tender its
interests in Wellington Woods, but,  subsequently,  the plaintiff and the second
purchase money noteholder filed an amended complaint. Both parties filed motions
for summary  judgment.  In September 2002, the judge ruled in the  Partnership's
favor  and  dismissed  the claim  and  related  attorneys'  fees.  However,  the
Partnership's interest in Wellington Woods, together with distributions received
by the  Partnership  after  the  dates  of the  noteholders'  demands,  will  be
transferred to the noteholders.

     Due to the impending  transfer of the Partnership's  interest in Wellington
Woods,  the net unamortized  amounts of acquisition  fees and property  purchase
costs,  which totaled $572,816,  at September 30, 2002, has been reclassified to
investment  in  partnership  held  for  sale  or  transfer  in the  accompanying
consolidated balance sheet.

                                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 November 12, 2002,  principal and
accrued  interest  of  $840,000  and  $1,975,341,  respectively,  were due.  The
Partnership has been sued by the noteholders for payment and for confirmation of
the  transfer of the  collateral  to the  noteholders.  On January 7, 2000,  the
Partnership  filed a motion to dismiss the suit.  The  noteholders  subsequently
filed  an  amended  complaint  seeking  confirmation  of  the  transfer  of  the
collateral to the noteholders but not seeking payment.  On February 9, 2000, the
Partnership filed a motion to dismiss the amended complaint,  which was granted.
A further amended complaint and motion to dismiss have been filed, but no ruling
on the latest motion has been made as of November 12, 2002. The  Partnership and
the  noteholders  have agreed in  principle  that the  Partnership  will deposit
assignments  of its  interests in Westport  Village in escrow,  together with an
option  agreement  pursuant to which the  noteholders may purchase the interests
for the  outstanding  debt if the property was not sold and/or the notes are not
repaid  by a  future  date to be  negotiated.  There  is no  assurance  that any
settlement will be finalized.

     Due to the  impending  transfer of the  Partnership's  interest in Westport
Village,  the net unamortized  amounts of acquisition fees and property purchase
costs, which totaled $46,989,  at September 30, 2002 and December 31, 2001, have
been   reclassified  to  investment  in  partnerships  held  in  escrow  in  the
accompanying balance sheets.

                                      -15-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

b.   Advances to Local Partnerships
     ------------------------------

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

     In  connection  with the  refinancing  of the mortgage  loan secured by the
property  owned by Crescent  Gardens in August 2001,  the  Partnership  advanced
$9,257 for closing  costs.  Such amount will be reimbursed  to the  Partnership,
with interest,  over a seven year period. For financial reporting purposes, this
advance has been reduced to zero by the Partnership as a result of losses at the
Local Partnership level.

                               Lakes of Northdale
                               ------------------

     To cover operating  deficits  incurred in prior years by Lakes of Northdale
Limited  Partnership  (Lakes  of  Northdale),  the  Partnership  advanced  funds
totaling  $54,500.  Upon the sale of Lakes of Northdale in September  2002,  the
advanced funds were paid in full.

c.   Property matters
     ----------------

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

     On March 19,  2002,  DeAngelis  Manor was sold.  See Note 2.a.  hereof  for
additional information concerning the sale.

                                Highland Village
                                ----------------

     On April 26, 2002, the property  related to Highland  Village was sold. See
Note 2.a. hereof for further information concerning the sale and the outstanding
accrued  interest  balance of the  purchase  money  notes  related  to  Highland
Village.

                               Lakes of Northdale
                               ------------------

     In  September  2002,  Lakes of  Northdale  Limited  Partnership  (Lakes  of
Northdale) was sold.  The purchase money note principal and interest  related to
Lakes of Northdale were forgiven.  The sale and  forgiveness of debt resulted in
gain from  extinguishment of debt of $4,118,220 for financial statement purposes
for 2002, and in cancellation of indebtedness income for federal tax purposes of
$9,258,912 in 2002.

                                   Matthew XXV
                                   -----------

     On March 19, 2002 Matthew XXV was sold. See Note 2.a. hereof for additional
information concerning the sale.

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

     In February 2002, a contract for the sale of the Partnership's  interest in
Pilgrim Tower East was signed.  See Note 2.a. hereof for additional  information
concerning the sale.


                                      -16-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     In January 2002, a contract for the sale of Pilgrim Tower North was signed.
See Note 2.a. hereof for additional information concerning the sale.

d.   Summarized financial information
     --------------------------------

     Combined  statements of operations for the 26 and 29 Local  Partnerships in
which  the  Partnership  was  invested  as  of  September  30,  2002  and  2001,
respectively,   follow.   The  combined   statements  have  been  compiled  from
information supplied by the management agents of the projects and are unaudited.
The  combined  statements  of  operations,  include  information  for five Local
Partnerships through their respective dates of sale in May 2001, March 2002 (2),
April 2002, and September 2002.

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


                                               For the three months ended          For the nine months ended
                                                      September 30,                      September 30,
                                               --------------------------         ---------------------------
                                                  2002             2001               2002             2001
                                               ----------       ----------        ------------     -----------
         <S>                                   <C>              <C>               <C>              <C>
         Revenue:
           Rental                              $7,315,758       $7,727,783        $22,196,229      $23,141,594
           Other, principally interest            512,442          588,429          1,598,905        1,762,249
                                               ----------       ----------        -----------      -----------

             Total revenue                      7,828,200        8,316,212         23,795,134       24,903,843
                                               ----------       ----------        -----------      -----------

         Expenses:
           Operating                            4,673,246        4,530,503         14,480,798       14,525,222
           Interest                             1,079,897        1,293,613          3,533,375        3,881,672
           Depreciation and amortization        1,417,763        1,550,070          4,591,745        4,701,439
                                               ----------       ----------        -----------      -----------

             Total expenses                     7,170,906        7,374,186         22,605,918       23,108,333
                                               ----------       ----------        -----------      -----------
         Net income                            $  657,294       $  942,026        $ 1,189,216      $ 1,795,510
                                               ==========       ==========        ===========      ===========
</TABLE>

     As of September 30, 2002 and 2001,  the  Partnership's  share of cumulative
losses  to  date  for 10 of the 26  and  29  Local  Partnerships,  respectively,
exceeded the amount of the  Partnership's  investments  in and advances to those
Local  Partnerships  by  $9,644,894  and  $13,123,812,   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.


                                      -17-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

                                   (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 $44,729 and
$185,868  for the  three  and nine  month  periods  ended  September  30,  2002,
respectively,  and $43,483  and  $173,417  for the three and nine month  periods
ended  September  30, 2001,  respectively,  to the Managing  General  Partner as
direct  reimbursement of expenses  incurred on behalf of the  Partnership.  Such
expenses are included in the accompanying  consolidated 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 $93,750 for
each of the three month periods ended  September 30, 2002 and 2001, and $281,250
for each of the nine month periods ended September 30, 2002 and 2001.

     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 January 2001, the Managing  General Partner was paid a disposition
fee of $186,682 relating to the sale of Wollaston Manor on December 28, 2000. In
March 2002,  the Managing  General  Partner was paid  disposition  fees totaling
$123,015  relating to the sales of DeAngelis  Manor and Matthew XXV on March 19,
2002.

                                      # # #

                                      -18-

<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 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.

                                     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.

     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;
however,  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 very 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.

                                      -19-

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


     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
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 will
receive  increased  cash flow,  as the limited  dividend will be increased in an
amount equal to the increase in gross rental revenues.

     Glenridge  Development  Company  (Glenridge  Gardens),  has a Section 8 HAP
contract  which,  as extended,  expires in May 2003.  The Section 8 HAP contract
covers 20% of the apartment units in Glenridge Gardens

     As of  September  30,  2002,  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.

     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 $5,066,789
as of September 30, 2002, along with anticipated  future cash distributions from
the Local  Partnerships,  is  expected  to be  adequate  to meet its current and
anticipated  operating  cash  needs.  As of  November  12,  2002,  there were no
material commitments for capital expenditures.

     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 $22,980,081 plus aggregate  accrued interest of
$92,081,670  as of September 30, 2002, 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.  However,  see Note 2.a. of the notes to consolidated  financial
statements  contained in Part I, Item 1, hereof, for information  concerning the
outstanding  accrued  interest  balance of the purchase  money notes  related to
Highland Village,  even though the property related to Highland Village has been
sold.

                                      -20-

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


     The maturity  dates of the purchase  money notes  related to the  following
properties were extended during 2001 and through November 12, 2002.

<TABLE>
<CAPTION>
                                                                Original         Extended
         Property                            Principal          Maturity         Maturity
         --------                           -----------         --------         --------
         <S>                                <C>                 <C>              <C>
         Jewish Federation                  $ 1,350,000         10/31/99         10/31/04 (2)
         Highland Village                     1,100,000(3)      10/31/99         10/31/04
         Canonsburg House (1)                 1,440,000         12/01/99         01/03/03
         Char House (1)                       1,430,000         12/01/99         01/03/03
         Liberty Tower (1)                    1,340,000         12/01/99         01/03/03
         Pilgrim Tower East                   1,550,000         12/01/99         11/30/03
         Pilgrim Tower North                  2,065,000         04/30/00         11/30/02

</TABLE>


         (1)  Other purchase money notes relating to these properties were paid
              off in October 2001.
         (2)  There were  interim  extensions  to April 30,  2000 and April 30,
              2001.
         (3)  The original  principal,  and a portion of the accrued  interest,
              were paid off out of cash and other proceeds from the sale of the
              property  on April  26,  2002.  However,  the  remaining  accrued
              interest, in the amount of $5,473,123, remains outstanding and is
              subject to receipt of acceleration notice from the purchase money
              noteholder,  as  provided  in the 2001  restructuring  agreement,
              which provided for a five-year extension of the maturity date.


     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of November 12, 2002.

         Property                            Principal          Maturity
         --------                           ----------          --------

         Crescent Gardens                   $  434,000          07/31/99
         Valley View                           920,000          09/01/99
         Westport Village                      840,000          09/01/99
         Wellington Woods                      485,000          12/01/99
         Glenridge Gardens                     665,000          01/01/02 (1)

         (1) Original maturity was August 1, 1999.


     The purchase money notes related to the following  properties were paid off
at a discount,  or the  collateral  that  secured  them was  transferred  to the
noteholders, during 2001 and through November 12, 2002.

<TABLE>
<CAPTION>

         Property                            Principal          Date                    Disposition
         --------                           ----------          ----                    -----------
         <S>                                <C>                 <C>                     <C>
         Chippewa County                    $  860,000          January 2001            Paid Off
         Hometown Village                    1,495,000          January 2001            Transferred
         Scoville Center                     1,400,000          January 2001            Transferred
         Cottonwood Park                       975,000          May 2001                Paid Off
         Tradewinds Terrace                    925,000          May 2001                Paid Off
         Riverview Manor                       740,000          July 2001               Paid Off
         Canonsburg House (2)                  100,000          October 2001            Paid Off
         Char House (2)                        100,000          October 2001            Paid Off
         Liberty Tower (2)                     100,000          October 2001            Paid Off
         DeAngelis Manor                       973,571 (1)      March 2002              Paid Off
         Matthew XXV                           978,367 (1)      March 2002              Paid Off
         Lakes of Northdale                  1,500,000          September 2002          (3)

</TABLE>

         (1)  Remaining principal after a partial payoff.
         (2)  Other  purchase  money notes  relating to these  properties  were
              extended to mature in January 2003.
         (3)  Principal  and interest  were  forgiven upon sale of the property
              related to Lakes of Northdale.

                                      -21-

<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 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 maturing  purchase money notes exceeds the carrying
amount  of the  investment  in,  and  advances  to,  each of the  related  Local
Partnerships. Thus, even a complete loss of the Partnership's interest in one of
these  Local  Partnerships  would  not have a  material  adverse  impact  on the
financial condition of the Partnership.

     The following  chart presents  information  related to purchase money notes
which have  matured,  have been  extended to mature,  or are scheduled to mature
through September 30, 2003, and which remain unpaid or unextended as of November
12, 2002.  Excluded  from the  following  chart are  purchase  money notes which
matured through September 30, 2002, and which have been paid off, cancelled,  or
extended on or before November 12, 2002.

<TABLE>
<CAPTION>
                                                                        Aggregate                   Carrying Amount
                                             Aggregate                   Accrued                    of Partnership's
                                             Principal                   Interest                   Investments in
                   Number of                  Balance                    Balance                    and Advances to
   Purchase        Underlying                  as of                      as of                     Underlying Local
  Money Note         Local      Percentage   September 30,  Percentage  September 30,  Percentage   Partnerships as of   Percentage
   Maturity       Partnerships   of Total        2002        of Total       2002        of Total    September 30, 2002    of Total
---------------   ------------  ----------   ------------   ---------   ------------   ----------   ------------------   ----------
<S>               <C>           <C>          <C>            <C>         <C>            <C>          <C>                  <C>
3rd Quarter 1999        3           11%      $ 2,194,000         10%    $ 5,414,582         6%         $        --           --
4th Quarter 1999        1            4%          485,000          2%      3,180,534         4%             542,260            3%
1st Quarter 2002        1            4%          665,000          3%      2,762,041         3%                  --           --
4th Quarter 2002        1            4%        2,065,000          9%     17,720,136        19%           2,352,328           12%
1st Quarter 2003        3           11%        4,210,000         18%     16,898,704        18%           2.830,610           15%
                     ----         ----       -----------       ----     -----------      ----          -----------         ----
Total through
 09/30/2003             9           34%      $ 9,619,000         42%    $45,975,997        50%         $ 5,725,198           30%
                     ====         ====       ===========       ====     ===========      ====          ===========         ====
Total, Local
  Partnerships         26 (1)      100%      $22,980,081        100%    $92,081,670       100%         $18,945,173 (2)      100%
                     ====         ====       ===========       ====     ===========      ====          ===========         ====

</TABLE>

(1)  Seventeen of the 26 Local  Partnerships  have related  purchase  money note
     obligations, nine of which mature through September 30, 2003.
(2)  Includes  $2,894,588  and  $2,432,730  for  the  partnerships  reported  as
     investment in  partnerships  held for sale or transfer and  $2,830,610  and
     $2,871,895  reported as  investment in  partnerships  held in escrow on the
     consolidated  balance  sheets at September  30, 2002 and December 31, 2001,
     respectively.

     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

                                      -22-

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


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, the excess of the nonrecourse indebtedness over the carrying amount
of the Partnership's investment in the related Local Partnership would be deemed
cancellation of indebtedness  income, which would be taxable to Limited Partners
at a  federal  tax  rate  of  up to  38.6%.  Additionally,  in  the  event  of a
foreclosure,  the Partnership would lose its investment in the Local Partnership
and,  likewise,  its  share of any  future  cash flow  distributed  by the Local
Partnership from rental operations,  mortgage debt refinancings,  or the sale of
the real  estate.  Of the 26 Local  Partnerships  in which  the  Partnership  is
invested as of September 30, 2002, the nine Local  Partnerships  with associated
purchase  money notes which  mature,  or have been  extended to mature,  through
September  30, 2003 and which  remain  unpaid or  unextended  as of November 12,
2002,   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            Income from
 For the Year Ended       from Local Partnerships        Local Partnerships
 ------------------       -----------------------      ----------------------

 December 31, 2001                 15%                          $0
 December 31, 2000                  8%                          $0

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity  of its 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 nine month periods ended  September 30, 2002 and 2001, net cash provided
by  investing   activities,   including  the  receipt  of   distributions   from
partnerships and proceeds from  disposition of investments in partnerships,  was
adequate  to support  operating  cash  requirements.  Cash and cash  equivalents
increased  during the nine month period ended  September  30, 2002,  as net cash
provided by investing  activities exceeded net cash used in operating activities
and financing activities.

     On September 11, 2002, the Partnership made a cash  distribution of $37,887
to  the  General  Partners  and  Initial  and  Special  Limited  Partners.   The
distribution from cash resources accumulated from operations, distributions from
Local  Partnerships and sales of eleven  properties,  was made after a review of
the  Partnership  Agreement  indicated  that  these  amounts  should  have  been
distributed in prior years when  distributions from these sources were paid only
to investor Limited Partners.

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

     The Partnership's net income for the three month period ended September 30,
2002,  increased  from the  corresponding  period in 2001,  primarily  due to an
increase in gain from extinguishment of debt in the 2002 period. Contributing to
the increase in the  Partnership's net income was an increase in share of income
from partnerships due to a distribution in excess of basis at one property,  and
increased  rental  income at  another  property  partially  offset by  increased
operating expenses at one property and the cessation of share of income from two
properties sold during the 2002 period. Also contributing to the increase in the
Partnership's  net income  were a decrease  in  interest  expense due to a lower
purchase money note balance,  and nominal  decreases in amortization of deferred
costs and general and administrative expenses. Partially offsetting the increase
in the Partnership's net income were a decrease in interest revenue due to lower


                                      -23-

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


interest  rates in  2002,  and an  increase  in  professional  fees  related  to
attorneys' fees for the Wellington Woods litigation.

     The  Partnership's net income for the nine month period ended September 30,
2002,  decreased  from the  corresponding  period  in 2001,  primarily  due to a
decrease  in gain from  extinguishment  of debt,  and a gain on  disposition  of
investment in partnership  recognized in 2001 but not in 2002.  Contributing  to
the  decrease  in the  Partnership's  net  income  were a decrease  in  interest
revenue,  and an increase in professional  fees primarily  related to attorneys'
fees  for the  Natick  Associates  (DeAngelis  Manor)  and  Diakonia  Associates
(Matthew XXV) purchase money note settlements. Partially offsetting the decrease
in the  Partnership's  net  income  was an  increase  in  share of  income  from
partnerships  related to distributions  received from two properties in 2002 but
not in 2001, and a decrease in operating  expenses at two properties offset by a
decrease in rental income at one property,  an increase in operating expenses at
another  property and the cessation of share of income from two properties  sold
in 2002.  Further offsetting the decrease in the Partnership's net income were a
decrease in interest expense, as discussed above, and a decrease in amortization
of deferred costs.

     For financial reporting purposes, the Partnership,  as a limited partner in
the Local  Partnerships,  does not record losses from the Local  Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result,  the  Partnership's  share of income from partnerships for the three and
nine month periods ended  September 30, 2002 did not include  losses of $169,901
and  $623,582,  respectively,  compared  to  excluded  losses  of  $119,661  and
$469,451,  for the  three and nine  month  periods  ended  September  30,  2001,
respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during the nine month period ended September 30, 2002.


Item 3. Controls and Procedures
        -----------------------

     In October 2002,  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-14 and 15d-14.  Based on that  evaluation,  the Principal
Executive   Officer  and  Principal   Financial   Officer   concluded  that  the
Partnership's  disclosure controls and procedures are effective 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. In addition,  there
have been no significant  changes in the  Partnership's  internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of the most recent evaluation.


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  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.

                                      -24-

<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information - Continued
        -----------------

                                  Tender offers
                                  -------------

     On December 5, 2000, Equity Resources Lexington Fund (Lexington)  initiated
an unregistered tender offer to purchase  approximately 1,200 of the outstanding
Units in the  Partnership at a price of $40 per Unit; the offer expired  January
3, 2001.  Lexington is unaffiliated with the Partnership or the Managing General
Partner.  The price offered was determined solely at the discretion of Lexington
and does not necessarily represent the fair market value of each Unit.

     In December 2000, Sierra Capital initiated an unregistered  tender offer to
purchase an unspecified  number of the outstanding Units in the Partnership at a
price of $50 per Unit;  the offer  expired  January 3, 2001.  Sierra  Capital is
unaffiliated  with the Partnership or the Managing  General  Partner.  The price
offered was  determined  solely at the discretion of Sierra Capital and does not
necessarily represent the fair market value of each Unit.

     On March 15, 2001, Bond Purchase,  L.L.C.  (Bond) initiated an unregistered
tender offer to purchase  approximately  3,650 of the  outstanding  Units in the
Partnership at a price of $33 per Unit;  the offer expired April 30, 2001.  Bond
is unaffiliated with the Partnership or the Managing General Partner.  The price
offered was determined solely at the discretion of Bond and does not necessarily
represent the fair market value of each Unit.

     The  Managing  General  Partner did not  express  any opinion and  remained
neutral toward the offers for the purchase of Units described above.

     On November 29,  2001,  Lexington  initiated a  registered  tender offer to
purchase up to 14,700 of the outstanding  Units in the Partnership at a price of
$40 per Unit; the offer expired December 29, 2001.

     In response to the  Lexington  tender  offer,  on December  12,  2001,  the
Managing  General Partner filed a Schedule  14D-9. In that filing,  the Managing
General  Partner  recommended  that Limited  Partners reject the Lexington offer
because it viewed the offer price as inadequate.

     During 2001, a number of investors  sold their Units in the  Partnership to
other investors as a result of the  unregistered  tender offers described above.
If more than five percent of the total  outstanding Units in the Partnership are
transferred  due to sale in any one calendar year (not counting  certain  exempt
transfers),  the Partnership could be taxed as a "publicly traded  partnership,"
with potentially  severe tax implications for the Partnership and its investors.
Specifically,  the Partnership  could be taxed as a corporation  and, if so, the
income and losses from the  Partnership  would no longer be considered a passive
activity.  From January 1, 2001, through July 16, 2001, the Partnership received
sale  transfer  requests  for  approximately  4.9%  of  the  outstanding  Units.
Accordingly,  to remain within the five percent safe harbor,  effective July 16,
2001,  the Managing  General  Partner  halted  recognition of any transfers that
would exceed the safe harbor  limit  through  December  31,  2001.  As a result,
transfers  of  Units  due to  sales  transactions  were  not  recognized  by the
Partnership  between July 17, 2001 and  December  31, 2001.  The halt was lifted
effective  January 1, 2002.  For the  calendar  year 2002 to November  12, 2002,
Units  transferred  have  not  exceeded  4.9% of the  total  outstanding  Units;
therefore, the Partnership has not halted recognition of transfers.

                                      -25-

<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information - Continued
        -----------------

                               Cash distributions
                               ------------------

     On April 27, 2001, the  Partnership  made a cash  distribution  of $733,670
($10.00 per Unit) to Additional  Limited  Partners who were holders of record as
of April 1, 2001. The  distribution was a result of the sale of Wollaston Manor.
On June 28, 2002, the  Partnership  made a cash  distribution of $586,896 ($8.00
per Unit) to Additional  Limited  Partners who were holders of record as of June
1,  2002.  The  distribution  was a result of the sales of  DeAngelis  Manor and
Matthew XXV.

     On September 11, 2002, the Partnership made a cash  distribution of $37,887
to  the  General  Partners  and  Initial  and  Special  Limited  Partners.   The
distribution from cash resources accumulated from operations, distributions from
Local Partnerships and sales of eleven properties was made after a review of the
Partnership  Agreement indicated that these amounts should have been distributed
in prior years when  distributions from these sources were paid only to investor
Limited Partners.


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

     a.   Exhibits

          Exhibit No.            Description
          -----------            -----------

               99                Certification of Periodic Financial Report
                                 Pursuant to 18 U.S.C. Section 1350

     b.   No  Reports  on Form 8-K were  filed  with the  Commission  during the
          quarter ended September 30, 2002.

All other Items are not applicable.

                                      -26-

<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




November 12, 2002                      by:  /s/ Michael J. Tuszka
-----------------                           ------------------------------------
DATE                                        Michael J. Tuszka
                                              Vice President
                                              and Chief Accounting Officer
                                              (Principal Financial Officer
                                              and Principal Accounting Officer)

                                      -27-

<PAGE>
                        CERTIFICATION OF QUARTERLY REPORT
                       PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


     I,   Michael J. Tuszka, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of CAPITAL REALTY
          INVESTORS-IV LIMITED PARTNERSHIP;

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

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

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee of the  registrant's  board of directors  (or persons
          performing the equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,  summarize,  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


                                      -28-

<PAGE>



     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.


                                    CAPITAL REALTY INVESTORS-IV
                                      LIMITED PARTNERSHIP
                                    --------------------------------------------
                                    (Issuer)

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



November 12, 2002                        by:  /s/ Michael J. Tuszka
-----------------                             ----------------------------------
DATE                                          Michael J. Tuszka,
                                                Vice President
                                                and Chief Accounting Officer
                                                (Principal Financial Officer)


     This  certification  is made solely for purpose of 18 U.S.C.  Section 1350,
subject  to the  knowledge  standard  contained  therein,  and not for any other
purpose.

                                      -29-

<PAGE>
                        CERTIFICATION OF QUARTERLY REPORT
                       PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


     I,   William B. Dockser, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of CAPITAL REALTY
          INVESTORS-IV LIMITED PARTNERSHIP;

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

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

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities, particularly during the period in which the periodic reports
          are being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee of the  registrant's  board of directors  (or persons
          performing the equivalent functions):


     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,  summarize,  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


                                      -30-

<PAGE>


     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.


                                    CAPITAL REALTY INVESTORS-IV
                                      LIMITED PARTNERSHIP
                                    --------------------------------------------
                                    (Issuer)

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



November 12, 2002                        by:  /s/ William B. Dockser
-----------------                             ----------------------------------
DATE                                          William B. Dockser,
                                                Director, Chairman of the Board,
                                                and Treasurer
                                                (Principal Executive Officer)


     This  certification  is made solely for purpose of 18 U.S.C.  Section 1350,
subject  to the  knowledge  standard  contained  therein,  and not for any other
purpose.


                                      -31-