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




                    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 June 30, 2001


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



                         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 JUNE 30, 2001




                                                                           Page

Part I - FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheets
               - June 30, 2001 and December 31, 2000.......................  1

           Consolidated Statements of Operations and Accumulated Losses
               - for the three and six months ended June 30, 2001 and 2000.  2

           Consolidated Statements of Cash Flows
               - for the six months ended June 30, 2001 and 2000...........  3

           Notes to Consolidated Financial Statements
               - June 30, 2001 and 2000....................................  4

Item 2.    Management's Discussion and Analysis of Financial Condition
               and Results of Operations................................... 18


PART II - OTHER INFORMATION

Item 3.    Defaults Upon Senior Securities................................. 23

Item 5.    Other Information............................................... 23

Item 6.    Exhibits and Reports on Form 8-K................................ 24

Signature.................................................................. 25

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

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS



                                     ASSETS


<TABLE>
<CAPTION>
                                                                                        June 30,        December 31,
                                                                                          2001             2000
                                                                                      -------------    ------------
                                                                                       (Unaudited)
<S>                                                                                   <C>              <C>
Investments in and advances to partnerships .......................................   $  26,793,119    $  26,150,075
Investment in partnership held for sale ...........................................            --            474,054
Investment in partnerships held in escrow .........................................         120,550        4,160,314
Cash and cash equivalents .........................................................       6,105,238        8,049,221
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $348,949 and $338,458, respectively ..........         490,346          500,837
Property purchase costs,
  net of accumulated amortization of $284,713 and $276,267, respectively ..........         390,967          399,413
Sales proceeds receivable .........................................................            --          1,545,628
Other assets ......................................................................           1,127             --
                                                                                      -------------    -------------

      Total assets ................................................................   $  33,901,347    $  41,279,542
                                                                                      =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships ................................................   $  28,880,081    $  34,535,081
Accrued interest payable ..........................................................      93,471,418      103,424,862
Accounts payable and accrued expenses .............................................         142,270          474,328
                                                                                      -------------    -------------

      Total liabilities ...........................................................     122,493,769      138,434,271
                                                                                      -------------    -------------

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 .........................................      (9,122,210)      (8,388,540)
    Offering costs ................................................................      (7,562,894)      (7,562,894)
    Accumulated losses ............................................................    (145,410,818)    (154,706,795)
                                                                                      -------------    -------------

      Total partners' deficit .....................................................     (88,592,422)     (97,154,729)
                                                                                      -------------    -------------

      Total liabilities and partners' deficit .....................................   $  33,901,347    $  41,279,542
                                                                                      =============    =============

</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 six months ended
                                                                   June 30,                         June 30,
                                                       ------------------------------    ------------------------------
                                                            2001             2000             2001            2000
                                                       -------------    -------------    -------------    -------------
<S>                                                    <C>              <C>              <C>              <C>
Share of income from partnerships ..................   $     685,531    $   1,580,011    $   1,154,950    $   2,017,314
                                                       -------------    -------------    -------------    -------------

Other revenue and  expenses:

  Revenue:
    Interest .......................................          67,419          113,411          168,059          217,154
                                                       -------------    -------------    -------------    -------------

  Expenses:
    Interest .......................................       2,618,160        3,116,849        5,278,668        6,275,630
    Management fee .................................          93,750           93,750          187,500          187,500
    General and administrative .....................          80,457           89,122          160,974          156,223
    Professional fees ..............................          42,625           56,609           85,250           86,270
    Amortization of deferred costs .................           9,469           11,811           18,937           23,623
                                                       -------------    -------------    -------------    -------------

                                                           2,844,461        3,368,141        5,731,329        6,729,246
                                                       -------------    -------------    -------------    -------------

      Total other revenue and expenses .............      (2,777,042)      (3,254,730)      (5,563,270)      (6,512,092)
                                                       -------------    -------------    -------------    -------------

Loss before gain on disposition
  of investment in partnership .....................      (2,091,511)      (1,674,719)      (4,408,320)      (4,494,778)
                                                       -------------    -------------    -------------    -------------

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

Loss before extraordinary gain
  from extinguishment of debt ......................      (1,415,120)      (1,674,719)      (3,731,929)      (4,494,778)

Extraordinary gain from extinguishment of debt .....       3,893,128             --         13,027,906             --
                                                       -------------    -------------    -------------    -------------

Net income (loss) ..................................       2,478,008       (1,674,719)       9,295,977       (4,494,778)

Accumulated losses, beginning of period ............    (147,888,826)    (166,124,442)    (154,706,795)    (163,304,383)
                                                       -------------    -------------    -------------    -------------

Accumulated losses, end of period ..................   $(145,410,818)   $(167,799,161)   $(145,410,818)   $(167,799,161)
                                                       =============    =============    =============    =============


Net income (loss) allocated
  to General Partners (1.51%) ......................   $      37,418    $     (25,288)   $     140,369    $     (67,871)
                                                       =============    =============    =============    =============

Net income (loss) allocated
  to Initial and Special Limited Partners (1.49%) ..   $      36,922    $     (24,953)   $     138,510    $     (66,972)
                                                       =============    =============    =============    =============

Net income (loss) allocated
  to Additional Limited Partners (97%) .............   $   2,403,668    $  (1,624,478)   $   9,017,098    $  (4,359,935)
                                                       =============    =============    =============    =============

Net income (loss) per unit of Additional Limited
  Partner Interest based on 73,500 units outstanding   $       32.70    $      (22.10)   $      122.68    $      (59.32)
                                                       =============    =============    =============    =============
</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 six months ended
                                                                                              June 30,
                                                                                   ----------------------------
                                                                                       2001            2000
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
Cash flows from operating activities:
  Net income (loss) ............................................................   $  9,295,977    $ (4,494,778)

  Adjustments  to  reconcile  net  income  (loss) to net cash used in  operating
    activities:
    Share of income from partnerships ..........................................     (1,154,950)     (2,017,314)
    Amortization of discount on purchase money notes ...........................           --            42,968
    Amortization of deferred costs .............................................         18,937          23,623
    Gain on disposition of investment in partnership ...........................       (676,391)           --
    Extraordinary gain from extinguishment of debt .............................    (13,027,906)           --

    Changes in assets and liabilities:
      Increase in other assets .................................................         (1,127)         (1,369)
      Increase in accrued interest payable .....................................      5,278,668       6,232,662
      Payment of purchase money note interest ..................................       (134,119)       (601,721)
      Decrease in accounts payable and accrued expenses ........................       (332,058)        (58,013)
                                                                                   ------------    ------------

        Net cash used in operating activities ..................................       (732,969)       (873,942)
                                                                                   ------------    ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships ...................................        527,028       1,092,057
  Decrease in sales proceeds receivable ........................................      1,545,628            --
  Proceeds from disposition of investment in partnership .......................      1,135,324            --
                                                                                   ------------    ------------

        Net cash provided by investing activities ..............................      3,207,980       1,092,057
                                                                                   ------------    ------------

Cash flows from financing activities:
  Distribution to Additional Limited Partners ..................................       (733,670)           --
  Payoff of purchase money note principal and related interest .................     (3,685,324)        (50,000)
                                                                                   ------------    ------------

        Net cash used in financing activities ..................................     (4,418,994)        (50,000)
                                                                                   ------------    ------------

Net (decrease) increase in cash and cash equivalents ...........................     (1,943,983)        168,115

Cash and cash equivalents, beginning of period .................................      8,049,221       7,607,687
                                                                                   ------------    ------------

Cash and cash equivalents, end of period .......................................   $  6,105,238    $  7,775,802
                                                                                   ============    ============




Supplemental disclosure of cash flow information:
  Cash paid during the period for interest .....................................   $  1,059,443    $    601,721
                                                                                   ============    ============
</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

                             June 30, 2001 and 2000

                                   (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 June 30,  2001,  and the  results  of its
operations  for the three and six months  ended June 30, 2001 and 2000,  and its
cash  flows for the six  months  ended June 30,  2001 and 2000.  The  results of
operations  for the interim  periods  ended June 30, 2001,  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 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  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, 2000.


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 purchase money notes having an aggregate principal
balance of $28,880,081 plus aggregate accrued interest of $93,471,418 as of June
30, 2001,  are payable in full upon the earliest of: (i) sale or  refinancing of
the respective Local Partnership's rental property;  (ii) payment in full of the
respective Local Partnership's permanent loan; or (iii) maturity.

     The maturity  dates of the purchase  money notes  related to the  following
properties were extended during 2001 and 2000.

                                                  Original      Extended
         Property                  Principal      Maturity      Maturity
         --------                  ----------     --------      --------
         Jewish Federation         $1,350,000     10/31/99      10/31/04
         Harborview Apartments      3,000,000     08/01/99      08/01/04
         Cedar Point                1,320,000     08/30/99      08/30/04
         Thornwood House            1,775,000     08/30/99      08/30/04
         Highland Village           1,100,000     10/31/99      10/31/04


                                       -4-

<PAGE>

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended.

         Property                            Principal          Maturity
         --------                           ----------          --------
         De Angelis Manor                   $1,015,000          07/01/99
         Matthew XXV                         1,020,000          07/01/99
         Crescent Gardens                      434,000          07/31/99
         Canonsburg House                    1,540,000          12/01/99
         Char House                          1,530,000          12/01/99
         Liberty Tower                       1,440,000          12/01/99
         Pilgrim Tower East                  1,650,000          12/01/99
         Wellington Woods                      485,000          12/01/99
         Pilgrim Tower North                 2,165,000          04/30/00
         Valley View                           920,000          01/01/01 (1)
         Westport Village                      840,000          01/01/01 (1)
         Glenridge Gardens                     690,000          01/01/01 (2)

     (1)  Extended in accordance with the forbearance agreement.
     (2)  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 2000 or 2001.

         Property                 Principal      Date               Disposition
         --------                ----------      ----               -----------
         Holiday Village         $1,370,000      July 2000          Paid off
         Redden Gardens           1,330,000      September 2000     Transferred
         Wollaston Manor          2,125,000      December 2000      Paid off
         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

     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 noteholders may have the right to foreclose on
the Partnership's  interest in the related Local Partnership.  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  39.6%.  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.

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     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 June 30, 2002,  and which remain  unpaid or  unextended as of August 10,
2001.  Excluded from the following  chart are purchase money notes which matured
through June 30, 2001, and which have been paid off,  cancelled,  or extended on
or before August 10, 2001.

<TABLE>
<CAPTION>

                                                                          Aggregate
                                               Aggregate                   Accrued                  Carrying Amount
                                               Principal                   Interest                 of Partnership's
                   Number of                    Balance                    Balance                  Investments in
   Purchase        Underlying                    as of                      as of                   Underlying Local
  Money Note         Local       Percentage       June       Percentage     June       Percentage   Partnerships as      Percentage
(PMN) Maturity    Partnerships    of Total      30, 2001      of Total     30, 2001     of Total    of June 30, 2001      of Total
--------------    ------------   ----------    -----------   ---------    ----------   ----------   -----------------    ----------
<S>               <C>            <C>           <C>           <C>          <C>          <C>          <C>                  <C>
3rd Quarter 1999        5            17%       $ 4,229,000         15%    $11,808,233        13%       $ 7,809,013            29%
4th Quarter 1999        5            17%         6,645,000         23%     21,494,293        23%         3,841,750            14%
2nd Quarter 2000        1             3%         2,165,000          8%     14,819,868        16%         2,621,199            10%
1st Quarter 2001        1             3%           690,000          2%      2,409,633         2%                --            --
                     ----          ----        -----------      -----     -----------      ----        -----------          ----
Total through
 6/30/2002             12            40%       $13,729,000         48%    $50,532,027        54%       $14,271,962            53%
                     ====          ====        ===========      =====     ===========      ====        ===========          ====
Total, Local
  Partnerships         29 (1)       100%       $28,880,081        100%    $93,471,418       100%       $26,793,119           100%
                     ====          ====        ===========      =====     ===========      ====        ===========          ====
</TABLE>


(1)  Twenty-one of the 29 Local  Partnerships  have related  purchase money note
     obligations.

     The  Managing  General  Partner  is  continuing  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

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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 39.6%.  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 29 Local  Partnerships in which the Partnership
is invested  as of June 30,  2001,  the 12 Local  Partnerships  with  associated
purchase  money notes which mature through June 30, 2002 and which remain unpaid
or unextended as of August 10, 2001,  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, 2000                 17%                      $602,669
    December 31, 1999                 16%                      $450,414

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity of its debt  obligations  and to seek  strategies  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 six  month  periods  ended  June 30,  2001 was  $2,618,160  and  $5,278,668,
respectively,  and $3,116,849 and $6,275,630 for the three and six month periods
ended June 30, 2000,  respectively.  Amortization  of discount on purchase money
notes increased  interest expense for the three and six month periods ended June
30, 2001 and 2000 by $0 and $42,968,  respectively. The accrued interest payable
on the purchase money notes of $93,471,418 and  $103,424,862 as of June 30, 2001
and December 31, 2000, 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.  As of August
10,  2001,   aggregate   principal  and  accrued   interest  of  $4,510,000  and
$15,953,708,  respectively,  were due.  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 continues to negotiate  with
the plaintiff. If no resolution is reached, hearings will likely be scheduled in
2001.  No action  has been  taken to date by the  holders  of the three  smaller
purchase money notes. There is no assurance that an extension will

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

be  obtained,  or that the  Partnership  will be able to retain its  interest in
these three properties.

                                 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
extraordinary gain from  extinguishment of debt of $2,164,719 for both financial
statement  purposes and in cancellation  of indebtedness  income 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 $676,391 and in extraordinary gain from  extinguishment of debt of $3,029,351
for financial  statement  purposes in 2001,  and a total gain of $4,973,428  for
federal tax purposes in 2001.

     Due to the  impending  sale of the  property  related to the  Partnership's
investment in Cottonwood Park, the Partnership's basis in the Local Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled $474,054, was reclassified to investment in partnership held for sale in
the accompanying consolidated balance sheet at December 31, 2000.

                                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

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

predict  the course of action  with regard to the Second  Crescent  Note.  As of
August 10, 2001,  principal  and accrued  interest of $434,000  and  $1,189,891,
respectively,  were due on the  Second  Crescent  Note.  The  property  recently
entered  the  Mark-to-Market  program,  and the  associated  loan  restructuring
requirement will likely inhibit the local managing general  partner's ability to
sell this property.  It is  anticipated  that the property will now operate at a
break-even level, and that future cash distributions are highly unlikely.

                                De Angelis Manor
                                ----------------

     The  Partnership  defaulted on its purchase  money notes  related to Natick
Associates (De Angelis  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 August 10, 2001,  aggregate
principal and accrued interest of $1,015,000 and $3,413,513,  respectively, were
due. The Partnership is currently trying to negotiate a discounted payoff of the
purchase  money notes in  connection  with a sale of the  property.  There is no
assurance that a discounted payoff of the purchase money notes will be obtained,
or that a sale will occur.

                                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  August  10,  2001,  aggregate
principal and accrued  interest of $690,000 and $2,438,523,  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  is
currently  negotiating  an  additional  one year  extension of the maturity date
through January 2002.  There is no assurance that an extension will be obtained.
As of August 10, 2001,  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 the Local
Partnership to the noteholder, the Partnership's basis in the Local Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled  $36,247,  has been  reclassified to investment in partnerships  held in
escrow in the  accompanying  consolidated  balance  sheets at June 30,  2001 and
December 31, 2000.

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

     The  Partnership  defaulted on its purchase money notes related to Highland
Village Associates (Highland Village) on October 31, 1999 when the notes matured
and were not paid. The default amount included principal and accrued interest of
$1,100,000 and $4,123,565,  respectively. In April 2001, the Partnership and the
noteholders  agreed to extend the maturity  date of the purchase  money notes to
October 31, 2004.  The  noteholders  retain the right to accelerate the maturity
date of the notes on six months' notice. The local managing general

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

partner and the noteholders are jointly  exploring  various options to refinance
with  Massachusetts  Housing  Finance Agency (MHFA) the HUD Section 236 interest
rate subsidized  mortgage loan related to this property.  In connection with the
extension of the purchase money note, the Partnership and its affiliated general
partner  did not retain any  consent  rights to approve a sale,  refinancing  or
other restructuring. There is no assurance that refinancing of the mortgage loan
will occur.

                                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 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 Hometown  Village was transferred to the noteholders.
The  transfer  of  the  Partnership's   interest  in  Hometown  Village  to  the
noteholders  resulted  in  extraordinary  gain  from  extinguishment  of debt of
$4,271,262  for financial  statement  purposes in 2001, and in  cancellation  of
indebtedness  income of  approximately  $7.9 million for federal tax purposes in
2001.

     Due to the transfer of the Partnership's  interest in Hometown Village, the
Partnership's  basis  in the  Local  Partnership,  along  with  net  unamortized
acquisition  fees and property  purchase costs,  which totaled  $3,121,315,  was
reclassified  to investment in partnerships  held in escrow in the  accompanying
consolidated balance sheet at December 31, 2000.

                                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  HUD  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.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                   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 August  10,  2001,  aggregate
principal and accrued interest of $1,020,000 and $3,444,131,  respectively, were
due. The Partnership is currently trying to negotiate a discounted payoff of the
purchase money notes in connection with a potential sale of the property.  There
is no  assurance  that a discounted  payoff of the purchase  money notes will be
obtained, or that a sale will occur.

                               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. As of
August 10, 2001,  principal and accrued  interest of $1,650,000 and  $3,072,016,
respectively,  were due. The Partnership is currently  negotiating to extend the
maturity  date of the  purchase  money note for five years,  in  exchange  for a
partial  payment.  Alternatively,  the  Partnership  is  negotiating to sell the
Partnership's interest in Pilgrim Tower East to the noteholder over a three-year
period in exchange for the principal  and accrued  interest  outstanding  on the
purchase money note and an annual  payment on the purchase money note.  There is
no assurance that an extension will be obtained, or that a sale will occur.

                               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.  As
of  August  10,  2001,   principal  and  accrued   interest  of  $2,165,000  and
$15,052,158, respectively, were due. The Partnership is currently negotiating to
extend the maturity date of the purchase money note for five years,  in exchange
for a partial payment. Alternatively, the Partnership is negotiating to sell the
Partnership's  interest  in  Pilgrim  Tower  North  to  the  noteholder  over  a
three-year period in exchange for the principal and accrued interest outstanding
on the purchase  money note and an annual  payment on the  purchase  money note.
There is no assurance  that an extension  will be obtained,  or that a sale will
occur.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                 Redden Gardens
                                 --------------

     The  Partnership  defaulted  on its  purchase  money note related to Redden
Development  Company  (Redden  Gardens) on August 31, 1997 when the note matured
and was not paid. The default amount included  principal and accrued interest of
$1,330,000 and $2,783,593,  respectively.  The noteholders extended the maturity
date of the  purchase  money  note  to  January  3,  2000,  at  which  time  the
Partnership  again  defaulted on the purchase money note. In connection with the
extension,  the  Partnership  had placed in escrow  documents  transferring  its
interest in Redden Gardens to the noteholders, to be released to the noteholders
upon a  future  default  by the  Partnership  on the  purchase  money  note.  On
September 12, 2000, the  noteholders  exercised their right to have the escrowed
documents released to them.

                                 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.  As of
June 30,  2001,  aggregate  principal  and  accrued  interest  of  $740,000  and
$2,094,568,  respectively,  were due. On July 23, 2001, the Partnership paid off
the  purchase  money  notes at a discount.  The  discounted  payoff  resulted in
extraordinary  gain from  extinguishment  of debt of  $2,141,273  for  financial
statement  purposes in 2001 (which will be reflected in the Partnership's  third
quarter  financial  statements),  and in cancellation of indebtedness  income of
$2,141,273 for federal tax purposes in 2001.

                                 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  extraordinary  gain from  extinguishment  of debt of $2,698,797 for
financial  statement  purposes in 2001,  and in a cancellation  of  indebtedness
income of approximately $5.9 million for federal tax purposes in 2001.

     Due to the transfer of the Partnership's  interest in Scoville Center,  the
Partnership's  basis  in the  Local  Partnership,  along  with  net  unamortized
acquisition  fees and  property  purchase  cost,  which  totaled  $918,448,  was
reclassified  to investment in partnerships  held in escrow in the  accompanying
consolidated balance sheet at December 31, 2000.

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                               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
extraordinary  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 August 10,  2001,
aggregate   principal   and  accrued   interest  of  $920,000  and   $2,037,261,
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 August 10, 2001. 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,  has been reclassified to investment in partnerships held
in escrow in the accompanying  consolidated  balance sheets at June 30, 2001 and
December 31, 2000.

                                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 August 10, 2001, aggregate principal and accrued interest of
$485,000  and  $2,736,713,  respectively,  were due.  The  Partnership  had been
negotiating  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.  Subsequently,  the plaintiff and the second  purchase money
noteholder filed an amended complaint.

                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

In late April 2001,  the parties  agreed in principle to a settlement  involving
extension of the maturity  date of the purchase  money notes to January 2, 2004,
in  exchange  for a partial  payment.  The  Partnership's  interest in the Local
Partnership  will be held in  escrow.  The  noteholders  will  have an option to
acquire the  interest  after the extended  maturity  date of the notes for their
then current balances. The settlement documents are being negotiated.  There can
be no assurance that the settlement will be consummated.

                                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 August 10, 2001,  principal  and
accrued  interest  of  $840,000  and  $1,841,273,  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 August 10, 2001.  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,   has  been   reclassified  to  investment  in
partnerships held in escrow in the accompanying  consolidated  balance sheets at
June 30, 2001 and December 31, 2000.

                                 Wollaston Manor
                                 ---------------

     The Partnership  defaulted on its purchase money notes related to Wollaston
Manor Associates (Wollaston Manor) on October 1, 1999 when the notes matured and
were not paid.  The default  amount  included  aggregate  principal  and accrued
interest of  $2,125,000  and  $4,111,380,  respectively.  On December  28, 2000,
Wollaston Manor was sold.  Proceeds received by the Partnership from the sale of
the  property  were used to pay off, at a  discount,  the  purchase  money notes
related to  Wollaston  Manor.  The sale of Wollaston  Manor  resulted in gain on
disposition of investments in  partnerships  of $4,135,937 and in  extraordinary
gain from  extinguishment of debt of $2,518,332 for financial statement purposes
in 2000,  and in a total gain of $8,868,806 for federal tax purposes in 2000. In
January  2001,  the  Managing  General  Partner  was paid a  disposition  fee of
$186,682 relating to the sale.

                                      -14-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     To cover operating  deficits  incurred in prior years by Lakes of Northdale
Limited  Partnership  (Lakes  of  Northdale),  the  Partnership  advanced  funds
totaling  $54,500 as of both June 30, 2001 and December  31,  2000.  No advances
have been made to Lakes of Northdale since September  1989.  These  non-interest
bearing  advances are payable from cash flow of Lakes of Northdale after payment
of first  mortgage debt service and after  satisfaction  by the  Partnership  of
certain other  interest  obligations on the purchase money notes relating to the
Local Partnership.  For financial reporting  purposes,  these advances have been
reduced  to  zero  by the  Partnership  as a  result  of  losses  at  the  Local
Partnership level during prior years.

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

     Combined  statements of operations for the 29 and 35 Local  Partnerships in
which the Partnership  was invested as of June 30, 2001 and 2000,  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 for the three and six months ended June 30, 2001 and 2000 includes
information for the Local Partnerships through date of transfer or sale.


                        COMBINED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                               For the three months ended          For the six months ended
                                                        June 30,                          June 30,
                                               --------------------------         --------------------------
                                                  2001             2000               2001            2000
                                               ----------       ----------        ------------     ----------
         <S>                                   <C>              <C>               <C>              <C>
         Revenue:
           Rental                              $7,672,488       $8,656,906        $15,413,811      $17,355,882
           Other, principally interest            584,507          503,931          1,173,820        1,090,709
                                               ----------       ----------        -----------      -----------

             Total revenue                      8,256,995        9,160,837         16,587,631       18,446,591
                                               ----------       ----------        -----------      -----------

         Expenses:
           Operating                            4.898,485        4,591,661          9,994,719       10,319,535
           Interest                             1,294,030        1,398,022          2,588,059        2,796,045
           Depreciation and amortization        1,575,685        1,847,340          3,151,369        3,694,678
                                               ----------       ----------        -----------      -----------

             Total expenses                     7,768,200        7,837,023         15,734,147       16,810,258
                                               ----------       ----------        -----------      -----------
         Net income                            $  488,795       $1,323,814        $   853,484      $ 1,636,333
                                               ==========       ==========        ===========      ===========
</TABLE>


     As of June 30, 2001 and 2000, the Partnership's  share of cumulative losses
to date for ten and six of the 29 and 35 Local Partnerships  exceeded the amount
of the Partnership's  investments in and advances to those Local Partnerships by
$13,081,155  and  $12,662,790,  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.

                                      -15-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


3.   AFFORDABLE HOUSING LEGISLATION

     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 one year.  Expiring  Section 8 HAP contracts  with rents that exceed
100% of fair market rents could be renewed for 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  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. Each
affected property may undergo debt  restructuring  according to terms determined
by an individual property and operations  evaluation.  This may involve reducing
the first mortgage loan balance to an amount supportable by the property, taking
into account the property's  operating  expenses and reduced income. The balance
of the amount  written down from the first  mortgage loan will be converted to a
non-performing but accruing (soft) second mortgage loan.

     Two  properties  in which the  Partnership  is invested as of June 30, 2001
have  Section 8 HAP  contracts  which,  as  extended,  will expire in 2001.  The
Section 8 HAP contracts  cover all of the apartment  units in Crescent  Gardens,
and 20% of the apartment units in Glenridge  Gardens.  Crescent Gardens recently
entered the Mark-to-Market  program. Both properties have related purchase money
notes which have matured, as discussed in Note 2.a.

     With the  uncertainty  of continued  project-based  Section 8 subsidies for
properties  with expiring  Section 8 HAP  contracts,  there is no assurance that
rental  properties  with Section 8 HAP  contract  rents in excess of fair market
rents will be able to maintain the rental income and occupancy  levels necessary
to pay  operating  costs and debt  service.  As a result,  it is not possible to
predict  the  impact on the Local  Partnerships'  operations  and the  resulting
impact on the Partnership's investments in and advances to Local Partnerships at
this time. As of June 30, 2001, the Partnership's  remaining investment in Local
Partnerships with Section 8 HAP contracts expiring in 2001 was $0.


4.   RELATED PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to reimburse the Managing  General  Partner for its direct expenses
in connection with managing the  Partnership.  The Partnership  paid $59,466 and
$129,934 for the three and six month periods  ended June 30, 2001  respectively,
and  $66,682 and  $137,224  for the three and six month  periods  ended June 30,
2000,  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

                                      -16-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

                                   (Unaudited)


4.   RELATED PARTY TRANSACTIONS - Continued

all other  expenses  of the  Partnership  are  paid.  The  Partnership  paid the
Managing  General  Partner a Management  Fee of $93,750 and $187,500 for each of
the three and six month periods ended June 30, 2001 and 2000.

     The Managing General Partner and/or its affiliates may receive a fee of not
more than two percent of the sales 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 sales  proceeds and making  certain  minimum  distributions  to limited
partners.  No such  fees were  earned by the  Managing  General  Partner  or its
affiliates  for the six month  periods  ended June 30, 2001 or 2000.  In January
2001,  the  Managing  General  partner  was paid a  disposition  fee of $186,682
relating to the sale of Wollaston Manor in December 2000.



                                      -17-

<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 one year.  Expiring  Section 8 HAP contracts  with rents that exceed
100% of fair market rents could be renewed for 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  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. Each
affected property may undergo debt  restructuring  according to terms determined
by an individual property and operations  evaluation.  This may involve reducing
the first mortgage loan balance to an amount supportable by the property, taking
into account the property's  operating  expenses and reduced income. The balance
of the amount  written down from the first  mortgage loan will be converted to a
non-performing but accruing (soft) second mortgage loan.

     Two  properties  in which the  Partnership  is invested as of June 30, 2001
have  Section 8 HAP  contracts  which,  as  extended,  will expire in 2001.  The
Section 8 HAP contracts  cover all of the apartment  units in Crescent  Gardens,
and 20% of the apartment units in Glenridge  Gardens.  Crescent Gardens recently
entered the Mark-to-Market  program. Both properties have related purchase money
notes which have  matured,  as discussed  in the notes to  financial  statements
contained in Part I, Item 1, hereof.

     With the  uncertainty  of continued  project-based  Section 8 subsidies for
properties  with expiring  Section 8 HAP  contracts,  there is no assurance that
rental  properties  with Section 8 HAP  contract  rents in excess of fair market
rents will be able to maintain the rental income and occupancy  levels necessary
to pay  operating  costs and debt  service.  As a result,  it is not possible to
predict  the  impact on the Local  Partnerships'  operations  and the  resulting
impact on the Partnership's investments in and advances to Local Partnerships at
this time. As of June 30,

                                      -18-

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

2001, the Partnership's  remaining investment in Local Partnerships with Section
8 HAP contracts expiring in 2001 was $0.

     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  Interest Subsidy 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.

     The Managing General Partner is considering new strategies to deal with the
ever changing  environment  of affordable  housing  policy.  The Section 236 and
Section  221(d)(3)  mortgage loans may be eligible for pre-payment in their 18th
year or later.  Properties  with  expiring  Section 8 HAP  contracts  may become
convertible  to  market-rate  apartment  properties.  Currently few lenders will
provide  financing  either to prepay  existing  mortgage loans of these types or
provide  additional  funds to allow a property to convert to market-rate  units.
Where  opportunities  exist,  the Managing General Partner will continue to work
with the Local  Partnerships to develop  strategies that make economic sense for
all parties involved.

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

     The Partnership's liquidity, with unrestricted cash resources of $6,105,238
as of June 30, 2001, along with anticipated  future cash  distributions from the
Local  Partnerships,  is  expected  to be  adequate  to  meet  its  current  and
anticipated operating cash needs. 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.  As of  August  10,  2001,  there  were  no  material
commitments for capital expenditures.

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the form of purchase money notes having an aggregate principal
balance of $28,880,081 plus aggregate accrued interest of $93,471,418 as of June
30, 2001,  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.

                                      -19-

<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 2000.

                                                     Original         Extended
         Property                   Principal        Maturity         Maturity
         --------                   ---------        --------         --------
         Jewish Federation          $1,350,000       10/31/99         10/31/04
         Harborview Apartments       3,000,000       08/01/99         08/01/04
         Cedar Point                 1,320,000       08/30/99         08/30/04
         Thornwood House             1,775,000       08/30/99         08/30/04
         Highland Village            1,100,000       10/31/99         10/31/04

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended.

         Property                            Principal          Maturity
         --------                           ----------          --------
         De Angelis Manor                   $1,015,000          07/01/99
         Matthew XXV                         1,020,000          07/01/99
         Crescent Gardens                      434,000          07/31/99
         Canonsburg House                    1,540,000          12/01/99
         Char House                          1,530,000          12/01/99
         Liberty Tower                       1,440,000          12/01/99
         Pilgrim Tower East                  1,650,000          12/01/99
         Wellington Woods                      485,000          12/01/99
         Pilgrim Tower North                 2,165,000          04/30/00
         Valley View                           920,000          01/01/01 (1)
         Westport Village                      840,000          01/01/01 (1)
         Glenridge Gardens                     690,000          01/01/01 (2)

     (1)  Extended in accordance with the forbearance agreement.
     (2)  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 2000 or 2001.

         Property                 Principal      Date              Disposition
         --------                 ---------      ----              -----------
         Holiday Village          $1,370,000     July 2000         Paid off
         Redden Gardens           1,330,000      September 2000    Transferred
         Wollaston Manor          2,125,000      December 2000     Paid off
         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


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

     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 noteholders may have the

                                      -20-

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

right  to  foreclose  on  the  Partnership's   interest  in  the  related  Local
Partnership.  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 39.6%.
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.

     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 June 30, 2002,  and which remain  unpaid or  unextended as of August 10,
2001.  Excluded from the following  chart are purchase money notes which matured
through June 30, 2001, and which have been paid off,  cancelled,  or extended on
or before August 10, 2001.

<TABLE>
<CAPTION>
                                                                          Aggregate
                                               Aggregate                   Accrued                  Carrying Amount
                                               Principal                   Interest                 of Partnership's
                   Number of                    Balance                    Balance                  Investments in
   Purchase        Underlying                    as of                      as of                   Underlying Local
  Money Note         Local       Percentage       June       Percentage     June       Percentage   Partnerships as      Percentage
(PMN) Maturity    Partnerships    of Total      30, 2001      of Total     30, 2001     of Total    of June 30, 2001      of Total
--------------    ------------   ----------    -----------   ---------    ----------   ----------   -----------------    ----------
<S>               <C>            <C>           <C>           <C>          <C>          <C>          <C>                  <C>
3rd Quarter 1999        5            17%       $ 4,229,000         15%    $11,808,233        13%       $ 7,809,013            29%
4th Quarter 1999        5            17%         6,645,000         23%     21,494,293        23%         3,841,750            14%
2nd Quarter 2000        1             3%         2,165,000          8%     14,819,868        16%         2,621,199            10%
1st Quarter 2001        1             3%           690,000          2%      2,409,633         2%                --            --
                     ----          ----        -----------      -----     -----------      ----        -----------          ----
Total through
 6/30/2002             12            40%       $13,729,000         48%    $50,532,027        54%       $14,271,962            53%
                     ====          ====        ===========      =====     ===========      ====        ===========          ====
Total, Local
  Partnerships         29 (1)       100%       $28,880,081        100%    $93,471,418       100%       $26,793,119           100%
                     ====          ====        ===========      =====     ===========      ====        ===========          ====
</TABLE>

(1)  Twenty-one of the 29 Local  Partnerships  have related  purchase money note
     obligations.


     The  Managing  General  Partner  is  continuing  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

                                      -21-

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

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  39.6%.  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 29 Local Partnerships in which the Partnership is invested as of June 30,
2001,  the 12 Local  Partnerships  with  associated  purchase  money notes which
mature  through June 31, 2002 and which remain unpaid or unextended as of August
10, 2001,  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, 2000              17%                    $602,669
          December 31, 1999              16%                    $450,414

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity of its debt  obligations  and to seek  strategies  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 six month  periods  ended June 30, 2001 and 2000,  net cash  provided by
investing activities,  including the receipt of distributions from partnerships,
was adequate to support operating cash  requirements.  Cash and cash equivalents
decreased  during the six month period ended June 30, 2001,  as net cash used in
financing  activities  for payment of purchase money note  principal,  payoff of
purchase money note interest and  distribution to Additional  Limited  Partners,
plus net cash  used in  operating  activities  exceeded  net  cash  provided  by
investing activities.

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

2000 Versus 1999
----------------

     The Partnership recognized net income for the three month period ended June
30, 2001,  compared to net loss for the  corresponding  period in 2000 primarily
due to extraordinary gain from extinguishment of debt and gain on disposition of
investment in partnership related to the sale of the property related to Shawnee
Heights Limited  Partnership  (Cottonwood Park) and the discounted payoff of the
purchase  money  note  related  to  Tradewinds  West  LDHA  Limited  Partnership
(Tradewinds  Terrace),  as  discussed  in the  notes to  consolidated  financial
statements.  Contributing to net income were a decrease in interest  expense due
to lower purchase money note balances as a result of the extinguishment of debt,
a decrease in general and  administrative  expenses due to reduced  expenses for
quarterly reporting,  and a decrease in professional fees due to lower appraisal
fees.  Partially  offsetting  the  Partnership's  increase  in net income were a
decrease in interest revenue due to lower cash and cash equivalent  balances and
lower  interest  rates  in  2001,  and  a  decrease  in  share  of  income  from
partnerships.  The decrease in share of income from  partnerships  was primarily
due to  increased  operating  expenses at two  properties  and the  cessation of
income from Local  Partnerships sold or transferred,  partially offset by higher
rental income at one property and lower operating expenses at two properties.

                                      -22-

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


     The  Partnership  recognized net income for the six month period ended June
30, 2001,  compared to net loss for the  corresponding  period in 2000 primarily
due to extraordinary gain from  extinguishment of debt related to the discounted
payoff of the purchase money notes related to Chippewa  County Housing  Partners
(Chippewa County) and Tradewinds Terrace, the transfers of partnership interests
to  the  purchase  money  noteholders   related  to  Hometown  Villages  Limited
Partnership  (Hometown  Village) and Beloit Housing Partners  (Scoville Center),
and the sale of Cottonwood  Park, all as discussed in the notes to  consolidated
financial  statements.  Contributing  to net income  were a decrease in interest
expense due to lower purchase money note balances and a decrease in amortization
of  deferred   costs  related  to  the  sale  or  transfer  of  certain  of  the
Partnership's  investments.  Offsetting the Partnership's increase in net income
were a decrease  in  interest  revenue  and a decrease  in share of income  from
partnerships, as discussed above.

     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
six month  periods  ended June 30, 2001 did not include  losses of $166,086  and
$349,790,  respectively,  compared to excluded  losses of $181,168 and $358,909,
for the three and six month periods ended June 30, 2000, respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during this period.


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.

     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.

                                      -23-

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

     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 such as those  described
above.

     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  are not being  recognized  by the
Partnership between July 17, 2001 and December 31, 2001. The halt will be lifted
effective January 1, 2002.

     On April 27, 2001, the  Partnership  made a cash  distribution  of $733,670
($10.00 per Unit) to  Additional  Limited  Partners,  to holders of record as of
April 1, 2001. The distribution was a result of the sale of Wollaston Manor.


Item 6. Exhibits and Reports on Form 8-K

     a.   None

     b.   No  Reports  on Form 8-K were  filed  with the  Commission  during the
          quarter ended June 30, 2001.

     All other items are not applicable.

                                      -24-

<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




August 10, 2001                  by:  /s/ Michael J. Tuszka
--------------------                  ------------------------------------------
DATE                                  Michael J. Tuszka
                                        Vice President
                                        and Chief Accounting Officer
                                        (Principal Financial Officer
                                        and Principal Accounting Officer)

                                      -25-

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