--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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



                                   FORM 10-QSB


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



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


                For the quarterly period ended September 30, 2000

                                       OR

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

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



                         Commission file number 0-13523

                 CAPITAL REALTY INVESTOR-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

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





Indicate by check mark whether the registrant (1) has filed all reports required
to be  filed by  Section  13 or 15(d) of the  Exchange  Act of 1934  during  the
preceding 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  |_|

The total number of shares of the  registrant's  Common  Stock,  outstanding  on
September 30, 2000, is not applicable.





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



                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2000





                                                                           PAGE

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets
           - September 30, 2000 and December 31, 1999.....................   1

         Consolidated Statements of Operations and Accumulated Losses
           - for the three and nine months ended
             September 30, 2000 and 1999.................................    2

         Consolidated Statements of Cash Flows
           - for the nine months ended September 30, 2000 and 1999........   3

         Notes to Consolidated Financial Statements
           - September 30, 2000 and 1999..................................   4

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


PART II - OTHER INFORMATION

Item 3.  Defaults upon Senior Securities..................................  24

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

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

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

Exhibit Index   ..........................................................  26


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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS



                                     ASSETS


<TABLE>
<CAPTION>
                                                                                      September 30,     December 31,
                                                                                          2000             1999
                                                                                      -------------    ------------
                                                                                       (Unaudited)
<S>                                                                                   <C>              <C>
Investments in and advances to partnerships .......................................   $  30,944,509    $  29,175,280
Investment in partnerships held for sale ..........................................       1,142,974        2,476,204
Partnership interest held in escrow ...............................................            --            928,160
Cash and cash equivalents .........................................................       8,385,348        7,607,687
Restricted cash equivalents .......................................................          50,400           50,400
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $390,265 and $371,870, respectively ..........         590,789          609,184
Property purchase costs, net of accumulated amortization
  of $365,747 and $348,713, respectively ..........................................         542,931          559,966
Other assets ......................................................................           2,749             --
                                                                                      -------------    -------------

      Total assets ................................................................   $  41,659,700    $  41,406,881
                                                                                      =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships ................................................   $  36,660,081    $  39,367,113
Accrued interest payable ..........................................................     105,466,954      107,616,493
Accounts payable and accrued expenses .............................................         136,268          175,592
                                                                                      -------------    -------------

      Total liabilities ...........................................................     142,263,303      147,159,198
                                                                                      -------------    -------------


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 .........................................      (8,388,540)      (8,388,540)
    Offering costs ................................................................      (7,562,894)      (7,562,894)
    Accumulated losses ............................................................    (158,155,669)    (163,304,383)
                                                                                      -------------    -------------

      Total partners' deficit .....................................................    (100,603,603)    (105,752,317)
                                                                                      -------------    -------------

      Total liabilities and partners' deficit .....................................   $  41,659,700    $  41,406,881
                                                                                      =============    =============
</TABLE>

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

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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             AND ACCUMULATED LOSSES

                                   (Unaudited)
<TABLE>
<CAPTION>


                                                      For the three months ended       For the nine months ended
                                                             SEPTEMBER 30,                    SEPTEMBER 30,
                                                   -------------------------------   ------------------------------
                                                        2000              1999           2000              1999
                                                   -------------    -------------    -------------    -------------
<S>                                                <C>              <C>              <C>              <C>
Share of income from partnerships ..............   $     923,885    $     721,950    $   2,941,199    $   2,863,584
                                                   -------------    -------------    -------------    -------------


Other revenue and  expenses:

  Revenue:
    Interest and other income ..................         127,442          117,877          344,596          365,079
                                                   -------------    -------------    -------------    -------------

  Expenses:
    Interest ...................................       2,912,502        4,081,283        9,188,132       13,524,310
    Management fee .............................          93,750           93,750          281,250          281,250
    General and administrative .................          73,512           58,156          229,736          193,299
    Professional fees ..........................          42,108           27,373          128,378           80,504
    Amortization of deferred costs .............          11,811           12,881           35,433           38,431
                                                   -------------    -------------    -------------    -------------

                                                       3,133,683        4,273,443        9,862,929       14,117,794
                                                   -------------    -------------    -------------    -------------

      Total other revenue and expenses .........      (3,006,241)      (4,155,566)      (9,518,333)     (13,752,715)
                                                   -------------    -------------    -------------    -------------

Loss before a gain on disposition
  of investment in partnership .................      (2,082,356)      (3,433,616)      (6,577,134)     (10,889,131)

Gain on disposition of investment in partnership       3,520,913             --          3,520,913             --
                                                   -------------    -------------    -------------    -------------

Income (loss) before extraordinary gain
  from extinguishment of debt ..................       1,438,557       (3,433,616)      (3,056,221)     (10,889,131)

Extraordinary gain from extinguishment of debt .       8,204,935             --          8,204,935             --
                                                   -------------    -------------    -------------    -------------

Net income (loss) ..............................       9,643,492       (3,433,616)       5,148,714      (10,889,131)

Accumulated losses, beginning of period ........    (167,799,161)    (155,616,891)    (163,304,383)    (148,161,376)
                                                   -------------    -------------    -------------    -------------

Accumulated losses, end of period ..............   $(158,155,669)   $(159,050,507)   $(158,155,669)   $(159,050,507)
                                                   =============    =============    =============    =============


Net income (loss) allocated to
  General Partners (1.51%) .....................   $     145,617    $     (51,848)   $      77,745    $    (164,426)
                                                   =============    =============    =============    =============


Net income (loss) allocated to Initial
  and Special Limited Partners (1.49%) .........   $     143,688    $     (51,161)   $      76,716    $    (162,248)
                                                   =============    =============    =============    =============


Net income (loss) allocated
  to Additional Limited Partners (97%) .........   $   9,354,187    $  (3,330,607)   $   4,994,253    $ (10,562,457)
                                                   =============    =============    =============    =============


Net income (loss) per unit of Additional Limited
  Partner Interest based on 73,500 units
  outstanding ..................................   $      127.27    $      (45.31)   $       67.95    $     (143.71)
                                                   =============    =============    =============    =============
</TABLE>

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

                                       -2-
<PAGE>
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     For the nine months ended
                                                                                            SEPTEMBER 30,
                                                                                   -----------------------------
                                                                                       2000            1999
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
Cash flows from operating activities:
  Net income (loss) ............................................................   $  5,148,714    $(10,889,131)

  Adjustments  to  reconcile  net  income  (loss) to net cash used in  operating
    activities:
    Share of income from partnerships ..........................................     (2,941,199)     (2,863,584)
    Amortization of discount on purchase money notes ...........................         42,968       4,748,888
    Amortization of deferred costs .............................................         35,433          38,431
    Gain on disposition of investment in partnership ...........................     (3,520,913)           --
    Extraordinary gain from extinguishment of debt .............................     (8,204,935)           --

    Changes in assets and liabilities:
      (Increase) decrease in other assets ......................................         (2,749)         58,378
      Increase in accrued interest payable .....................................      9,145,164       8,774,819
      Payment of purchase money note interest ..................................       (828,570)       (533,400)
      (Decrease) increase in accounts payable and accrued expenses .............        (39,324)         15,439
                                                                                   ------------    ------------

        Net cash used in operating activities ..................................     (1,165,411)       (650,160)
                                                                                   ------------    ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships ...................................      1,161,926       1,088,307
  Proceeds from disposition of investment in partnership .......................        831,146            --
                                                                                   ------------    ------------

        Net cash provided by investing activities ..............................      1,993,072       1,088,307
                                                                                   ------------    ------------

Cash flows from financing activities:
  Payment of purchase money note principal .....................................        (50,000)     (2,301,310)
                                                                                   ------------    ------------

Net increase (decrease) in cash and cash equivalents ...........................        777,661      (1,863,163)

Cash and cash equivalents, beginning of period .................................      7,607,687      10,765,753
                                                                                   ------------    ------------

Cash and cash equivalents, end of period .......................................   $  8,385,348    $  8,902,590
                                                                                   ============    ============
</TABLE>

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

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)



1.       BASIS OF PRESENTATION

         In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying   unaudited   consolidated   financial   statements   reflect   all
adjustments,  consisting  of normal  recurring  accruals,  necessary  for a fair
presentation of the financial  position of Capital Realty  Investors-IV  Limited
Partnership  (the  Partnership) as of September 30, 2000, and the results of its
operations for the three and nine months ended  September 30, 2000 and 1999, and
its cash  flows for the nine  months  ended  September  30,  2000 and 1999.  The
results of operations for the interim  periods ended September 30, 2000, 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, 1999.


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

a.       DUE ON INVESTMENTS IN PARTNERSHIPS AND ACCRUED INTEREST PAYABLE
         ---------------------------------------------------------------

         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 $36,660,081  plus aggregate  accrued  interest of  $105,466,954 as of
September  30,  2000,  are  payable  in full upon the  earliest  of: (1) sale or
refinancing of the respective Local Partnership's  rental property;  (2) payment
in full of the respective Local Partnership's permanent loan; or (3) maturity. A
purchase  money note in the principal  amount of $1,370,000  matured on July 27,
1994 and was paid off, at a discount, in July 2000. A purchase money note in the
principal  amount of  $1,330,000  matured on August 31,  1997,  was  extended to
January 3, 2000,  and the related  partnership  interest was  transferred to the
noteholders in September 2000.  Purchase money notes in the aggregate  principal
amounts of  $2,035,000  and $434,000  matured on July 1, 1999 and July 31, 1999,
respectively,  and have not been paid or extended.  A purchase money note in the
principal  amount of $434,000 matured on July 31, 1999, and has been extended to
July 31,  2004.  A purchase  money note in the  principal  amount of  $2,301,310
matured on July 31, 1999, and was paid in full on July 30, 1999.  Purchase money
notes in the aggregate  principal amount of $2,355,000 matured on August 1, 1999
and have been extended to January 4, 2001. A purchase money note in the original
principal  amount of $3,732,081  matured on August 31, 1999,  was partially paid
down, and was extended to August 31, 2004. Purchase money notes in the aggregate
principal  amount of $8,250,000  matured during August and September,  1999, and
have not been paid or extended.  A purchase money note in the original principal
amount of $740,000  matured on August 1, 1999,  and has been extended to January
2001. A purchase  money note in the principal  amount of  $1,320,000  matured on
August 30, 1999 and has been extended to August 30, 2004. A purchase  money note
in the principal  amount of  $1,400,000  matured on October 1, 1999 and has been
extended to January 4, 2001. Purchase money notes in the aggregate principal

                                       -4-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

amount of  $10,795,000  matured  during the fourth quarter of 1999, and have not
been  paid or  extended.  Purchase  money  notes  in the  principal  amounts  of
$1,500,000 and  $1,350,000  were due to mature on September 27, 1999 and October
31, 1999,  respectively,  and were  extended to September 27, 2002 and April 30,
2001, respectively.  A purchase money note in the principal amount of $2,165,000
matured on April 30,  2000,  but has not been paid or  extended.  The  remaining
purchase  money note, in the principal  amount of $500,000,  matures  October 1,
2025.

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

         The following  chart  presents  information  related to purchase  money
notes which have  matured,  have been  extended to mature,  or are  scheduled to
mature  through  September 30, 2001, and which remain unpaid or unextended as of
November 13, 2000.  Excluded from the following  chart are purchase  money notes
which  matured  through  September  30,  2000,  and  which  have  been paid off,
cancelled, or extended on or before November 13, 2000.

<TABLE>
<CAPTION>
                                                                         Aggregate                 Carrying Amount
                                               Aggregate                  Accrued                  of Partnership's
                                               Principal                  Interest                 Investments in
                   Number of                    Balance                   Balance                  and Advances to
   Purchase        Underlying                    as of                     as of                   Underlying Local
  Money Note         Local       Percentage    September    Percentage   September    Percentage   Partnerships as of    Percentage
(PMN) MATURITY    PARTNERSHIPS    OF TOTAL      30, 2000     OF TOTAL     30, 2000     OF TOTAL    SEPTEMBER 30, 2000     OF TOTAL
--------------    ------------   ----------    -----------  ---------    ----------   ----------   ------------------    ----------
<S>               <C>            <C>           <C>          <C>          <C>          <C>          <C>                   <C>
3rd Quarter 1999        9             27%      $10,719,000        29%    $ 25,101,010      24%        $11,333,658             35%
4th Quarter 1999        8             24%       10,795,000        29%      29,982,373      28%          6,367,403             20%
2nd Quarter 2000        1              3%        2,165,000         6%      13,273,794      12%          2,806,708              9%
1st Quarter 2001        4             12%        4,445,000        12%      12,563,560      12%          4,662,482             15%
2nd Quarter 2001        1              3%        1,350,000         4%       6,054,076       6%            458,858              1%
                     ----          -----       -----------     -----     ------------   -----         -----------          -----

Total through
 9/30/2001             23             69%      $29,474,000        80%    $ 86,974,813      82%        $25,629,109 (1)         80%
                     ====          =====       ===========     =====     ============   =====         ===========          =====

Total, Local
  Partnerships         33            100%      $36,660,081       100%    $105,466,954     100%        $32,043,457 (1)        100%
                     ====          =====       ===========     =====     ============   =====         ===========          =====
</TABLE>


(1)      Includes  $1,098,948  for the  partnership  reported as  investment  in
         partnership  held  for  sale  on  the  consolidated  balance  sheet  at
         September 30, 2000.

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

         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 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 33 Local  Partnerships  in which  the  Partnership  is
invested as of September 30, 2000,  the 23 Local  Partnerships  with  associated
purchase  money notes which mature  through  September 30, 2001 and which remain
unpaid  or  unextended  as of  November  13,  2000,  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 ENDING    FROM LOCAL PARTNERSHIPS        LOCAL PARTNERSHIPS
 -------------------    -----------------------      ----------------------

 December 31, 1999               48%                       $  665,255
 December 31, 1998               53%                       $1,043,309


         The  Managing  General  Partner  continues  to address the maturity and
impending  maturity of its debt  obligations and to seek  strategies  which will
provide the most favorable outcome to the limited partners.  However,  there can
be no assurance that these strategies will be successful.

         Interest  expense on the  Partnership's  purchase  money  notes for the
three and nine months ended  September 30, 2000 was $2,912,502  and  $9,188,132,
respectively, and $4,081,283 and $13,524,310 for the three and nine months ended
September 30, 1999,  respectively.  Amortization  of discount on purchase  money
notes  increased  interest  expense  during  the  three  and nine  months  ended
September  30,  2000 by $0 and  $42,968,  respectively,  and by  $1,148,243  and
$4,748,888 for the three and nine months ended September 30, 1999, respectively.
The accrued  interest  payable on the purchase money notes of  $105,466,954  and
$107,616,493  as of September 30, 2000 and December 31, 1999,  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.

                                       -6-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                  ASBURY TOWER

         The Partnership  defaulted on its purchase money note related to Asbury
Tower Associates Limited  Partnership (Asbury Tower) on August 31, 1999 when the
note matured and was not paid. The default amount included principal and accrued
interest of $3,732,081  and  $9,978,961,  respectively.  In November  1999,  the
Partnership  and the  noteholder  agreed,  as of August 31, 1999,  to extend the
maturity date of the purchase  money note until August 31, 2004, in exchange for
a partial payment of principal.

                 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 November
13,  2000,   aggregate   principal  and  accrued   interest  of  $4,510,000  and
$14,572,469,  respectively,  were  due.  The  Partnership  continues  to  try 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.  Hearings  will likely be  scheduled  in
early 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 be obtained,
or that the  Partnership  will be able to retain  its  interest  in these  three
properties.

                                   CEDAR POINT

         The  Partnership  defaulted  on its  purchase  money  note  related  to
Southwest  Development  Company  (Cedar  Point) on August 30, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of $1,320,000  and  $2,460,115,  respectively.  In September  2000, the
Partnership  and  noteholder  agreed to extend the maturity date of the purchase
money note to August 30,  2004,  in exchange  for a partial  payment of purchase
money note interest.

                                 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. The noteholders have agreed to
accept a discounted payoff of the note provided that such payment is made during
the forbearance period.  There is no assurance that the Partnership will be able
to pay the  agreed  discounted  amount in a timely  manner  and thus  retain its
interest in Chippewa County

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                 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.  As of November  13, 2000,
principal and accrued  interest of $975,000 and $2,997,644,  respectively,  were
due. In May 2000, the noteholders  filed suit to foreclose on the  Partnership's
interest in  Cottonwood  Park.  However,  the parties  negotiated a  forbearance
agreement, which allows for a possible sale of the property prior to January 31,
2001.  If the  property  is not  sold,  or if the  purchase  money  note  is not
otherwise paid prior to that date, the noteholders may file a confessed judgment
and thereby take title to the  Partnership's  interest in Cottonwood Park. There
is no assurance that a sale or other purchase money note payoff will occur.

                                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 for up to July 31,  2004,  subject to  semi-annual  interest  payments  and
reduces the interest rate of the First Crescent Note. The  Partnership  has been
contacted  by only one of the holders of the other note (Second  Crescent  Note)
and thus cannot predict the course of action with regard to the Second  Crescent
Note. As of November 13, 2000,  principal  and accrued  interest of $434,000 and
$971,365, respectively, were due on the Second Crescent Note.

                                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 November 13, 2000, aggregate
principal and accrued interest of $1,015,000 and $3,138,213,  respectively, were
due.  The  Partnership  is  currently  negotiating  a  discounted  payoff of the
purchase  money notes in  conjunction  with a possible sale of the property.  An
affiliate of the local limited partner (a not-for-profit  entity) has offered to
purchase the property and has drafted a contract to be signed  contingent  upon,
among other things, a satisfactory  agreement with the noteholders regarding the
purchase money notes and the approval of the Partnership.  There is no assurance
that a discounted payoff of the purchase money notes will be obtained, or that a
sale of the property will occur.

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                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.  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.

                              HARBORVIEW APARTMENTS

         The  Partnership  defaulted  on its  purchase  money  notes  related to
Harborview Apartments Associates Limited Partnership  (Harborview Apartments) on
August 1, 1999 when the notes  matured  and were not paid.  The  default  amount
included aggregate  principal and accrued interest of $3,000,000 and $5,342,321,
respectively.  As of November 13, 2000, aggregate principal and accrued interest
of  $3,000,000  and  $5,870,195,  respectively,  were due.  The  Partnership  is
currently negotiating a five year extension of the maturity date and has reached
an agreement in principle which is being documented.  There is no assurance that
an extension will be obtained.

                                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. As of November 13,
2000, principal and accrued interest of $1,100,000 and $4,719,176, respectively,
were due. The  Partnership is currently  negotiating to extend the maturity date
of the  purchase  money notes for five years,  although  the  noteholders  would
retain the right to accelerate  the notes on six months'  notice.  In connection
with the proposed  extension of the maturity date,  the local  managing  general
partner and the noteholders are jointly  exploring  various options to refinance
with the  Massachusetts  Housing  Finance  Agency  (MHFA)  the HUD  Section  236
interest rate subsidized mortgage loan related to this property. The Partnership
and its affiliated  general partner will likely not retain any consent rights to
approve any sale, refinancing or other restructuring. There is no assurance that
an extension  will be obtained,  or that  refinancing  of the mortgage loan will
occur.

                                 HOLIDAY VILLAGE

         The Partnership defaulted on its purchase money note related to Holiday
Village Apartments  (Holiday Village) on July 27, 1994 when the note matured and
was not paid.  The default  amount  included  principal and accrued  interest of
$1,370,000 and $2,862,342,  respectively.  The Managing  General Partner and the
noteholder reached an agreement on a discounted payoff of the note in connection
with,  and  contingent  upon,  the sale of the  property  agreed to by the Local
Partnership and an unrelated third party. On July 21, 2000,  Holiday Village was
sold.  Proceeds  received by the Partnership  from the sale of the property were
used

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

to pay off, at a discount,  the purchase money note related to Holiday  Village.
The sale of Holiday  Village  resulted in gain on  disposition of investments in
partnerships of $3,520,913 and in extraordinary gain from extinguishment of debt
of $3,969,834  for  financial  statement  purposes in 2000,  and a total gain of
$8,677,698 for federal tax purposes in 2000.

         Due to the sale of the property related to the Partnership's investment
in Holiday Village, the Partnership's basis in the Local Partnership, along with
net unamortized  acquisition  fees and property  purchase  costs,  which totaled
$1,562,844  as  of  December  31,  1999,  was   reclassified  to  investment  in
partnerships  held for sale in the  accompanying  consolidated  balance sheet at
December 31, 1999.

                                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.  The  noteholders  have
agreed to accept a discounted  payoff of the note  provided that such payment is
made during the forbearance  period.  There is no assurance that the Partnership
will be able to pay the agreed  discounted  amount in a timely  fashion and thus
retain its interest in Hometown Village.

                                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.  The Local  Partnership had entered
into an agreement to make such donation and transfer,  but the  transaction  was
denied by HUD in January 1998. In April 1998, the local managing general partner
indicated that it had received  verbal approval from HUD and intended to reapply
for  financing  with HUD.  There is no  assurance  that such  financing  will be
obtained.  On May 21, 1999,  the  noteholder  extended the maturity  date of the
purchase  money  note to April 30,  2000,  to allow  time for the  donation  and
transfer to occur.  On April 24,  2000,  the  noteholder  further  extended  the
maturity  date to April  30,  2001.  There  is no  assurance  that  any  further
extensions will be obtained.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                               LAKES OF NORTHDALE

         The  purchase  money  note  related  to  Lakes  of  Northdale   Limited
Partnership (Lakes of Northdale), in the principal amount of $1,500,000, was due
to  mature  on  September  27,  1999.  At the  time  of the  refinancing  of the
property's  mortgage loan in 1996, the Partnership and the noteholder  agreed to
extend the maturity  date of the purchase  money note to September  27, 2002, if
the  Local  Partnership   extended  the  letter  of  credit  serving  as  credit
enhancement with respect to its first mortgage debt, which extension occurred on
June 28,  1999.  Accordingly,  the  purchase  money note for Lakes of  Northdale
presently matures on September 27, 2002.

                              MARY ALLEN WEST TOWER

         On July 30, 1999,  the  Partnership  paid, in full,  the purchase money
note related to Galesburg Housing Partners (Mary Allen West Tower). The purchase
money note was in the principal amount of $2,301,310.

                                   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 November 13, 2000,
aggregate   principal  and  accrued   interest  of  $1,020,000  and  $3,166,616,
respectively,  were due. The  Partnership is currently  negotiating a discounted
payoff of the purchase  money notes in  conjunction  with a possible sale of the
property.  An affiliate of the local limited partner (a not-for-profit  entity),
has offered to  purchase  the  property  and has drafted a contract to be signed
contingent  upon,  among  other  things,  a  satisfactory   agreement  with  the
noteholders  regarding  the  purchase  money  notes  and  the  approval  of  the
Partnership.  There is no  assurance  that a  discounted  payoff of the purchase
money notes will be obtained, or that a sale of the property 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
November 13, 2000,  principal and accrued interest of $1,650,000 and $2,925,239,
respectively,  were due.  The  Partnership  is  currently  negotiating  with the
noteholder to extend the maturity date of the purchase money note for five years
in exchange for a partial payment.  There is no assurance that an extension will
be obtained.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                               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  November  13,  2000,  principal  and  accrued  interest  of  $2,165,000  and
$13,498,584, 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. There is no assurance that an extension will be obtained.

                                 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.

         The  transfer  of Redden  Gardens  to the  noteholders  resulted  in an
extraordinary  gain from  extinguishment  of debt of  $4,235,101  for  financial
statement  purposes  in 2000,  and a total gain of  $6,222,475  for  federal tax
purposes in 2000.

         Due to  the  transfer  of  the  Partnership's  interest  in  the  Local
Partnership  to  the  noteholders,   the   Partnership's   basis  in  the  Local
Partnership,  along with net unamortized  acquisition fees and property purchase
costs,  which  totaled  $928,160 as of December 31, 1999,  was  reclassified  to
partnership  interest held in escrow in the  accompanying  consolidated  balance
sheets at December 31, 1999.

                                 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 November 13, 2000, aggregate principal and accrued interest
of $740,000 and $2,002,050, respectively, were due. The Partnership is currently
negotiating  with the noteholders for a discounted  payoff of the purchase money
notes.  There is no  assurance  that a discounted  payoff of the purchase  money
notes will be obtained.

                                 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

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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. The
noteholders have agreed to accept a discounted  payoff of the note provided that
such payment is made during the forbearance  period.  There is no assurance that
the  Partnership  will be able to pay the agreed  discounted  amount in a timely
fashion and thus retain its interest in Scoville Center.

                                 THORNWOOD HOUSE

         The  Partnership  defaulted  on its  purchase  money  notes  related to
Thornwood House Associates  (Thornwood  House) on August 30, 1999 when the notes
matured and were not paid. The default amount included  aggregate  principal and
accrued interest of $1,775,000 and $3,218,691,  respectively. As of November 13,
2000,  aggregate  principal and accrued  interest of $1,775,000 and  $3,509,370,
respectively,  were due. The Partnership is currently  negotiating to extend the
maturity date of the purchase money notes for five years.  There is no assurance
that an extension will be obtained.

                               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.  As of
November 13, 2000,  principal and accrued  interest of $925,000 and  $1,307,147,
respectively,  were due. The Partnership is negotiating to sell the property and
simultaneously  pay off the  purchase  money  note at a  discount.  There  is no
assurance  that a sale of the  property or a  discounted  payoff of the purchase
money note will occur.

                                   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  principal and accrued  interest of
$920,000 and $1,788,829,  respectively.  As of November 13, 2000,  principal and
accrued  interest  of  $920,000  and  $1,942,385,  respectively,  were due.  The
Partnership has been sued by the noteholders for payment and for confirmation of
the  transfer of the  collateral  to the  noteholders.  On January 7, 2000,  the
Partnership  filed a motion to dismiss the suit.  The  noteholders  subsequently
filed  an  amended  complaint  seeking  confirmation  of  the  transfer  of  the
collateral to the noteholders but not seeking payment.  On February 9, 2000, the
Partnership filed a motion to dismiss the amended complaint,  which was granted.
A further amended complaint and motion to dismiss have been filed, but no ruling
on the latest motion has been made as of November 13, 2000. 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
January 2001.  There is no assurance that any settlement  will be finalized,  or
that the Partnership will be able to retain its interest in Valley View.

                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                WELLINGTON WOODS

         The  Partnership  defaulted  on its  purchase  money  notes  related to
Clarkson Associates of Wellington Woods Limited  Partnership  (Wellington Woods)
on  December  1, 1999,  when the notes  matured  and were not paid.  The default
amount  included  aggregate  principal  and accrued  interest  of  $485,000  and
$2,169,679,  respectively.  As of November 13,  2000,  aggregate  principal  and
accrued  interest  of  $485,000  and  $2,475,376,  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.  However,  one  of  the  noteholders  has  sued  for  foreclosure.  The
Partnership has not answered the lawsuit,  pending the  plaintiff's  response to
its  proposal to assign its  interest in  Wellington  Woods to the  plaintiff in
January 2001. There is no assurance that an extension will be obtained,  or that
the Partnership will be able to retain its interest in Wellington Woods.

                                WESTPORT VILLAGE

         The  Partnership  defaulted  on its  purchase  money  notes  related to
Westport  Associates  (Westport  Village)  on  September  1, 1999 when the notes
matured and were not paid.  The default  amount  included  principal and accrued
interest of $840,000  and  $1,615,644,  respectively.  As of November  13, 2000,
principal and accrued  interest of $840,000 and $1,755,270,  respectively,  were
due.  The  Partnership  has been sued by the  noteholders  for  payment  and for
confirmation of the transfer of the collateral to the noteholders. On January 7,
2000,  the  Partnership  filed a motion to  dismiss  the suit.  The  noteholders
subsequently filed an amended complaint seeking  confirmation of the transfer of
the collateral to the noteholders but not seeking payment.  On February 9, 2000,
the  Partnership  filed a motion to dismiss  the  amended  complaint,  which was
granted.  A further amended complaint and motion to dismiss have been filed, but
no ruling on the  latest  motion  has been made as of  November  13,  2000.  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 is not sold and/or the
notes are not  repaid by early  January  2001.  There is no  assurance  that any
settlement will be finalized, or that the Partnership will be able to retain its
interest in Westport Village.

                                 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. As of November 13,
2000, principal and accrued interest of $2,125,000 and $4,367,050, respectively,
were due.  Recently,  the  Partnership  negotiated  a  discounted  payoff of the
purchase money notes in conjunction with a possible sale of the property and the
documents are being  circulated  for  execution.  A contract for the sale of the
property  was signed in January  2000,  and closing is  anticipated  in December
2000. There is no assurance that a sale of the property and a discounted  payoff
of the purchase money the notes will occur.

         Due to the  impending  and likely sale of the  property  related to the
Partnership's  investment in Wollaston  Manor,  the  Partnership's  basis in the
Local Partnership, along with net unamortized

                                      -14-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

acquisition  fees and property  purchase  costs,  which  totaled  $913,360 as of
December 31, 1999, has been  reclassified to investment in partnerships held for
sale in the accompanying  consolidated  balance sheets at September 30, 2000 and
December 31, 1999.

b.       ADVANCES TO LOCAL PARTNERSHIPS

                               LAKES OF NORTHDALE

         To  cover  operating  deficits  incurred  in  prior  years  by Lakes of
Northdale,  the Partnership advanced funds totaling $54,500 as of both September
30, 2000 and December 31, 1999. 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.       PROPERTY MATTERS

                                  GARDEN COURT

         On December  31, 1998,  the local  managing  general  partner of Garden
Court Associates Limited Partnership  (Garden Court) sold the property.  The net
proceeds to the Partnership were received on March 2, 1999.

d.       SUMMARIZED FINANCIAL INFORMATION

         Combined  statements of operations for the 33 and 35 Local Partnerships
in which  the  Partnership  was  invested  as of  September  30,  2000 and 1999,
respectively,   follow.   The  combined   statements  have  been  compiled  from
information supplied by the management agents of the projects and are unaudited.

                                      -15-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                        COMBINED STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                  For the three months ended   For the nine months ended
                                         SEPTEMBER 30,                SEPTEMBER 30,
                                  -------------------------   -------------------------
                                     2000          1999           2000          1999
                                  -----------   -----------   -----------   -----------
<S>                               <C>           <C>           <C>           <C>
Revenue:
  Rental ......................   $ 8,403,416   $ 8,920,685   $25,759,298   $25,722,612
  Other, principally interest .       621,833       614,005     1,712,542     1,797,063
                                  -----------   -----------   -----------   -----------

    Total revenue .............     9,025,249     9,534,690    27,471,840    27,519,675
                                  -----------   -----------   -----------   -----------


Expenses:
  Operating and other .........     4,981,606     5,849,348    15,301,141    15,562,097
  Interest ....................     1,391,699     1,456,525     4,187,744     4,369,594
  Depreciation and amortization     1,812,348     1,816,618     5,507,026     5,449,865
                                  -----------   -----------   -----------   -----------

    Total expenses ............     8,185,653     9,122,491    24,995,911    25,381,556
                                  -----------   -----------   -----------   -----------

Net income ....................   $   839,596   $   412,199   $ 2,475,929   $ 2,138,119
                                  ===========   ===========   ===========   ===========

</TABLE>

         As  of  September  30,  2000  and  1999,  the  Partnership's  share  of
cumulative losses to date for six and nine, respectively, of the 33 and 35 Local
Partnerships, respectively, exceeded the amount of the Partnership's investments
in and advances to those Local  Partnerships  by  $12,736,850  and  $12,811,509,
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.


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.

                                      -16-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


3.       AFFORDABLE HOUSING LEGISLATION - Continued

         Two properties in which the  Partnership is invested may be affected by
the Mark-to-Market  program,  since they have Section 8 HAP contracts which have
already expired or which will expire in 2000. One property renewed its Section 8
HAP contracts for one year.  The other  property did not renew its Section 8 HAP
contract for six units when it expired in June 1999.  Properties  with  expiring
Section 8 HAP contract  rents greater than 100% of fair market rents in the area
where each property is located may be affected  immediately by the  legislation.
Both  properties  have  related  purchase  money  notes which have  matured,  as
discussed in Note 2.a. hereof.

         The Section 8 HAP  contracts  for the  following  properties  initially
expired during the  government's  fiscal year 1998 or 1999; one has been renewed
as  indicated,  while the other has not been  renewed.  This  schedule  does not
include Section 8 HAP contracts with extensions which expire beyond 2001.

                                      Units          Original        Renewed
                                  Authorized for   Expiration of   Expiration of
                  Number of     Rental Assistance    Section 8       Section 8
PROPERTY         RENTAL UNITS    UNDER SECTION 8   HAP CONTRACT    HAP CONTRACT
--------         ------------   -----------------  -------------   -------------

Cottonwood Park      126                6             06/30/98     06/30/99 (1)
Glenridge Gardens    120               24             05/31/99     05/31/01 (2)
                    ----             ----

    Total            246               30
                    ====             ====


     (1)  The  Section 8 HAP  contract  was not  renewed at the  election of the
          Managing General  Partner.
     (2) The Section 8 HAP contract was renewed for another one year term.


         With the uncertainty of continued project-based Section 8 subsidies for
properties with expiring HAP contracts,  there is no assurance that these rental
properties  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 September 30, 2000, the carrying amount of the
Partnership's  investments in and advances to Local Partnerships included in the
above table was $3,824.

         There  is  a  new  HUD-sponsored   program  generally  referred  to  as
"Mark-up-to-Market."  Under this program,  properties  with  expiring  Section 8
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 incentivize owners of properties with expiring Section 8 contracts
not to convert these properties to market rate housing.

                                      -17-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2000 and 1999

                                   (Unaudited)


3.       AFFORDABLE HOUSING LEGISLATION - Continued

         In return for receiving market rate rents under Mark-up-to-Market,  the
property owner must enter into a five year  conditional  Section 8 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 revenues.


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 $54,885 and $192,109 for the three and nine month periods  ended  September
30,  2000,  respectively,  and $36,389 and $127,764 for the three and nine month
periods ended September 30, 1999, respectively,  to the Managing General Partner
as direct reimbursement of expenses incurred on behalf of the Partnership.  Such
expenses are included in the accompanying  consolidated statements of operations
as general and administrative expenses.

         In  accordance  with  the  terms  of  the  Partnership  Agreement,  the
Partnership is obligated to pay the Managing General Partner an annual incentive
management fee (Management  Fee) after all other expenses of the Partnership are
paid.  The  Partnership  paid the Managing  General  Partner a Management Fee of
$93,750  and  $281,250  for each of the  three  and  nine  month  periods  ended
September 30, 2000 and 1999, respectively.

         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 three and nine month periods ended  September 30, 2000 or
1999.

                                      -18-

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

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

                                     GENERAL

         Some of the  rental  properties  owned by the  Local  Partnerships  are
financed by state housing  agencies.  The Managing  General  Partner has sold or
refinanced, and will continue to sell or refinance,  certain properties pursuant
to  programs   developed  by  these   agencies.   These   programs  may  include
opportunities  to sell a property to a qualifying  purchaser  who would agree to
maintain the property as low to moderate  income  housing in  perpetuity,  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 may be affected by
the Mark-to-Market  program,  since they have Section 8 HAP contracts which have
already expired or which will expire in 2000. One property renewed its Section 8
HAP contracts for one year.  The other  property did not renew its Section 8 HAP
contract for six units when it expired in June 1999.  Properties  with  expiring
Section 8 HAP contract  rents greater than 100% of fair market rents in the area
where each property is located may be affected  immediately by the  legislation.
Both  properties  have  related  purchase  money  notes which have  matured,  as
discussed in Note 2.a to the consolidated financial statements.

         In many instances,  the  Mark-to-Market  rental rate  restructuring may
require the write down of an  FHA-insured  mortgage  loan,  which would  trigger
cancellation  of  indebtedness  income to the partners,  a taxable  event,  even
though no actual cash is received.  Additionally, if the existing first mortgage
loan is bifurcated into a first and second mortgage loan, the newly created

                                      -19-

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


second mortgage loan will accrue interest at a below-market rate;  however,  the
Internal  Revenue  Service  issued a ruling in July 1998 that concluded that the
below-market rate of interest will not generate additional ordinary income. Each
property subject to Mark-to-Market will be affected in a different manner. It is
very  difficult to predict the exact form of  restructuring,  or  potential  tax
liabilities to the limited partners, at this time.

         There  is  a  new  HUD-sponsored   program  generally  referred  to  as
"Mark-up-to-Market."  Under this program,  properties  with  expiring  Section 8
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 incentivize owners of properties with expiring Section 8 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 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 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 there are few lenders
that 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
$8,385,348  as of  September  30,  2000,  along  with  anticipated  future  cash
distributions  from the Local  Partnerships,  is expected to be adequate to meet
its current and  anticipated  operating  cash needs.  As of November  13,  2000,
$50,400 of cash resources were restricted for future interest payments on one of
the  purchase  money  notes.  As of November  13,  2000,  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 $36,660,081  plus aggregate  accrued  interest of  $105,466,954 as of
September  30,  2000,  are  payable  in full upon the  earliest  of: (1) sale or
refinancing of the respective Local Partnership's  rental property;  (2) payment
in full of the respective Local Partnership's permanent loan; or (3) maturity. A
purchase  money note in the principal  amount of $1,370,000  matured on July 27,
1994 and was paid off, at a discount, in July 2000. A purchase money note in the
principal  amount of  $1,330,000  matured on August 31,  1997,  was  extended to
January 3, 2000,  and the related  partnership  interest was  transferred to the
noteholders in September 2000.  Purchase money notes in the aggregate  principal
amounts of  $2,035,000  and $434,000  matured on July 1, 1999 and July 31, 1999,
respectively,  and have not been paid or extended.  A purchase money note in the
principal  amount of $434,000 matured on July 31, 1999, and has been extended to
July 31,  2004.  A purchase  money note in the  principal  amount of  $2,301,310
matured on July 31, 1999, and was paid in full on July 30, 1999.  Purchase money
notes in the aggregate principal amount of

                                      -20-

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


$2,355,000  matured on August 1, 1999 and have been extended to January 4, 2001.
A purchase money note in the original  principal amount of $3,732,081 matured on
August 31, 1999,  was partially  paid down, and was extended to August 31, 2004.
Purchase  money notes in the aggregate  principal  amount of $8,250,000  matured
during  August  and  September,  1999,  and have not been  paid or  extended.  A
purchase  money note in the  original  principal  amount of $740,000  matured on
August 1, 1999,  and has been extended to January 2001. A purchase money note in
the  principal  amount of  $1,320,000  matured on August  30,  1999 and has been
extended to August 30, 2004. A purchase  money note in the  principal  amount of
$1,400,000  matured on October 1, 1999 and has been extended to January 4, 2001.
Purchase money notes in the aggregate  principal  amount of $10,795,000  matured
during the fourth quarter of 1999, and have not been paid or extended.  Purchase
money notes in the principal  amounts of $1,500,000 and  $1,350,000  were due to
mature on  September  27,  1999 and  October 31,  1999,  respectively,  and were
extended to  September  27, 2002 and April 30,  2001,  respectively.  A purchase
money note in the principal amount of $2,165,000  matured on April 30, 2000, but
has not been  paid or  extended.  The  remaining  purchase  money  note,  in the
principal  amount of  $500,000,  matures  October 1, 2025.  See the notes to the
consolidated  financial statements 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.  The Partnership's inability to pay certain of
the purchase  money note principal and accrued  interest  balances when due, and
the  resulting  uncertainty  regarding  the  Partnership's  continued  ownership
interest  in the  related  Local  Partnerships,  does not  adversely  impact the
Partnership's   financial   condition  because  the  purchase  money  notes  are
nonrecourse  and  secured  solely by the  Partnership's  interest in the related
Local  Partnerships.  Therefore,  should  the  investment  in any  of the  Local
Partnerships with maturing purchase money notes not produce  sufficient value to
satisfy the related purchase money notes, the Partnership's  exposure to loss is
limited  because  the  amount  of the  nonrecourse  indebtedness  of each of the
maturing  purchase money notes exceeds the carrying amount of the investment in,
and advances to, each of the related Local  Partnerships.  Thus, even a complete
loss of the Partnership's  interest in one of these Local Partnerships would not
have a material adverse impact on the financial condition of the Partnership.

         The following  chart  presents  information  related to purchase  money
notes which have  matured,  have been  extended to mature,  or are  scheduled to
mature  through  September 30, 2001, and which remain unpaid or unextended as of
November 13, 2000.  Excluded from the following  chart are purchase  money notes
which  matured  through  September  30,  2000,  and  which  have  been paid off,
cancelled, or extended on or before November 13, 2000.

                                      -21-

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

<TABLE>
<CAPTION>

                                                                         Aggregate                 Carrying Amount
                                               Aggregate                  Accrued                  of Partnership's
                                               Principal                  Interest                 Investments in
                   Number of                    Balance                   Balance                  and Advances to
   Purchase        Underlying                    as of                     as of                   Underlying Local
  Money Note         Local       Percentage    September    Percentage   September    Percentage   Partnerships as of    Percentage
(PMN) MATURITY    PARTNERSHIPS    OF TOTAL      30, 2000     OF TOTAL     30, 2000     OF TOTAL    SEPTEMBER 30, 2000     OF TOTAL
--------------    ------------   ----------    -----------  ---------    ----------   ----------   ------------------    ----------
<S>               <C>            <C>           <C>          <C>          <C>          <C>          <C>                   <C>
3rd Quarter 1999        9             27%      $10,719,000        29%    $ 25,101,010      24%        $11,333,658             35%
4th Quarter 1999        8             24%       10,795,000        29%      29,982,373      28%          6,367,403             20%
2nd Quarter 2000        1              3%        2,165,000         6%      13,273,794      12%          2,806,708              9%
1st Quarter 2001        4             12%        4,445,000        12%      12,563,560      12%          4,662,482             15%
2nd Quarter 2001        1              3%        1,350,000         4%       6,054,076       6%            458,858              1%
                     ----          -----       -----------     -----     ------------   -----         -----------          -----

Total through
 9/30/2001             23             69%      $29,474,000        80%    $ 86,974,813      82%        $25,629,109 (1)         80%
                     ====          =====       ===========     =====     ============   =====         ===========          =====

Total, Local
  Partnerships         33            100%      $36,660,081       100%    $105,466,954     100%        $32,043,457 (1)        100%
                     ====          =====       ===========     =====     ============   =====         ===========          =====
</TABLE>



(1)      Includes  $1,098,948  for the  partnership  reported as  investment  in
         partnership  held  for  sale  on  the  consolidated  balance  sheet  at
         September 30, 2000.

         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 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 33 Local  Partnerships  in which  the  Partnership  is
invested as of September 30, 2000,  the 23 Local  Partnerships  with  associated
purchase  money notes which mature  through  September 30, 2001 and which remain
unpaid  or  unextended  as of  November  13,  2000,  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 ENDING     FROM LOCAL PARTNERSHIPS        LOCAL PARTNERSHIPS
-------------------     -----------------------      ----------------------

December 31, 1999                48%                       $  665,255
December 31, 1998                53%                       $1,043,309




                                      -22-

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


         The Partnership  closely monitors its cash flow and liquidity  position
in an  effort  to  ensure  that  sufficient  cash  is  available  for  operating
requirements.  For the nine month periods ended September 30, 2000 and 1999, the
receipt of  distributions  from Local  Partnerships  and existing cash resources
were adequate to support operating cash requirements.  Cash and cash equivalents
increased  during the nine month period ended September 30, 2000, as the receipt
of distributions from partnership and proceeds from disposition of investment in
partnerships  were in  excess  of net  cash  used  in  operating  and  financing
activities.

                              RESULTS OF OPERATIONS

         The Partnership  recognized net income for the three month period ended
September 30, 2000, as compared to net loss during the  corresponding  period in
1999  primarily due to gain on  disposition  of investment  in  partnership  and
extraordinary  gain from  extinguishment  of debt related to the sale of Holiday
Village  Apartments  (Holiday  Village)  in July 2000,  and the  transfer of the
Partnership's  interest  in  Redden  Development  Company  (Redden  Gardens)  in
September  2000,  as  discussed  in  the  notes  to the  consolidated  financial
statements.  Contributing  to net income was an increase in share of income from
partnerships  generally due to higher  operating  income at two properties and a
decrease  in  operating  expenses  at three  properties,  partially  offset by a
decrease in rental  income at one property and increased  operating  expenses at
another. Also contributing to net income were a decrease in interest expense due
to lower discount accretion on purchase money notes, and an increase in interest
income. Offsetting the increase in the Partnership's net income were an increase
in general and  administrative  expenses  related to higher  reimbursed  payroll
costs and appraisal fees, and higher  professional fees related to litigation at
three properties.

         The  Partnership  recognized net income for the nine month period ended
September 30, 2000, as compared to net loss during the  corresponding  period in
1999,  primarily due to gain on  disposition  of investment in  partnership  and
extraordinary  gain from  extinguishment  of debt, as discussed above and in the
notes to the consolidated financial statements.  Contributing to the increase in
net income were a decrease in interest expense,  also as discussed above, and an
increase in share of income  generally due to an increase in operating income at
two  properties  and a  decrease  in  operating  expenses  at three  properties,
partially  offset by a decrease in rental income at two properties,  an increase
of  operating  expense  at  two  properties  and an  increase  in  interest  and
depreciation  expense  at  two  properties.   Offsetting  the  increase  in  the
Partnership's  net income were a decrease  in interest  income due to lower cash
and cash  equivalent  balances in 2000,  and higher  general and  administrative
expenses and an increase in professional fees, both 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
nine month periods ended  September 30, 2000 did not include  losses of $182,773
and $541,682, respectively, compared to excluded losses of $217,945 and $653,833
for the three and nine month periods ended September 30, 1999, respectively.

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

                                      -23-

<PAGE>
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

                  The  Managing  General  Partner has reason to believe  that in
         April 2000,  Peachtree Partners  (Peachtree)  initiated an unregistered
         tender  offer  to  purchase  up to 4.9%  of the  outstanding  units  of
         additional limited partnership interest (Units) in the Partnership at a
         price of $40 per Unit.  The offer  expired  in May 2000.  Peachtree  is
         unaffiliated  with the Managing General Partner.  The price offered was
         determined   solely  at  the  discretion  of  Peachtree  and  does  not
         necessarily  represent the fair market value of each Unit.  There is no
         established   market  for  the  purchase  and  sale  of  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 in the Partnership.


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 September 30, 2000.

         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




NOVEMBER 13, 2000                 by:    /S/ MICHAEL J. TUSZKA
-----------------                        ---------------------------------------
DATE                                     Michael J. Tuszka
                                             Vice President
                                             and Chief Accounting Officer
                                             (Principal Financial Officer
                                             and Principal Accounting Officer)

                                      -25-

<PAGE>
                                  EXHIBIT INDEX



EXHIBIT                                               METHOD OF FILING
-------                                        ------------------------------

27               Financial Data Schedule       Filed herewith electronically

                                      -26-