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

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


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



                                   FORM 10-QSB


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



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

                  For the quarterly period ended June 30, 2006


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



                         Commission file number 0-13523

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


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



        Internal Revenue Service - Employer Identification No. 52-1328767

                 11200 Rockville Pike, Rockville, Maryland 20852

                                 (301) 468-9200


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

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the  registrant  was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes [X ] No [ ]

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

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

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                       FOR THE QUARTER ENDED JUNE 30, 2006

                                                                            Page

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets
           - June 30, 2006 and December 31, 2005............................  1

         Consolidated Statements of Operations and Accumulated Losses
           - for the three and six months ended June 30, 2006 and 2005......  2

         Consolidated Statements of Cash Flows
           - for the six months ended June 30, 2006 and 2005................  3

         Notes to Consolidated Financial Statements
           - June 30, 2006 and 2005.........................................  4

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations........................................ 15

Item 3.  Controls and Procedures............................................ 20


PART II - OTHER INFORMATION

Item 3.  Defaults Upon Senior Securities.................................... 20

Item 5.  Other Information.................................................. 20

Item 6.  Exhibits........................................................... 21

Signature................................................................... 22


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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>
                                                                             June 30,        December 31,
                                                                               2006             2005
                                                                           -------------    -------------
                                                                            (Unaudited)
<S>                                                                        <C>              <C>
Investments in partnerships ............................................   $   2,319,022    $   2,311,722
Investment in partnerships held for sale or transfer ...................       4,251,632        4,190,405
Investment in partnerships held in escrow ..............................         663,750          760,083
Cash and cash equivalents ..............................................       8,203,720        7,995,351
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $79,354 and $127,877, respectively           67,684          113,319
Property purchase costs,
  net of accumulated amortization of $110,382 and $120,226, respectively          86,179           99,299
Other assets ...........................................................           1,025            1,400
                                                                           -------------    -------------

      Total assets .....................................................   $  15,593,012    $  15,471,579
                                                                           =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships .....................................   $  14,101,081    $  14,101,081
Accrued interest payable ...............................................      59,809,719       57,269,747
Accounts payable and accrued expenses ..................................         112,936          175,260
                                                                           -------------    -------------

      Total liabilities ................................................      74,023,736       71,546,088
                                                                           -------------    -------------

Commitments and contingencies

Partners' deficit:

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

                                                                              73,503,500       73,503,500

  Less:
    Accumulated distributions to partners ..............................     (16,887,870)     (16,887,870)
    Offering costs .....................................................      (7,562,894)      (7,562,894)
    Accumulated losses .................................................    (107,483,460)    (105,127,245)
                                                                           -------------    -------------

      Total partners' deficit ..........................................     (58,430,724)     (56,074,509)
                                                                           -------------    -------------

      Total liabilities and partners' deficit ..........................   $  15,593,012    $  15,471,579
                                                                           =============    =============
</TABLE>

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

                                       -1-

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

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             AND ACCUMULATED LOSSES

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                           For the three months ended             For the six months ended
                                                                    June 30,                               June 30,
                                                       ---------------------------------      ---------------------------------
                                                            2006               2005                2006                2005
                                                       -------------       -------------      -------------       -------------
<S>                                                    <S>                 <C>                <C>                 <C>
Share of income from partnerships                      $     356,443       $   1,399,078      $     397,772       $   1,359,138
                                                       -------------       -------------      -------------       -------------

Other revenue and  expenses:

  Revenue:
    Interest                                                  86,442              56,190            165,306             101,931
    Other                                                     32,964                  --             32,964                  --
    Gain from extinguishment of debt                              --           1,348,879                 --           4,736,646
                                                       -------------       -------------      -------------       -------------

                                                             119,406           1,405,069            198,270           4,838,577
                                                       -------------       -------------      -------------       -------------

  Expenses:
    Interest                                               1,269,986           2,077,534          2,539,972           4,183,967
    Management fee                                            93,750              93,750            187,500             187,500
    General and administrative                                68,653              67,648            139,158             136,712
    Professional fees                                         40,300              38,750             80,600              77,500
    Amortization of deferred costs                             2,147               3,616              5,027               7,233
                                                       -------------       -------------      -------------       -------------

                                                           1,474,836           2,281,298          2,952,257           4,592,912
                                                       -------------       -------------      -------------       -------------

      Total other revenue and expenses                    (1,355,430)           (876,229)        (2,753,987)            245,665
                                                       -------------       -------------      -------------       -------------

Net (loss) income                                           (998,987)            522,849         (2,356,215)          1,604,803

Accumulated losses, beginning of period                 (106,484,473)       (128,678,263)      (105,127,245)       (129,760,217)
                                                       -------------       -------------      -------------       -------------

Accumulated losses, end of period                      $(107,483,460)      $(128,155,414)     $(107,483,460)      $(128,155,414)
                                                       =============       =============      =============       =============


Net (loss) income allocated
  to General Partners (1.51%)                          $     (15,085)      $       7,895      $     (35,579)      $      24,233
                                                       =============       =============      =============       =============

Net (loss) income allocated
  to Initial and Special
  Limited Partners (1.49%)                             $     (14,885)      $       7,790      $     (35,108)      $      23,912
                                                       =============       =============      =============       =============

Net (loss) income allocated
  to Additional Limited Partners (97%)                 $    (969,017)      $     507,164      $  (2,285,528)      $   1,556,658
                                                       =============       =============      =============       =============

Net (loss) income per unit of
  Additional Limited Partner Interest,
    based on 73,337 units outstanding                  $      (13.21)      $        6.92      $      (31.16)      $       21.23
                                                       =============       =============      =============       =============
</TABLE>

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

                                       -2-

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

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                               For the six months ended
                                                                                       June 30,
                                                                             ---------------------------
                                                                                 2006           2005
                                                                             ------------   ------------
<S>                                                                          <C>            <C>
Cash flows from operating activities:
  Net (loss) income ......................................................   $(2,356,215)   $ 1,604,803

  Adjustments to reconcile net (loss) income to net cash used in operating
    activities:
    Share of income from partnerships ....................................      (397,772)    (1,359,138)
    Gain from extinguishment of debt .....................................          --       (4,736,646)
    Amortization of deferred costs .......................................         5,027          7,233

    Changes in assets and liabilities:
      Decrease (increase) in other assets ................................           375           (341)
      Increase in accrued interest payable ...............................     2,539,972      4,183,967
      Decrease in accounts payable and accrued expenses ..................       (62,324)       (49,542)
                                                                             -----------    -----------

        Net cash used in operating activities ............................      (270,937)      (349,664)
                                                                             -----------    -----------

Cash flows from investing activities:
  Receipt of distributions from partnerships .............................       479,306        159,737
                                                                             -----------    -----------

Net increase (decrease) in cash and cash equivalents .....................       208,369       (189,927)

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

Cash and cash equivalents, end of period .................................   $ 8,203,720    $ 8,945,572
                                                                             ===========    ===========
</TABLE>

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

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


1. BASIS OF PRESENTATION

     In the opinion of C.R.I.,  Inc. (CRI), the Managing  General  Partner,  the
accompanying   unaudited   consolidated   financial   statements   reflect   all
adjustments,  consisting  of normal  recurring  accruals,  necessary  for a fair
presentation of the financial  position of Capital Realty  Investors-IV  Limited
Partnership  (the  Partnership)  as of June 30,  2006,  and the  results  of its
operations for the three and six month periods ended June 30, 2006 and 2005, and
its cash  flows for the six month  periods  ended  June 30,  2006 and 2005.  The
results of  operations  for the interim  periods  ended June 30,  2006,  are not
necessarily indicative of the results to be expected for the full year.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in conformity  with  accounting  principles  generally  accepted in the
United  States of America (US GAAP) and with the  instructions  to Form  10-QSB.
Certain  information and accounting policies and footnote  disclosures  normally
included in financial  statements  prepared in conformity with US GAAP have been
condensed or omitted pursuant to such instructions. These condensed consolidated
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  and notes thereto  included in the  Partnership's  annual
report on Form 10-KSB at December 31, 2005.


2.   INVESTMENTS IN PARTNERSHIPS

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

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

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $14,101,081 plus aggregate  accrued interest of
$59,809,719  as of June 30, 2006,  are payable in full upon the earliest of: (i)
sale or refinancing of the respective Local Partnership's rental property;  (ii)
payment in full of the respective Local  Partnership's  permanent loan; or (iii)
maturity.

     The  collateral  that  secured  the  purchase  money  notes  related to the
following properties was transferred to the noteholders during 2005.

<TABLE>
<CAPTION>

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

</TABLE>

                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2. INVESTMENTS IN PARTNERSHIPS - Continued

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of August 10, 2006.

<TABLE>
<CAPTION>
                                                              Accrued Interest
                                                                   As of
     Property                                Principal         June 30, 2006         Maturity
     --------                               -----------       ---------------      -----------
     <S>                                    <C>               <C>                  <C>
     Crescent Gardens - Second Note         $  434,000          $ 1,607,787          07/31/99
     Westport Village                          840,000            2,410,285          09/01/99
     Pilgrim Tower East                      1,450,000 (1)        4,144,805          11/30/03
     Harborview                              3,000,000            7,946,460          08/01/04
     Cedar Point                             1,320,000            3,454,598          08/30/04
     Thornwood House                         1,775,000            4,467,728          08/30/04
     Jewish Federation                       1,350,000           12,486,698          10/31/04

</TABLE>

     (1) Remaining principal, after partial payment.

     The  purchase  money note secured by the  Partnership's  interest in Asbury
Tower Associates Limited  Partnership (Asbury Tower) was due to mature on August
31, 2004.  However,  the  noteholder has agreed to extend the maturity date on a
month to month basis until such time as the noteholder provides a 30 day advance
notice to the Partnership.  As of June 30, 2006,  principal and accrued interest
due on the purchase money note were  $3,432,081 and  $20,753,705,  respectively.
The Local  Managing  General  Partner is currently  negotiating  the sale of the
property related to Asbury Tower to an affiliate. Proceeds from the sale will be
used to pay off the purchase money note at a discount.  The sale is scheduled to
close in the third quarter of 2006.  There is no assurance  that the sale of the
property will occur.

     Due to the  impending  sale of the property  related to Asbury  Tower,  the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property purchase costs, which totaled $53,727 at
June 30, 2006, have been  reclassified  to investment in  partnerships  held for
sale or transfer in the accompanying consolidated balance sheet at that date.

     The purchase  money note related to Northridge  Park matures in 2025. As of
June 30,  2006,  principal  and accrued  interest  balances  were  $500,000  and
$2,537,653, respectively.

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

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

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2. INVESTMENTS IN PARTNERSHIPS - Continued

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

     The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note  requirements,  paying off certain  purchase  money  notes at a  discounted
price, extending the due dates of certain purchase money notes,  refinancing the
respective  properties'  underlying  debt, or selling the underlying real estate
and using the  Partnership's  share of the  proceeds to pay or buy down  certain
purchase money note  obligations.  Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these  strategies  will be  successful in the future.  If the
Managing  General  Partner is unable to negotiate  an  extension  or  discounted
payoff,  in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships.  In the event of a foreclosure or other transfer
of the Partnership's  interest, the excess of the nonrecourse  indebtedness over
the  carrying  amount  of the  Partnership's  investment  in the  related  Local
Partnership  will result in a taxable gain. This gain will be taxable to Limited
Partners at a federal tax rate of up to 25.0%,  as it will reflect  recapture of
depreciation  deductions claimed in prior years.  Additionally,  the Partnership
would lose its investment in the Local Partnership and,  likewise,  its share of
any future cash  distributed by the Local  Partnership  from rental  operations,
mortgage debt refinancings, or the sale of the real estate. Of the sixteen Local
Partnerships in which the Partnership is invested as of June 30, 2006, the eight
Local Partnerships with associated  purchase money notes which have matured,  or
which mature  through June 30, 2007, and which remain unpaid or unextended as of
August 10, 2006,  represented  the following  percentages  of the  Partnership's
total  distributions  received from Local  Partnerships and share of income from
Local Partnerships for the immediately preceding two calendar years.

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

     December 31, 2005               0.0%                     $ (16,243)
     December 31, 2004               0.0%                     $(187,420)


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

     Interest  expense on the  Partnership's  purchase money notes for the three
and six  month  periods  ended  June 30,  2006 was  $1,269,986  and  $2,539,972,
respectively,  and $2,077,534 and $4,183,967 for the three and six month periods
ended June 30, 2005, respectively.  The accrued interest payable on the purchase
money notes of $59,809,719  and $57,269,747 as of June 30, 2006 and December 31,
2005, respectively,  is due upon the earliest of: (i) sale or refinancing of the
respective  Local  Partnership's  rental  property;  (ii) payment in full of the
respective Local Partnership's permanent loan; or (iii) maturity.

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2. INVESTMENTS IN PARTNERSHIPS - Continued

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

     The  Partnership  defaulted  on its  purchase  money  note  secured  by its
interest in Southwest Development Company (Cedar Point) on August 30, 2004, when
the note matured and was not paid.  The default  amount  included  principal and
accrued  interest of $1,320,000 and $3,122,592,  respectively.  As of August 10,
2006, principal and accrued interest of $1,320,000 and $3,474,187, respectively,
were due.  The  Partnership  has agreed in  principle  to assign its interest in
Cedar Point to the noteholders in satisfaction of the nonrecourse note. However,
there is no  assurance  that a transfer of the  Partnership's  interest in Cedar
Point will occur.

     Due to the impending transfer of the Partnership's  interest in Cedar Point
to the noteholder, the Partnership's basis in the Local Partnership,  along with
the net  unamortized  amount of acquisition  fees and property  purchase  costs,
which totaled  $1,925,062 and $1,856,905 at June 30, 2006 and December 31, 2005,
respectively,  has been reclassified to investment in partnerships held for sale
or transfer in the accompanying consolidated balance sheets.

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

     The  Partnership  defaulted on its two purchase  money notes secured by its
interest in Crescent  Gardens  Associates  (Crescent  Gardens) on July 31, 1999,
when the notes matured and were not paid. The default amount included  aggregate
principal and accrued  interest of $868,000 and  $2,033,388,  respectively.  The
Partnership  successfully negotiated an agreement to extend the maturity date of
one of the purchase money notes (First Crescent Note) in the original  principal
amount of  $434,000,  effective  October 15,  1999.  Pursuant  to the  extension
agreement, the Partnership made payments to the noteholder to be applied against
accrued but unpaid  interest.  The agreement  extended the maturity date to July
31, 2004,  subject to semi-annual  interest  payments,  and reduced the interest
rate of the First Crescent Note. The  Partnership  did not make the  semi-annual
interest   payment  due  in  January  2004.  In  June  2005,   one-half  of  the
Partnership's  limited partner interest in the Local Partnership was transferred
to a designee  of its  current  noteholder  in  satisfaction  of that note.  The
transfer of one-half of the Partnership's  interest in Crescent Gardens resulted
in gain  from  extinguishment  of  debt  for  financial  statement  purposes  of
$1,348,879 in 2005,  and in total gain of $1,840,362 for federal tax purposes in
2005. The Partnership has been contacted by only one of the holders of the other
note (Second  Crescent  Note) and thus cannot  predict the course of action with
regard to the Second Crescent Note. As of August 10, 2006, principal and accrued
interest  of  $434,000  and  $1,617,032,  respectively,  were due on the  Second
Crescent Note.  Crescent  Gardens  completed  mortgage  restructuring  under the
Mark-to-Market  program  during  2003,  and the  associated  loan  restructuring
requirements will likely inhibit the local managing general partner's ability to
sell this property.

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

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

     On March 19,  2002,  DeAngelis  Manor was sold.  Proceeds  received  by the
Partnership  from the sale of the property  were used to pay off, at a discount,
the remaining  purchase money note related to DeAngelis Manor,  although,  as of
August  10,  2006,  the note has not been  canceled  pending  final  receipt  of
accumulated cash from the property's  previous operations and payment thereof to
the purchase money noteholder.  The final  cancellation of the note will have no
financial impact to the Partnership.

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

     The  Partnership  defaulted  on its  purchase  money  notes  secured by its
interest in Harborview Apartments Associates  (Harborview  Apartments) on August
1, 1999,  when the notes matured and were not paid. The default amount  included
aggregate   principal  and  accrued   interest  of  $3,000,000  and  $5,342,321,
respectively.  On October 31, 2000, the Partnership  and  noteholders  agreed to
extend the maturity date of the purchase  money notes to August 1, 2004, and the
Partnership  placed an assignment of its interest in Harborview  Apartments into
escrow.  As of August 10, 2006,  the notes were again in default,  and principal
and accrued interest of $3,000,000 and $7,990,906,  respectively,  were due. The
noteholders are attempting to finalize regulatory  authority for the transfer of
interests in satisfaction of the  outstanding  principal and interest  balances.
There  is no  assurance  that  a  transfer  of  the  Partnership's  interest  in
Harborview to the noteholders will occur.

     Due to the impending  transfer of the Partnership's  interest in Harborview
Apartments to the noteholder,  the Partnership's basis in the Local Partnership,
along with the net unamortized  amount of acquisition fees and property purchase
costs,  which  totaled  $631,843  and $728,176 at June 30, 2006 and December 31,
2005, respectively,  has been reclassified to investment in partnerships held in
escrow in the accompanying consolidated balance sheets.

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

     The  Partnership  defaulted  on its  purchase  money  note  secured  by its
interest in Jewish  Federation  Apartments  Associates  (Jewish  Federation)  on
October 31,  2004,  when the note matured and was not paid.  The default  amount
included   principal  and  accrued   interest  of  $1,350,000  and  $10,185,885,
respectively.  As  of  August  10,  2006,  principal  and  accrued  interest  of
$1,350,000  and  $12,649,535,  respectively,  were due.  In  January  2006,  the
Partnership  delivered an assignment of its interest in Jewish Federation to the
noteholder  in escrow in  satisfaction  of the  nonrecourse  note,  pending  HUD
approval of the transfer.  However, there is no assurance that a transfer of the
Partnership's interest in Jewish Federation will occur.

     Due to the  impending  transfer  of the  Partnership's  interest  in Jewish
Federation to the noteholder,  the Partnership's basis in the Local Partnership,
along with the net unamortized  amount of acquisition fees and property purchase
costs,  which totaled  $31,907 at both June 30, 2006 and December 31, 2005,  has
been   reclassified  to  investment  in  partnerships  held  in  escrow  in  the
accompanying consolidated balance sheets.

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2. INVESTMENTS IN PARTNERSHIPS - Continued

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

     The  Partnership  defaulted  on its  purchase  money  note  secured  by its
interest in Pilgrim Tower East  Associates  (Pilgrim  Tower East) on December 1,
1999,  when the note  matured  and was not paid.  The  default  amount  included
principal and accrued interest of $1,650,000 and $2,719,372, respectively. As of
August 10, 2006,  principal and accrued  interest of $1,450,000 and  $4,168,538,
respectively,  were due. The Partnership and the noteholder signed a contract to
sell the  Partnership's  interest  in Pilgrim  Tower East to the  noteholder  in
exchange  for the  outstanding  principal  and accrued  interest on the purchase
money note and two $100,000  payments on the purchase  money note,  one of which
was paid in  February  2002,  and one of which  was paid in  January  2003.  The
contract for the sale of the  Partnership's  interest  expired in November 2003,
however,  the parties are  currently  negotiating  an extension to provide for a
closing in 2006. There is no assurance that a sale of the Partnership's interest
in Pilgrim Tower East will occur.

     Due to the impending  sale of the  Partnership's  interest in Pilgrim Tower
East,  the  Partnership's  basis in the Local  Partnership,  along  with the net
unamortized  amount of  acquisition  fees and  property  purchase  costs,  which
totaled  $39,732  at both  June  30,  2006  and  December  31,  2005,  has  been
reclassified  to  investment  in  partnerships  held for sale or transfer in the
accompanying consolidated balance sheets.

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

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

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

     The  Partnership  defaulted  on its  purchase  money  note  secured  by its
interest in Thornwood  House  Associates  (Thornwood  House) on August 30, 2004,
when the note matured and was not paid.  The default amount  included  principal
and accrued  interest of $1,775,000 and $4,025,568,  respectively.  As of August
10,  2006,   principal  and  accrued  interest  of  $1,775,000  and  $4,493,815,
respectively,  were due. The  Partnership  has agreed in principle to assign its
interest to the noteholder in  satisfaction of the  nonrecourse  note.  However,
there is no assurance that a transfer of the Partnership's interest in Thornwood
House will occur.

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

     Due to the  impending  transfer of the  Partnerships  interest in Thornwood
House to the noteholder the Partnership's basis in the Local Partnership,  along
with the net unamortized amount of acquisition fees and property purchase costs,
which totaled  $596,438 and $660,102 at June 30, 2006 and December 31, 2005, has
been reclassified to investment in partnerships held for sale or transfer in the
accompanying consolidated balance sheets.

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

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

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

     The  Partnership  defaulted  on its  purchase  money  notes  secured by its
interest in Westport  Associates  (Westport  Village) on September 1, 1999, when
the notes matured and were not paid. The default amount  included  principal and
accrued  interest of $840,000  and  $1,615,644,  respectively.  As of August 10,
2006,  principal and accrued interest of $840,000 and $2,422,873,  respectively,
were due. The Partnership was sued by the noteholders but there has not been any
legal action  since 2000.  The  Partnership  and the  noteholders  had agreed in
principle  that the  Partnership  would deposit  assignments of its interests in
Westport Village in escrow,  together with an option agreement pursuant to which
the  noteholders  could purchase the interests for the  outstanding  debt if the
property  were not sold and/or the notes were not repaid by January 8, 2001.  At
that time, the Partnership's basis in the Local Partnership,  along with the net
unamortized  amount of  acquisition  fees and  property  purchase  costs,  which
totaled $46,989,  was reclassified to investment in partnerships held in escrow.
However, there has been no response from the noteholders concerning implementing
the  settlement  since  2000.  Therefore,   effective  December  31,  2003,  the
acquisition  fees and property  purchase  costs which had been  reclassified  to
investment  in  partnerships  held in escrow were  returned to their  respective
accounts.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

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

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

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

     Due to the impending sale of the property related to Chippewa  County,  the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property  purchase costs,  which totaled $499,456
and $511,467 at June 30, 2006 and December  31,  2005,  respectively,  have been
reclassified  to  investment  in  partnerships  held for sale or transfer in the
accompanying consolidated balance sheets.

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

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

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

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

     Due to the impending sale of the property  related to Riverview  Manor, the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property purchase costs, which totaled $1,137,217
and  $1,122,199  at June 30, 2006 and at December 31, 2005,  respectively,  have
been reclassified to investment in partnerships held for sale or transfer in the
accompanying consolidated balance sheets.

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

     The loan encumbering  Westport Village is in default.  The managing general
partner  of the Local  Partnership  was  unable to reach an  agreement  with the
Illinois   Housing   Development   Authority   (the   "Lender")  to  a  mortgage
restructuring.  Unless an agreement  is reached with the Lender,  it is possible
that the Westport Village property could be lost through foreclosure.

                                      -11-


<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

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

     Combined  statements  of  operations  for the  sixteen and  eighteen  Local
Partnerships in which the Partnership was invested as of June 30, 2006 and 2005,
respectively,   follow.   The  combined   statements  have  been  compiled  from
information  supplied  by the  management  agents  of  the  properties  and  are
unaudited.  The information for each of the periods is presented  separately for
those Local  Partnerships  which have investment basis (equity method),  and for
those Local Partnerships which have cumulative losses in excess of the amount of
the  Partnership's  investments  in  those  Local  Partnerships  (equity  method
suspended). Appended after the combined statements is information concerning the
Partnership's  share of income from partnerships  related to cash  distributions
recorded as income, and related to the Partnership's  share of income from Local
Partnerships.

                        COMBINED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             For the three months ended
                                                                     June 30,
                                              ------------------------------------------------------------
                                                         2006                             2005
                                              --------------------------       ---------------------------
                                                Equity                           Equity
                                                Method        Suspended          Method         Suspended
                                              ----------      ----------       ----------       ----------
     <S>                                      <C>             <C>              <C>              <C>
     Number of Local Partnerships                 7               9                 8               10
                                                  =               =                 =               ==
     Revenue:
       Rental                                 $1,883,637      $2,747,187       $3,318,881       $2,747,886
       Other                                      12,963         141,023           81,492          107,358
                                              ----------      ----------       ----------       ----------
         Total revenue                         1,896,600       2,888,210        3,400,373        2,855,244
                                              ----------      ----------       ----------       ----------
     Expenses:
       Operating                               1,585,713       2,009,299        1,604,347        1,908,066
       Interest                                  112,448         555,805          117,681          545,541
       Depreciation and amortization             309,134         575,287          390,419          566,931
                                              ----------      ----------       ----------       ----------
         Total expenses                        2,007,295       3,140,391        2,112,447        3,020,538
                                              ----------      ----------       ----------       ----------
     Net (loss) income                        $ (110,695)     $ (252,181)      $1,287,926       $ (165,294)
                                              ==========      ==========       ==========       ==========
     Cash distributions                       $   13,286      $  466,020       $   34,120       $  125,617
                                              ==========      ==========       ==========       ==========

     Cash distributions recorded
       as reduction of investments
       in partnerships                        $   13,286      $       --       $   34,120       $       --
                                              ==========      ==========       ==========       ==========

     Cash distributions recorded
       as income                              $       --      $  466,020       $       --       $  125,617

     Partnership's share of Local
       Partnership net (loss) income            (109,577)             --        1,273,461               --
                                              --------------------------       ---------------------------
     Share of income
       from partnerships                              $356,443                        $1,399,078
                                                      ========                        ==========
</TABLE>


                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

<TABLE>
<CAPTION>
                                                                For the six months ended
                                                                         June 30,
                                              ------------------------------------------------------------
                                                         2006                             2005
                                              --------------------------       ---------------------------
                                                Equity                           Equity
                                                Method        Suspended          Method         Suspended
                                              ----------      ----------       ----------       ----------
     <S>                                      <C>             <C>              <C>              <C>
     Number of Local Partnerships                 7               9                 8               10
                                                  =               =                 =               ==
     Revenue:
       Rental                                 $3,803,794      $5,494,374       $5,594,066       $5,615,098
       Other                                     107,949         282,046          196,295          225,098
                                              ----------      ----------       ----------       ----------
         Total revenue                         3,911,743       5,776,420        5,790,361        5,840,196
                                              ----------      ----------       ----------       ----------
     Expenses:
       Operating                               3,137,525       4,018,598        3,483,269        3,912,422
       Interest                                  224,896       1,111,611          235,363        1,101,460
       Depreciation and amortization             618,268       1,150,574          780,838        1,160,595
                                              ----------      ----------       ----------       ----------
         Total expenses                        3,980,689       6,280,783        4,499,470        6,174,477
                                              ----------      ----------       ----------       ----------
     Net (loss) income                        $  (68,946)     $ (504,363)      $1,290,891       $ (334,281)
                                              ==========      ==========       ==========       ==========

     Cash distributions                       $   13,286      $  466,020       $   34,120       $  125,617
                                              ==========      ==========       ==========       ==========

     Cash distributions recorded
       as reduction of investments
       in partnerships                        $   13,286      $       --       $   34,120       $       --
                                              ==========      ==========       ==========       ==========

     Cash distributions recorded
       as income                              $       --      $  466,020       $       --       $  125,617

     Partnership's share of Local
       Partnership net (loss) income             (68,248)             --        1,233,521               --
                                              --------------------------       ---------------------------
     Share of income from
       partnerships                                     $397,772                       $1,359,138
                                                        ========                       ==========
</TABLE>


     Cash  distributions  received from Local Partnerships which have investment
basis (equity method) are recorded as a reduction of investments in partnerships
and as  cash  receipts  on the  respective  consolidated  balance  sheets.  Cash
distributions  received from Local  Partnerships which have cumulative losses in
excess  of  the  amount  of  the   Partnership's   investments  in  those  Local
Partnerships  (equity  method  suspended)  are  recorded as share of income from
partnerships on the respective consolidated statements of operations and as cash
receipts on the respective  consolidated balance sheets. As of June 30, 2006 and
2005, the  Partnership's  share of cumulative losses to date for nine and ten of
the sixteen and eighteen Local Partnerships,  respectively,  exceeded the amount
of the Partnership's  investments in those Local Partnerships by $11,060,261 and
$10,016,408,  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.


                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2006 and 2005

                                   (Unaudited)


3.   RELATED PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to reimburse the Managing  General  Partner for its direct expenses
in connection with managing the  Partnership.  The Partnership  paid $46,934 and
$99,999 for the three and six month periods  ended June 30, 2006,  respectively,
and  $58,813 and  $112,887  for the three and six month  periods  ended June 30,
2005,  respectively,  to the Managing General Partner as direct reimbursement of
expenses  incurred on behalf of the  Partnership.  Such expenses are included in
general and administrative expenses in the accompanying  consolidated statements
of operations.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to pay the Managing General Partner an annual incentive  management
fee  (Management  Fee) after all other expenses of the Partnership are paid. The
Partnership  paid the Managing  General  Partner a Management Fee of $93,750 for
each of the three month periods  ended June 30, 2006 and 2005,  and $187,500 for
each of the six month periods ended June 30, 2006 and 2005.

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


4.   CASH DISTRIBUTION

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

                                      # # #

                                      -14-

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


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

                          Critical Accounting Policies
                          ----------------------------

     The  Partnership has disclosed its selection and application of significant
accounting policies in Note 1 of the notes to consolidated  financial statements
included in the Partnership's annual report on Form 10-KSB at December 31, 2005.
The   Partnership   accounts  for  its   investments  in   partnerships   (Local
Partnerships)  by the equity method because the Partnership is a limited partner
in the Local  Partnerships.  As such,  the  Partnership  has no control over the
selection and application of accounting  policies,  or the use of estimates,  by
the  Local  Partnerships.  Environmental  and  operational  trends,  events  and
uncertainties  that might affect the properties owned by the Local  Partnerships
would not necessarily have a significant impact on the Partnership's application
of the equity method of  accounting,  since the equity method has been suspended
for nine Local Partnerships which have cumulative losses in excess of the amount
of the Partnership's investments in those Local Partnerships.

                                     General
                                     -------

     Some of the rental properties owned by the Local  Partnerships are financed
by state and federal housing agencies.  The Managing General Partner has sold or
refinanced, and will continue to sell or refinance,  certain properties pursuant
to  programs   developed  by  these   agencies.   These   programs  may  include
opportunities  to sell a property to a qualifying  purchaser  who would agree to
maintain  the  property as low to moderate  income  housing,  or to  refinance a
property,  or to obtain  supplemental  financing.  The Managing  General Partner
continues to monitor  certain state housing  agency  programs,  and/or  programs
provided by certain lenders,  to ascertain  whether the properties would qualify
within the  parameters  of a given  program and  whether  these  programs  would
provide  an  appropriate  economic  benefit  to  the  Limited  Partners  of  the
Partnership.

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of  project-based  Section 8 Rental Housing  Assistance  Payments
(HAP)  provided by the U.S.  Department of Housing and Urban  Development  (HUD)
pursuant  to Section 8 HAP  contracts.  Current  legislation  allows all expired
Section 8 HAP contracts  with rents at less than 100% of fair market rents to be
renewed for up to one year.  Expiring  Section 8 HAP  contracts  with rents that
exceed  100% of fair market  rents  could be renewed for up to one year,  but at
rents  reduced  to 100% of fair  market  rents  (Mark-to-Market).  All  expiring
Section 8 HAP  contracts  with rents  exceeding  comparable  market  rents,  and
properties  with mortgage  loans insured by the Federal  Housing  Administration
(FHA), became subject to the Mark-to-Market legislation.

     Mark-to-Market (M2M) implementation will reduce rental income at properties
that are currently  subsidized  at  higher-than-market  rental  rates,  and will
therefore  lower cash flow  available to meet  mortgage  payments and  operating
expenses.  In some instances,  a property will be able to meet its existing debt
service  payments  after the  reduction  in rental  income.  In this  case,  the
property  may enter  the M2M  "Lite"  program,  which  would not  require a debt
restructuring.  In the remaining  instances,  the affected  property may undergo
debt restructuring  according to terms determined by an individual  property and
operations  evaluation.  This would  involve  reducing the first  mortgage  loan
balance to an amount  supportable  by the  property's  operations,  taking  into

                                      -15-

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


account the property's operating expenses and reduced income. The balance of the
amount  written  down from the  first  mortgage  loan  would be  converted  to a
non-performing but accruing (soft) second mortgage loan. When the existing first
mortgage loan is bifurcated  into a first and second  mortgage  loan,  the newly
created second  mortgage loan will accrue  interest at a below-market  rate. The
Internal  Revenue  Service  issued a ruling in July 1998 that concluded that the
below-market  rate of interest would not generate  additional  ordinary  income.
Each property subject to M2M will be affected in a different  manner,  and it is
difficult  to  predict  the  exact  form  of  restructuring,  or  potential  tax
liabilities to the Limited Partners, at this time. All properties, upon entering
the M2M program  (excluding  M2M Lite),  are required to enter into an agreement
restricting the property's use to affordable housing for 30 years.

     Finally, under HUD's "Mark-up-to-Market"  program, properties with expiring
Section 8 HAP  contracts  that are located in high-rent  areas as defined by HUD
are eligible for rent increases  which would be necessary to bring Section 8 HAP
contract  rents in line with market rate rents.  For  properties  that enter the
program and have interest rate  subsidized FHA loans,  the rents are adjusted to
take into  account  the  benefits  the  property is already  receiving  from the
below-market  interest rate by means of a HUD-determined  adjustment factor. The
purpose of this program is to provide  incentives to owners of  properties  with
expiring  Section 8 HAP contracts not to convert these properties to market rate
housing. In return for receiving market rate rents under Mark-up-to-Market,  the
property  owner must enter into a five-year  conditional  Section 8 HAP contract
with HUD,  subject  to the  annual  availability  of  funding  by  Congress.  In
addition,  property  owners who enter  into the  Mark-up-to-Market  program  may
receive  increased  cash flow,  as the limited  dividend will be increased in an
amount equal to the increase in gross rental revenues.

     Harborview Apartments Associates  (Harborview) has a Section 8 HAP contract
which expires May 31, 2007. The Section 8 HAP contract covers  substantially all
of  the  apartment  units  in  Harborview.  It is  anticipated  that  the  Local
Partnership  will extend its Section 8 HAP contract for a one-year period at its
expiration.

     Crescent Gardens Associates (Crescent Gardens) has a Section 8 HAP contract
which  expires  July 8,  2007.  The  Section 8 HAP  contract  covers  all of the
apartment  units  in  Crescent  Gardens.   It  is  anticipated  that  the  Local
Partnership  will extend its Section 8 HAP contract for a one-year period at its
expiration.

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

     As of June 30, 2006, the carrying amount of the  Partnership's  investments
in Local  Partnerships  with  Section 8 HAP  contracts  expiring  in the next 12
months was $586,907.

     The Managing  General  Partner  continues to seek  strategies  to deal with
affordable housing policy. While the Managing General Partner cannot predict the
outcome for any particular  property at this time, the Managing  General Partner
will continue to work with the Local  Partnerships  to develop  strategies  that
maximize the benefits to investors.

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

     The Partnership's liquidity, with unrestricted cash resources of $8,203,720
as of June 30, 2006, along with anticipated future cash distributions from Local
Partnerships,  is expected  to be  adequate to meet its current and  anticipated
operating cash needs. As of August 10, 2006, there were no material  commitments

                                      -16-

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


for capital  expenditures.  The Managing  General Partner  currently  intends to
retain all of the Partnership's  remaining undistributed cash pending resolution
of the  Partnership's  outstanding  purchase  money  notes and  related  accrued
interest, and for operating cash reserves.

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $14,101,081 plus aggregate  accrued interest of
$59,809,719  as of June 30, 2006,  are payable in full upon the earliest of: (i)
sale or refinancing of the respective Local Partnership's rental property;  (ii)
payment in full of the respective Local  Partnership's  permanent loan; or (iii)
maturity.

     The  collateral  that  secured  the  purchase  money  notes  related to the
following properties was transferred to the noteholders during 2005.

<TABLE>
<CAPTION>

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

</TABLE>


     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of August 10, 2006.

<TABLE>
<CAPTION>
                                                             Accrued Interest
                                                                  As of
     Property                               Principal         June 30, 2006      Maturity
     --------                              -----------       ---------------   -----------
     <S>                                   <C>               <C>               <C>
     Crescent Gardens - Second Note        $  434,000          $ 1,607,787       07/31/99
     Westport Village                         840,000            2,410,285       09/01/99
     Pilgrim Tower East                     1,450,000 (1)        4,144,805       11/30/03
     Harborview                             3,000,000            7,946,460       08/01/04
     Cedar Point                            1,320,000            3,454,598       08/30/04
     Thornwood House                        1,775,000            4,467,728       08/30/04
     Jewish Federation                      1,350,000           12,486,698       10/31/04

</TABLE>

     1) Remaining principal, after partial payment.

     The  purchase  money note secured by the  Partnership's  interest in Asbury
Tower was due to mature on August 31, 2004.  However,  the noteholder has agreed
to extend the  maturity  date on a month to month  basis  until such time as the
noteholder  provides a 30 day advance notice to the Partnership.  As of June 30,
2006,  principal  and  accrued  interest  due on the  purchase  money  note were
$3,432,081 and $20,753,705,  respectively. The Local Managing General Partner is
currently  negotiating  the sale of the  property  related to Asbury Tower to an
affiliate.  Proceeds  from the sale will be used to pay off the  purchase  money
note at a discount. The sale is scheduled to close in the third quarter of 2006.
There is no assurance that the sale of the property will occur.

     The purchase  money note related to Northridge  Park matures in 2025. As of
June 30,  2006,  principal  and accrued  interest  balances  were  $500,000  and
$2,537,653, respectively.

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

                                      -17-

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


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

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

     The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note  requirements,  paying off certain  purchase  money  notes at a  discounted
price, extending the due dates of certain purchase money notes,  refinancing the
respective  properties'  underlying  debt, or selling the underlying real estate
and using the  Partnership's  share of the  proceeds to pay or buy down  certain
purchase money note  obligations.  Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these  strategies  will be  successful in the future.  If the
Managing  General  Partner is unable to negotiate  an  extension  or  discounted
payoff,  in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships.  In the event of a foreclosure or other transfer
of the Partnership's  interest, the excess of the nonrecourse  indebtedness over
the  carrying  amount  of the  Partnership's  investment  in the  related  Local
Partnership  will result in a taxable gain. This gain will be taxable to Limited
Partners at a federal tax rate of up to 25.0%,  as it will reflect  recapture of
depreciation  deductions claimed in prior years.  Additionally,  the Partnership
would lose its investment in the Local Partnership and,  likewise,  its share of
any future cash  distributed by the Local  Partnership  from rental  operations,
mortgage debt refinancings, or the sale of the real estate. Of the sixteen Local
Partnerships in which the Partnership is invested as of June 30, 2006, the eight
Local Partnerships with associated  purchase money notes which have matured,  or
which mature  through June 30, 2007, and which remain unpaid or unextended as of
August 10, 2006,  represented  the following  percentages  of the  Partnership's
total  distributions  received from Local  Partnerships and share of income from
Local Partnerships for the immediately preceding two calendar years.

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

     December 31, 2005               0.0%                     $ (16,243)
     December 31, 2004               0.0%                     $(187,420)



                                      -18-

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


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

     The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient  cash is available for operating  requirements.
For the six month period ended June 30, 2006,  existing  cash  resources and the
receipt  of  distributions  from Local  Partnerships  were  adequate  to support
operating cash requirements. Cash and cash equivalents increased $208,369 during
the six month  period  ended  June 30,  2006,  primarily  due to the  receipt of
distributions from Local Partnerships.

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

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

     The  Partnership  recognized net loss for the three month period ended June
30,  2006,  compared  to net  income  during  the  corresponding  period in 2005
primarily  due to decreases in gain from  extinguishment  of debt related to the
transfer of Crescent Gardens Associates (Crescent Gardens),  and share of income
from  partnerships  and  increases  in general and  administrative  expenses and
professional fees, partially offset by an increase in interest and other revenue
and decreases in interest expense and  amortization of deferred costs.  Share of
income from  partnerships  decreased  primarily  due to the  cessation of income
related to a property  sold in 2005.  Interest  revenue  increased due to higher
rates in 2006. Other revenue increased due to the receipt of a cash distribution
related to Pilgrim  Tower  North  Associates  (Pilgrim  Tower  North).  Interest
expense decreased due to the transfer of Pilgrim Tower North in 2005.

     The Partnership recognized net loss for the six month period ended June 30,
2006, compared to net income during the corresponding  period in 2005, primarily
due to decreases in gain from  extinguishment of debt,  related to the transfers
of Valley  View  Associates  and  Crescent  Gardens,  and  share of income  from
partnerships   and  increases  in  general  and   administrative   expenses  and
professional  fees,  partially offset by increases in interest and other revenue
and  decreases  in interest  expense and  amortization  of  deferred  costs,  as
discussed above.

     For financial reporting purposes, the Partnership,  as a limited partner in
the Local  Partnerships,  does not record losses from the Local  Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result,  the  Partnership's  share of income from partnerships for the three and
six month  periods  ended June 30, 2006 did not include  losses of $282,441  and
$564,881,  respectively,  compared to excluded  losses of $257,061 and $473,415,
for the three and six month periods ended June 30, 2005, respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during the six month period ended June 30, 2006.

                                      -19-

<PAGE>
Part II.. FINANCIAL INFORMATION
Item 3. Controls and Procedures


     In July  2006,  representatives  of the  Managing  General  Partner  of the
Partnership  carried out an  evaluation of the  effectiveness  of the design and
operation of the Partnership's  disclosure controls and procedures,  pursuant to
Exchange Act Rules  13a-15 and 15d-15.  The  Managing  General  Partner does not
expect that the  Partnership's  disclosure  controls and procedures will prevent
all error and all fraud.  A control  system,  no matter how well  conceived  and
operated,  can provide only  reasonable  assurance  that the  objectives  of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource  constraints,  and the benefits of controls must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues have been detected.  These inherent  limitations  include the
realities that judgments in  decision-making  can be faulty, and that breakdowns
can occur  because  of simple  error or  mistake.  The  design of any  system of
controls also is based in part upon certain  assumptions about the likelihood of
future  events,  and there can be no  assurance  that any design will succeed in
achieving its stated goals under all  potential  future  conditions.  Over time,
controls may become inadequate  because of changes in conditions,  or the degree
of compliance  with the policies or procedures may  deteriorate.  Because of the
inherent  limitations in a cost-effective  control system,  misstatements due to
error or fraud may occur and not be detected. Based on the July 2006 evaluation,
and subject to the  foregoing,  the  Principal  Executive  Officer and Principal
Financial  Officer  concluded  that the  Partnership's  disclosure  controls and
procedures  are effective as of the end of the period  covered by this report to
alert  them in a timely  manner  to any  material  information  relating  to the
Partnership that must be included in the Partnership's periodic SEC filings, and
particularly  during  the  period in which  this  report is being  prepared.  In
addition,  there have been no significant changes in the Partnership's  internal
control over financial  reporting that occurred  during the  Partnership's  most
recent fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Partnership's internal control over financial reporting.


Part II. OTHER INFORMATION
Item 3. Defaults upon Senior Securities


     See Note 2.a. of the notes to consolidated  financial  statements contained
in Part I, Item 1, hereof, for information concerning the Partnership's defaults
on certain purchase money notes.


Item 5. Other Information

     There has not been any information  required to be disclosed in a report on
Form 8-K during the quarter ended June 30, 2006,  but not  reported,  whether or
not otherwise required by this Form 10-QSB at June 30, 2006.

     There  is no  established  market  for the  purchase  and  sale of units of
additional limited partner interest (Units) in the Partnership, although various
informal  secondary market services exist. Due to the limited markets,  however,
investors may be unable to sell or otherwise dispose of their Units.

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

                                      -20-

<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits


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

31.1            Certification of Principal Executive Officer, pursuant to
                18 U.S.C. Section 1350, as adopted pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002.

31.2            Certification of Principal Financial Officer, pursuant to
                18 U.S.C. Section 1350, as adopted pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002.

32              Certification of Principal Executive Officer and Principal
                Financial Officer, pursuant to 18 U.S.C. Section 1350,
                as adopted pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.

All other Items are not applicable.

                                      -21-

<PAGE>
                                    SIGNATURE

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


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

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




August 10, 2006                        by:  /s/ H. William Willoughby
---------------                             ------------------------------------
DATE                                        H. William Willoughby,
                                            Director, President, Secretary,
                                              Principal Financial Officer and
                                              Principal Accounting Officer






                                                       -22-

<PAGE>