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


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


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



                                   FORM 10-QSB


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



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

                For the quarterly period ended September 30, 2003


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



                         Commission file number 0-13523

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


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



        Internal Revenue Service - Employer Identification No. 52-1328767

                 11200 Rockville Pike, Rockville, Maryland 20852

                                 (301) 468-9200


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





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






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



                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                    FOR THE QUARTER ENDED September 30, 2003





                                                                           Page

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets
           - September 30, 2003 and December 31, 2002......................   1

         Consolidated Statements of Operations and Accumulated Losses
           - for the three and nine months ended September 30, 2003
           and 2002........................................................   2

         Consolidated Statements of Cash Flows
           - for the nine months ended September 30, 2003 and 2002.........   3

         Notes to Consolidated Financial Statements
           - September 30, 2003 and 2002...................................   4

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

Item 3.  Controls and Procedures...........................................  23


PART II - OTHER INFORMATION

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

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

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

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



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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                      September 30,     December 31,
                                                                                          2003             2002
                                                                                      -------------    -------------
                                                                                       (Unaudited)
<S>                                                                                   <C>              <C>
Investments in and advances to partnerships .......................................   $   7,396,953    $  12,763,288
Investment in partnerships held for sale or transfer ..............................       8,128,599        3,037,231
Investment in partnerships held in escrow .........................................         120,550        3,006,602
Cash and cash equivalents .........................................................       4,430,454        4,862,869
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $211,820 and $217,097, respectively ..........         233,712          259,342
Property purchase costs,
  net of accumulated amortization of $164,295 and $164,138, respectively ..........         174,361          188,018
Other assets ......................................................................              66              113
                                                                                      -------------    -------------

      Total assets ................................................................   $  20,484,695    $  24,117,463
                                                                                      =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships ................................................   $  18,160,081    $  22,955,081
Accrued interest payable ..........................................................      79,209,854       94,373,145
Accounts payable and accrued expenses .............................................         191,329          161,982
                                                                                      -------------    -------------

      Total liabilities ...........................................................      97,561,264      117,490,208
                                                                                      -------------    -------------

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 .........................................      (9,746,963)      (9,746,963)
    Offering costs ................................................................      (7,562,894)      (7,562,894)
    Accumulated losses ............................................................    (133,270,212)    (149,566,388)
                                                                                      -------------    -------------

      Total partners' deficit .....................................................     (77,076,569)     (93,372,745)
                                                                                      -------------    -------------

      Total liabilities and partners' deficit .....................................   $  20,484,695    $  24,117,463
                                                                                      =============    =============

</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,
                                                        ------------------------------    ------------------------------
                                                             2003             2002            2003              2002
                                                        -------------    -------------    -------------    -------------
<S>                                                     <C>              <C>              <C>              <C>
Share of income from partnerships ...................   $     215,041    $   1,571,670    $     602,310    $   2,373,698
                                                        -------------    -------------    -------------    -------------

Other revenue and  expenses:

  Revenue:
    Interest ........................................           6,358           16,774           25,401           49,635
    Gain from extinguishment of debt ................              --        4,118,220       21,844,501        6,062,288
                                                        -------------    -------------    -------------    -------------

                                                                6,358        4,134,994       21,869,902        6,111,923
                                                        -------------    -------------    -------------    -------------

  Expenses:
    Interest ........................................       1,842,170        2,182,498        5,526,510        7,331,459
    Management fee ..................................          93,750           93,750          281,250          281,250
    General and administrative ......................          89,237           76,927          249,374          241,219
    Professional fees ...............................          34,150           75,820          104,451          206,911
    Amortization of deferred costs ..................           4,817            5,641           14,451           17,270
                                                        -------------    -------------    -------------    -------------

                                                            2,064,124        2,434,636        6,176,036        8,078,109
                                                        -------------    -------------    -------------    -------------

      Total other revenue and expenses ..............      (2,057,766)       1,700,358       15,693,866       (1,966,186)
                                                        -------------    -------------    -------------    -------------

Net (loss) income ...................................      (1,842,725)       3,272,028       16,296,176          407,512

Accumulated losses, beginning of period .............    (131,427,487)    (149,840,514)    (149,566,388)    (146,975,998)
                                                        -------------    -------------    -------------    -------------

Accumulated losses, end of period ...................   $(133,270,212)   $(146,568,486)   $(133,270,212)   $(146,568,486)
                                                        =============    =============    =============    =============


Net (loss) income allocated
  to General Partners (1.51%) .......................   $     (27,825)   $      49,408    $     246,072    $       6,153
                                                        =============    =============    =============    =============

Net (loss) income allocated
  to Initial and Special Limited Partners (1.49%) ...   $     (27,457)   $      48,753    $     242,813    $       6,072
                                                        =============    =============    =============    =============

Net (loss) income allocated
  to Additional Limited Partners (97%) ..............   $  (1,787,443)   $   3,173,867    $  15,807,291    $     395,287
                                                        =============    =============    =============    =============

Net (loss) income per unit of Additional Limited
  Partner Interest, based on 73,342 units outstanding   $      (24.37)   $       43.27    $      215.53    $        5.39
                                                        =============    =============    =============    =============

</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,
                                                                                  ----------------------------
                                                                                      2003            2002
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
Cash flows from operating activities:
  Net income ..................................................................   $ 16,296,176    $    407,512

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships .........................................       (602,310)     (2,373,698)
    Gain from extinguishment of debt ..........................................    (21,844,501)     (6,062,288)
    Amortization of deferred costs ............................................         14,451          17,270

    Changes in assets and liabilities:
      Decrease in advances to partnerships ....................................             --          54,500
      Decrease (increase) in other assets .....................................             47             (38)
      Increase in accrued interest payable ....................................      5,526,510       7,331,459
      Payment of purchase money note interest .................................        (48,013)       (257,359)
      Increase in accounts payable and accrued expenses .......................         29,347          19,202
                                                                                  ------------    ------------

        Net cash used in operating activities .................................       (628,293)       (863,440)
                                                                                  ------------    ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships ..................................        295,878       1,830,784
  Proceeds from disposition of investments in partnerships, net ...............             --       5,476,101
                                                                                  ------------    ------------

        Net cash provided by investing activities .............................        295,878       7,306,885
                                                                                  ------------    ------------

Cash flows from financing activities:
  Payment of purchase money note principal ....................................       (100,000)     (1,900,000)
  Distribution to Additional Limited Partners .................................             --        (586,896)
  Distribution to General Partners and Initial and Special Limited Partners ...             --         (37,887)
  Payoff of purchase money note principal and related interest ................             --      (3,668,220)
                                                                                  ------------    ------------

        Net cash used in financing activities .................................       (100,000)     (6,193,003)
                                                                                  ------------    ------------

Net (decrease) increase in cash and cash equivalents ..........................       (432,415)        250,442

Cash and cash equivalents, beginning of period ................................      4,862,869       4,816,347
                                                                                  ------------    ------------

Cash and cash equivalents, end of period ......................................   $  4,430,454    $  5,066,789
                                                                                  ============    ============



Supplemental disclosure of cash flow information:
  Cash paid during the period for interest ....................................   $     48,013    $  1,973,642
                                                                                  ============    ============


</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, 2003 and 2002

                                   (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, 2003, and the results of its
operations for the three and nine months ended  September 30, 2003 and 2002, and
its cash  flows for the nine  months  ended  September  30,  2003 and 2002.  The
results of operations for the interim  periods ended September 30, 2003, are not
necessarily indicative of the results to be expected for the full year.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in conformity  with  accounting  principles  generally  accepted in the
United  States of America  and with the  instructions  to Form  10-QSB.  Certain
information and accounting policies and footnote  disclosures  normally included
in  financial  statements  prepared in  conformity  with  accounting  principles
generally  accepted  in the United  States of  America  have been  condensed  or
omitted pursuant to such instructions.  These condensed  consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements and notes thereto included in the Partnership's annual report on Form
10-KSB at December 31, 2002.

     In January  2003,  the  Financial  Accounting  Standards  Board issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN
46 clarifies the application of Accounting  Research  Bulletin 51,  Consolidated
Financial Statements, for certain entities that do not have sufficient equity at
risk for the entity to finance its activities  without  additional  subordinated
financial  support from other  parties or in which equity  investors do not have
the  characteristics  of a controlling  financial interest  ("variable  interest
entities").  Variable  interest  entities  within  the  scope  of FIN 46 will be
required  to  be  consolidated  by  their  primary   beneficiary.   The  primary
beneficiary  of a variable  interest  entity is  determined to be the party that
absorbs a majority of the entity's  expected losses,  receives a majority of its
expected returns, or both.  Application of the provisions of FIN 46 to interests
held in a variable  interest  entity or potential  variable  interest entity has
been  deferred  until the end of the first interim or annual period ending after
December 15, 2003, to variable interest entities or potential  variable interest
entities  in which an  enterprise  holds a variable  interest  that it  acquired
before  February  1, 2003.  The  Managing  General  Partner is in the process of
determining  what impact,  if any, the adoption of the provisions of FIN 46 will
have upon the  Partnership's  financial  condition  and  results  of  operations
related  to  the  Partnership's   investments  in  limited  partnerships  (Local
Partnerships),  and has complied with the disclosure  requirements  of FIN 46 in
these  consolidated  financial  statements.   As  of  September  30,  2003,  the
Partnership's  maximum loss exposure  related to its investments in and advances
to partnerships is limited to the remaining balance of $15,646,102.

     Certain  reclassifications  have been made to certain amounts  reported for
the nine  months  ended  September  30,  2002,  to conform  them to the  amounts
subsequently reported at December 31, 2002.

                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

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

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

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $18,160,081 plus aggregate  accrued interest of
$79,209,854  as of September 30, 2003, are payable in full upon the earliest of:
(i) sale or refinancing of the respective Local  Partnership's  rental property;
(ii) payment in full of the respective  Local  Partnership's  permanent loan; or
(iii) maturity. However, see the discussion relating to Highland Village, below,
for  information  concerning the  outstanding  accrued  interest  balance of the
purchase  money notes  related to  Highland  Village,  even though the  property
related to Highland Village has been sold.

     The maturity  dates of the purchase  money notes  related to the  following
properties were extended during 2002, and through November 11, 2003.

<TABLE>
<CAPTION>


                                                                  Original             Extended
         Property                           Principal             Maturity             Maturity
         --------                           ----------            ---------            ---------
         <S>                                <C>                   <C>                  <C>
         Pilgrim Tower East                 $1,450,000 (1)         12/01/99             11/30/03 (2)
         Pilgrim Tower North                 2,065,000             04/30/00             11/30/03 (2)

</TABLE>

     (1)  Remaining principal after a partial payoff.
     (2)  See below for further  information  concerning  the  maturities of the
          purchase  money notes  related to Pilgrim Tower East and Pilgrim Tower
          North.

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of November 11, 2003.

         Property                           Principal              Maturity
         --------                           ----------             --------
         Crescent Gardens                   $  434,000             07/31/99
         Valley View                           920,000             09/01/99 (1)
         Westport Village                      840,000             09/01/99 (1)
         Glenridge Gardens                     640,000             01/01/03 (1)

     (1)  Extended in accordance with the forbearance agreement.



                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The purchase money notes related to the following  properties were paid off
at  a  discount,  were  forgiven,  or  the  collateral  that  secured  them  was
transferred to the noteholders, during 2002, and through November 11, 2003.

<TABLE>
<CAPTION>


         Property                           Principal                  Date             Disposition
         --------                           ----------             --------------       -----------
         <S>                                <C>                    <C>                  <C>
         DeAngelis Manor                    $  973,571 (1)         March 2002           Paid Off
         Matthew XXV                           978,367 (1)         March 2002           Paid Off
         Lakes of Northdale                  1,500,000             September 2002       (2)
         Canonsburg House                    1,440,000             January 2003         Transferred
         Char House                          1,430,000             January 2003         Transferred
         Liberty Tower                       1,340,000             January 2003         Transferred
         Wellington Woods                      485,000             January 2003         Transferred
</TABLE>

     (1)  Remaining principal after a partial payoff.
     (2)  Principal and interest were forgiven upon sale of the property related
          to Lakes of Northdale.

     The remaining  purchase money notes mature in 2004  ($11,311,081  aggregate
principal balance) and 2025 ($500,000 principal balance).

     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, 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  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

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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,  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 21 Local  Partnerships in
which the  Partnership  is  invested as of  September  30,  2003,  the ten Local
Partnerships  with  associated  purchase money notes which have matured or which
mature  through  September 30, 2004, and which remain unpaid or unextended as of
November 11, 2003,  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.

<TABLE>
<CAPTION>

                                            Percentage of Total            Partnership's Share of
                                           Distributions Received            Income (Loss) from
             For the Year Ending           from Local Partnerships           Local Partnerships
             -------------------           -----------------------         ----------------------
             <S>                           <C>                             <C>
             December 31, 2002                      0.8%                        $  35,702
             December 31, 2001                     34.1%                        $(538,256)

</TABLE>

     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 nine month periods ended  September 30, 2003, was $1,842,170 and $5,526,510,
respectively, and $2,182,498 and $7,331,459 for the three and nine month periods
ended  September 30, 2002,  respectively.  The accrued  interest  payable on the
purchase  money notes of $79,209,854  and  $94,373,145 as of September 30, 2003,
and December 31, 2002, respectively,  is due on the respective maturity dates of
the purchase money notes or earlier, in some instances, if (and to the extent of
a portion  thereof) the related Local  Partnership  has  distributable  net cash
flow, as defined in the relevant Local Partnership agreement.

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

     The  Partnership  defaulted  on its six  purchase  money  notes  related to
Canonsburg Housing Associates Limited Partnership (Canonsburg House), Char House
Highrise  Association  Limited  Partnership  (Char  House),  and  Liberty  Tower
Associates  Limited  Partnership  (Liberty  Tower) on December 1, 1999, when the
notes matured and were not paid. The default amount included aggregate principal
and accrued interest of $4,510,000 and $12,951,810,  respectively. As of January
6, 2003, remaining principal and accrued interest of $4,210,000 and $17,395,304,
respectively,  were due.  The  Partnership  tried to  negotiate  to  extend  the
maturity  date of the  purchase  money notes for up to five years.  However,  on
September  8, 2000,  the  Partnership  received  service  of three  suits by the
noteholder  of one of the notes with  respect to each of the three  partnerships
for foreclosure on

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

the  Partnership's  interests.  The Partnership filed its answers on October 24,
2000,  although it continued to negotiate  with the plaintiff.  The  Partnership
entered  into a settlement  agreement on October 22, 2001,  pursuant to which it
obtained an extension of the maturity  date of the three larger notes to January
2003. Under the extension  agreement,  documents  transferring the Partnership's
interests in Canonsburg  House,  Char House and Liberty Tower to the  noteholder
were  placed in escrow to be  released  to the  noteholder  upon the  earlier of
occurrence of a future default by the Partnership on the purchase money notes or
January 4, 2003. In January  2003,  the  Partnership's  interests in these three
Local Partnerships, relating to purchase money notes in the aggregate amounts of
$1,176,151,  $534,201 and  $1,175,700,  respectively,  were  transferred  to the
noteholder.  The  transfer of the  Partnership's  interests in these three Local
Partnerships  resulted  in  gain  from  extinguishment  of  debt  for  financial
statement  purposes of  $18,684,319  in 2003,  and in total gain for federal tax
purposes of $20,551,401 in 2003.

     Due to the  subsequent  transfer of the  Partnership's  interests  in these
three Local  Partnerships to the noteholders,  the Partnership's  basis in these
three  Local  Partnerships,  along  with net  unamortized  acquisition  fees and
property  purchase  costs,  which totaled  $2,886,052 at December 31, 2002,  was
reclassified  to investment in partnerships  held in escrow in the  accompanying
consolidated balance sheet.

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

     The  Partnership  defaulted  on its two  purchase  money  notes  related to
Crescent Gardens Associates Limited  Partnership  (Crescent Gardens) on July 31,
1999,  when the notes  matured and were not paid.  The default  amount  included
aggregate   principal   and  accrued   interest  of  $868,000  and   $2,033,388,
respectively. The Partnership successfully negotiated an agreement to extend the
maturity date of one of the purchase  money notes (First  Crescent  Note) in the
original principal amount of $434,000,  effective October 15, 1999.  Pursuant to
the extension  agreement,  the Partnership made payments to the noteholder to be
applied against accrued but unpaid interest.  The agreement extends the maturity
date up to July 31, 2004, subject to semi-annual interest payments,  and reduces
the interest rate of the First Crescent Note. The Partnership has been contacted
by only one of the  holders of the other note  (Second  Crescent  Note) and thus
cannot predict the course of action with regard to the Second  Crescent Note. As
of November 11, 2003, principal and accrued interest of $434,000 and $1,347,512,
respectively,  were due on the Second Crescent Note.  Crescent  Gardens recently
completed  mortgage  restructuring  under the  Mark-to-Market  program,  and the
associated  loan  restructuring  requirement  will likely limit the sale of this
property to a not-for-profit  organization.  It is anticipated that the property
will now operate at a break-even  level, and that future cash  distributions are
highly unlikely.

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

     The  Partnership  defaulted on its purchase  money notes  related to Natick
Associates  (DeAngelis  Manor) on July 1, 1999,  when the notes matured and were
not paid. The default amount included  aggregate  principal and accrued interest
of $1,015,000 and $2,670,689,  respectively. As of March 19, 2002, principal and
accrued interest of $973,571 and $3,483,307, respectively, were due. On December
4,  2001,  the  Partnership  paid off,  at a  discount,  the  smaller of the two
purchase money notes. The discounted payoff resulted in gain from extinguishment
of  debt  of  $116,659  for  financial   statement  purposes  in  2001,  and  in
cancellation  of  indebtedness  income of $116,659  for federal tax  purposes in
2001. On March 19, 2002, DeAngelis Manor was sold. Proceeds received

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

by the  Partnership  from the sale of the  property  were used to pay off,  at a
discount,  the second purchase money note related to DeAngelis  Manor,  although
the note has not been cancelled  pending final receipt of accumulated  cash from
the property's  previous  operations,  and payment thereof to the purchase money
noteholder.  The sale and discounted payoff resulted in gain from extinguishment
of  debt  of  $711,397  for  financial   statement  purposes  in  2002,  and  in
cancellation  of  indebtedness  income for federal tax purposes of $1,931,047 in
2002. In March 2002, the Managing  General Partner was paid a disposition fee of
$73,272 relating to the sale, which was netted from the proceeds of the sale.

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

     The  Partnership  defaulted on its purchase money note related to Glenridge
Development Company (Glenridge Gardens) on August 1, 1999, when the note matured
and was not paid. The default amount included  principal and accrued interest of
$740,000 and $1,928,809,  respectively.  As of November 11, 2003,  principal and
accrued interest of $640,000 and $3,103,398, respectively, were due. On June 16,
2000, the Partnership  and noteholder  agreed to extend the maturity date of the
purchase money note to January 2001, in exchange for a payment which was applied
to the purchase money note  principal  balance.  Under the extension  agreement,
documents  transferring the  Partnership's  interest in Glenridge Gardens to the
noteholder  were placed in escrow to be released to the noteholder upon a future
default  by the  Partnership.  The  Partnership  reached an  agreement  with the
noteholder in which the noteholder agreed to forbear from taking any action with
respect to the note through January 3, 2002, in exchange for a payment which was
applied  to  the  purchase  money  note  principal  balance.  During  2002,  the
Partnership  reached another agreement with the noteholder to extend forbearance
through January 3, 2003. As of November 11, 2003, the purchase money  noteholder
had not  taken  action to  transfer  the  Partnership's  interest  in  Glenridge
Gardens.

     Due to the  possible  transfer of the  Partnership's  interest in Glenridge
Gardens to the  noteholder,  the net unamortized  acquisition  fees and property
purchase  costs,  which totaled  $36,247 at September 30, 2003, and December 31,
2002, has been  reclassified to investment in partnerships held in escrow in the
accompanying consolidated balance sheets.

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

     The  Partnership  defaulted  on its four  purchase  money notes  related to
Highland  Village  Associates  (Highland  Village) on October 31, 1999, when the
notes  matured and were not paid.  The President of the local  managing  general
partner of Highland Village had taken assignment of the four payees' interest in
each of the notes and is the  holder of all of the  notes.  The  default  amount
included   principal  and  accrued   interest  of  $1,100,000  and   $4,123,565,
respectively. Subsequent to the sale of the property related to Highland Village
on April 26, 2002, accrued interest of $5,486,253 was due. In February 2001, the
Partnership  and the  noteholder  agreed  to  extend  the  maturity  date of the
purchase money notes to October 31, 2004, provided that the maturity date of the
notes may be accelerated to any earlier date  designated by the noteholder  upon
not less than six months' notice to the  Partnership  from the  noteholder  (the
"Restructuring Agreement").

     On April 26, 2002, the property  related to Highland  Village was sold to a
limited  partnership  whose general  partner is also the local managing  general
partner of Highland Village.  The sale proceeds to Highland  Village,  after the
purchaser's assumption of existing mortgage debt, included

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

$600,000 in cash, a short term  promissory  note for  $300,000,  and a long term
purchase money mortgage note for $400,000.  In accordance  with the terms of the
Restructuring   Agreement,   the  Partnership's   share  of  the  proceeds  were
distributed  directly to the noteholder,  to be applied first to principal until
all  principal  has  been  repaid  ($1,100,000),   and  thereafter  to  interest
($186,870) until interest, including all accrued but previously unpaid interest,
has been paid in full.

     As of November 11, 2003,  the  noteholder has not provided the required six
months' notice to the  Partnership of  acceleration  of the maturity date of the
notes,  and the  Partnership has not removed the unpaid balance in the amount of
$5,486,253  from its books,  even though the  nonrecourse  notes are essentially
worthless because the collateral that secures them (the  Partnership's  interest
in Highland  Village) has no value since Highland  Village sold its only assets.
As a result,  the Partnership  stopped accruing  interest on the notes effective
the date of the sale of the property on April 26, 2002. The  Partnership and the
noteholder  had been  discussing  an  acceleration  of the maturity  date of the
notes.  Upon  acceleration  and resulting  cancellation of the notes,  gain from
extinguishment  of debt of $5,486,253  will be  recognized  by the  Partnership.
There is no assurance  that the  acceleration  will occur.  The sale of Highland
Village resulted in a total gain of $7,380,542 for federal tax purposes in 2002.

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

     The  Partnership  defaulted on its purchase money notes related to Diakonia
Associates  (Matthew  XXV) on July 1, 1999,  when the notes matured and were not
paid. The default amount included  aggregate  principal and accrued  interest of
$1,020,000 and  $2,695,752,  respectively.  As of March 19, 2002,  principal and
accrued interest of $978,367 and $3,531,806, respectively, were due. On December
4,  2001,  the  Partnership  paid off,  at a  discount,  the  smaller of the two
purchase money notes. The discounted payoff resulted in gain from extinguishment
of  debt  of  $141,152  for  financial   statement  purposes  in  2001,  and  in
cancellation  of  indebtedness  income of $141,152  for federal tax  purposes in
2001.  On March  19,  2002,  Matthew  XXV was  sold.  Proceeds  received  by the
Partnership  from the sale of the property  were used to pay off, at a discount,
the second purchase money note related to Matthew XXV, although the note has not
been  cancelled  pending final receipt of  accumulated  cash from the property's
previous operations,  and payment thereof to the purchase money noteholder.  The
sale and  discounted  payoff  resulted  in gain from  extinguishment  of debt of
$1,232,671  for financial  statement  purposes in 2002, and in  cancellation  of
indebtedness  income for federal tax purposes of  $2,181,531  in 2002.  In March
2002,  the  Managing  General  Partner  was paid a  disposition  fee of  $49,743
relating to the sale, which was netted from the proceeds of the sale.

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower East Associates  Limited  Partnership  (Pilgrim Tower East) on December 1,
1999,  when the note  matured  and was not paid.  The  default  amount  included
principal and accrued interest of $1,650,000 and $2,719,372,  respectively.  The
Partnership and the noteholder have signed a contract to sell the  Partnership's
interest in Pilgrim  Tower East to the  noteholder in exchange for the principal
and accrued  interest  outstanding  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,  and in exchange for an extension of the
maturity  date to November  30, 2003.  There is no assurance  that a sale of the
Partnership's interest in Pilgrim Tower East will occur.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     Due to the impending  sale of the  Partnership's  interest in Pilgrim Tower
East to the  noteholder,  the net  unamortized  amount of  acquisition  fees and
property  purchase  costs,  which  totaled  $39,732 at September  30, 2003,  and
December 31, 2002, has been  reclassified to investment in partnerships held for
sale or transfer in the accompanying consolidated balance sheets.

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower North Associates  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 $18,922,763,  respectively. The
Partnership signed a contract with the noteholder which allows the noteholder to
purchase  the  property  in exchange  for the  principal  and  accrued  interest
outstanding  on the purchase  money note and  assumption  or  prepayment  by the
noteholder of the mortgage note, the flexible  subsidy note and all related debt
associated  with the  property.  In addition,  in exchange for the  noteholder's
forbearance  to November  30, 2003,  the  Partnership  made a principal  payment
applied to the note in January  2002.  There is no assurance  that a sale of the
property will occur.

     Due to the  impending  sale of the  property  related to the  Partnership's
investment in Pilgrim Tower North to the noteholder,  the Partnership's basis in
the Local Partnership,  along with net unamortized acquisition fees and property
purchase costs,  which totaled  $2,320,560 and $2,391,262 at September 30, 2003,
and December 31, 2002,  respectively,  has been  reclassified  to  investment in
partnerships held for sale or transfer in the accompanying  consolidated balance
sheets.

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

     The  Partnership  defaulted on its purchase  money notes  related to Valley
View  Associates  (Valley View) on September 1, 1999, when the notes matured and
were not paid. The default  amount  included  principal and accrued  interest of
$920,000 and $1,788,829,  respectively.  As of November 11, 2003,  principal and
accrued  interest  of  $920,000  and  $2,326,596,  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.
Further cross- motions were heard, but there has not been any action since 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 a future date to be  negotiated.  There is no  assurance
that any settlement will be finalized.

     Due to the impending transfer of the Partnership's  interest in Valley View
to the noteholders,  the net unamortized amount of acquisition fees and property
purchase  costs,  which totaled  $37,315 at September 30, 2003, and December 31,
2002, has been  reclassified to investment in partnerships held in escrow in the
accompanying consolidated balance sheets.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (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 January 6, 2003, aggregate principal and accrued interest of
$485,000 and $3,288,849, respectively, were due.

     The  Partnership  attempted to negotiate with the noteholders to extend the
maturity  date of the  purchase  money note for five years,  in  exchange  for a
partial payment.  In August 2000, one of the purchase money noteholders sued the
Partnership  for  damages  and  foreclosure  of the  security  interests  in the
Wellington  Woods  Local  Partnership.  The  Partnership  offered  to tender its
interests in Wellington Woods, but,  subsequently,  the plaintiff and the second
purchase money noteholder filed an amended complaint. Both parties filed motions
for summary  judgment.  In September 2002, the court ruled in the  Partnership's
favor and dismissed the plaintiffs'  damages claims and related attorneys' fees.
However,  the  Partnership's  interest  in  Wellington  Woods,  in the amount of
$575,681 together with distributions received by the Partnership after the dates
of the  noteholders'  demands,  was assigned to the noteholders in January 2003.
The transfer of the Partnership's interest in this Local Partnership resulted in
gain from  extinguishment of debt for financial statement purposes of $3,160,182
in 2003, and in total gain for federal tax purposes of $3,156,107 in 2003.

     Due to the subsequent transfer of the Partnership's  interest in Wellington
Woods to the  noteholders,  the  Partnership's  basis in the Local  Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled  $606,237 at December  31,  2002,  was  reclassified  to  investment  in
partnerships held for sale or transfer in the accompanying  consolidated balance
sheet.

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

     The  Partnership  defaulted on its purchase money notes related to Westport
Associates  (Westport  Village) on September 1, 1999, when the notes matured and
were not paid. The default  amount  included  principal and accrued  interest of
$840,000 and $1,615,644,  respectively.  As of November 11, 2003,  principal and
accrued  interest  of  $840,000  and  $2,103,551,  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.
Further cross- motions were heard, but there has not been any action since 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 a future date to be  negotiated.  There is no
assurance that any settlement will be finalized.

     Due to the  impending  transfer of the  Partnership's  interest in Westport
Village to the noteholders,  the net unamortized  amount of acquisition fees and
property  purchase  costs,  which  totaled  $46,989 at September  30, 2003,  and
December 31, 2002, has been  reclassified to investment in partnerships  held in
escrow in the accompanying consolidated balance sheets.

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

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

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

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

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

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

                                Campbell Terrace
                                ----------------

     As of November 11, 2003, the local managing  general partner is negotiating
a contract to sell the property owned by Campbell Terrace  Associates  (Campbell
Terrace). There is no assurance that a sale of the property will occur.

     Due to the  possible  sale of the  property  related  to the  Partnership's
investment  in  Campbell  Terrace,   the   Partnership's   basis  in  the  Local
Partnership,  along with net unamortized  acquisition fees and property purchase
costs,  which totaled $5,768,307 at September 30, 2003, has been reclassified to
investment  in  partnerships  held  for  sale or  transfer  in the  accompanying
consolidated balance sheet at that date.

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

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

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

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

                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                 Madison Square
                                 --------------

     The Local Managing General Partner of Madison Square Ltd.  Dividend Housing
Association  (Madison Square)  requested debt relief effective  October 1, 2001.
The property has depleted its  operating  cash and  replacement  reserve  funds,
therefore, the Local Managing General Partner requested from the lender that the
debt  payments  be  reduced to  interest  only  payments  until such time as the
property  can be sold.  In December  2001,  the lender  approved  interest  only
payments and a reduction in the rate for a period of five years,  although  this
loan  modification  has not yet been closed.  The Local Managing General Partner
has been searching for a  not-for-profit  organization  to purchase the property
but has no firm offers as of November 11, 2003.  As of September  30, 2003,  the
Partnership's  remaining  investment in Madison  Square,  which consisted of net
unamortized  acquisition fees and property purchase costs, was $15,031. There is
no assurance that a sale of the property will occur.

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

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

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

     In September 2002, the property related to Lakes of Northdale was sold. The
purchase  money note  principal and interest  related to Lakes of Northdale were
forgiven.  The sale and forgiveness of debt resulted in gain from extinguishment
of  debt  of  $4,118,220  for  financial  statement  purposes  in  2002,  and in
cancellation  of  indebtedness  income for federal tax purposes of $8,385,660 in
2002.

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

     In January 2002, a contract for the sale of Pilgrim Tower North was signed.
See Note 2.a.  hereof for  additional  information  concerning  the sale.  As of
September  30, 2003,  the  Partnership's  remaining  investment in Pilgrim Tower
North was $2,320,560 and the Partnership  believes that it is fully  realizable.
There is no assurance that a sale of the property will occur.

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

     Combined  statements of operations for the 21 and 25 Local  Partnerships in
which  the  Partnership  was  invested  as  of  September  30,  2003  and  2002,
respectively,  follow. The combined statements of operations include information
for six Local Partnerships through their respective dates of sale or transfer in
April  2002 (1),  September  2002  (1),  and  January  2003  (4).  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 for which the  Partnership's
carrying  value is zero (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.

                                      -14-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued


                        COMBINED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               For the three months ended
                                                                     September 30,
                                                ------------------------------------------------------------
                                                           2003                             2002
                                                --------------------------       ---------------------------
                                                  Equity                           Equity
                                                  Method        Suspended          Method         Suspended
                                                ----------      ----------       ----------       ----------
         <S>                                    <S>             <S>              <S>              <S>
         Number of Local Partnerships               10              11               15               12
                                                    ==              ==               ==               ==

         Revenue:
           Rental                               $3,516,083      $2,826,310       $4,116,736       $3,199,022
           Other                                   184,706         129,126          308,495          203,946
                                                ----------      ----------       ----------       ----------

             Total revenue                       3,700,789       2,955,436        4,425,231        3,402,968
                                                ----------      ----------       ----------       ----------

         Expenses:
           Operating                             2,483,511       1,939,467        2,473,759        2,199,487
           Interest                                367,437         546,902          445,249          634,648
           Depreciation and amortization           632,180         557,297          725,026          692,737
                                                ----------      ----------       ----------       ----------

             Total expenses                      3,483,128       3,043,666        3,644,034        3,526,872
                                                ----------      ----------       ----------       ----------

         Net income (loss)                      $  217,661      $  (88,230)      $  781,197       $ (123,904)
                                                ==========      ==========       ==========       ==========

         Cash distributions                     $   15,010      $       --       $1,315,011 (1)   $       --
                                                ==========      ==========       ==========       ==========

         Cash distributions recorded
           as reduction of investments
           in partnerships                      $   15,010      $       --       $  516,490       $       --
                                                ==========      ==========       ==========       ==========

         Cash distributions recorded
           as income                            $       --      $       --       $  798,521 (2)   $       --

         Partnership's share of Local
           Partnership net income (loss)           215,041             --           773,149              --
                                                -------------------------        --------------------------

         Share of income from partnerships               $215,04                          $1,571,670
                                                         =======                          ==========
</TABLE>


     (1)  Includes  cash  proceeds of  $1,300,000  from the sale of the Highland
          Village.
     (2)  Represents  cash proceeds in excess of basis from the sale of Highland
          Village.



                                      -15-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>
                                                                For the nine months ended
                                                                      September 30,
                                                -------------------------------------------------------------
                                                           2003                            2002
                                                --------------------------      -----------------------------
                                                  Equity                          Equity
                                                  Method        Suspended         Method           Suspended
                                                ----------      ----------      ----------        -----------
         <S>                                    <C>             <C>             <C>               <C>
         Number of Local Partnerships               10              11              15                12
                                                    ==              ==              ==                ==

         Revenue:
           Rental                               $10,306,031     $8,467,960      $12,184,731       $ 9,597,064
           Other                                    609,338        384,323          899,569           611,846
                                                -----------     ----------      -----------       -----------

             Total revenue                       10,915,369      8,852,283       13,084,300        10,208,910
                                                -----------     ----------      -----------       -----------

         Expenses:
           Operating                              7,362,737      5,794,642        7,649,830         6,598,466
           Interest                               1,102,314      1,640,712        1,609,042         1,903,951
           Depreciation and amortization          1,896,544      1,671,894        2,456,748         2,078,222
                                                -----------     ----------      -----------       -----------

             Total expenses                      10,361,595      9,107,248       11,715,620        10,580,639
                                                -----------     ----------      -----------       -----------

         Net income (loss)                      $   553,774     $ (254,965)     $ 1,368,680       $  (371,729)
                                                ===========     ==========      ===========       ===========

         Cash distributions                     $   240,660     $   55,218      $ 1,606,876 (1)   $   223,908
                                                ===========     ==========      ===========       ===========

         Cash distributions recorded
           as reduction of investments
           in partnerships                      $   240,660     $       --      $   808,355       $        --
                                                ===========     ==========      ===========       ===========

         Cash distributions recorded
           as income                            $        --     $   55,218      $   798,521 (2)   $   223,908

         Partnership's share of Local
           Partnership net income (loss)            547,092            --         1,355,637          (4,368)
                                                -------------------------       ---------------------------

         Share of income from partnerships               $602,31                          $2,373,698
                                                         =======                          ==========
</TABLE>


     (1)  Includes  cash  proceeds of  $1,300,000  from the sale of the Highland
          Village.
     (2)  Represents  cash proceeds in excess of basis from the sale of Highland
          Village.


     Cash  distributions  received from Local Partnerships which have investment
basis are recorded as a reduction of investments in and advances to partnerships
and as  cash  receipts  on the  respective  consolidated  balance  sheets.  Cash
distributions  received  from  Local  Partnerships  for which the  Partnership's
carrying value is zero (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 September 30,
2003 and 2002, the  Partnership's  share of cumulative losses to date for 11 and
10 of the 21 and 25 Local Partnerships, respectively, exceeded the amount of the
Partnership's  investments  in and  advances  to  those  Local  Partnerships  by
$9,924,345  and  $9,644,894,  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.

                                      -16-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

                                   (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 $45,752 and
$162,427  for the  three  and  nine  month  periods  ended  September  30,  2003
respectively,  and $44,729  and  $185,868  for the three and nine month  periods
ended  September  30, 2002,  respectively,  to the Managing  General  Partner as
direct  reimbursement of expenses  incurred on behalf of the  Partnership.  Such
expenses are included in the accompanying  consolidated statements of operations
as general and administrative expenses.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to pay the Managing General Partner an annual incentive  management
fee  (Management  Fee) after all other expenses of the Partnership are paid. The
Partnership  paid the Managing  General  Partner a Management Fee of $93,750 for
each of the three month periods ended  September 30, 2003 and 2002, and $281,250
for each of the nine month periods ended September 30, 2003 and 2002.

     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 March 2002, the Managing General Partner was paid disposition fees
totaling  $123,015  relating to the sales of the DeAngelis Manor and Matthew XXV
properties on March 19, 2002, which were netted from the proceeds of the sales.

                                      # # #

                                      -17-

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


     Capital  Realty  Investors-IV   Limited   Partnership's  (the  Partnership)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  section  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, 2002.
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.

                                     General
                                     -------

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

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

     Mark-to-Market (M2M) implementation will reduce rental income at properties
that are currently  subsidized  at  higher-than-market  rental  rates,  and will
therefore  lower cash flow  available to meet  mortgage  payments and  operating
expenses.  In some instances,  a property will be able to meet its existing debt
service  payments  after the  reduction  in rental  income.  In this  case,  the
property  may enter  the M2M  "Lite"  program,  which  would not  require a debt
restructuring.  In the remaining  instances,  the affected  property may undergo
debt restructuring  according to terms determined by an individual  property and
operations  evaluation.  This would  involve  reducing the first  mortgage  loan
balance to an amount  supportable  by the  property's  operations,  taking  into
account the property's operating expenses and reduced income. The balance of the
amount  written  down from the  first  mortgage  loan  would be  converted  to a
non-performing but accruing (soft) second mortgage loan. When the existing first
mortgage loan is bifurcated  into a first and second  mortgage  loan,  the newly
created second  mortgage loan will accrue  interest at a below-market  rate. The
Internal  Revenue  Service  issued a ruling in July 1998 that concluded that the
below-market rate of interest

                                      -18-

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


would not generate additional ordinary income. Each property subject to M2M will
be affected in a different manner, and it is very difficult to predict the exact
form of restructuring,  or potential tax liabilities to the Limited Partners, at
this time. All properties,  upon entering the M2M program  (excluding M2M Lite),
are  required  to enter into an  agreement  restricting  the  property's  use to
affordable housing for 30 years.

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

     Pilgrim Tower North Associates  Limited  Partnership  (Pilgrim Tower North)
has a Section 8 HAP contract which, as extended,  expires February 29, 2004. The
Section 8 HAP contract covers 79% of the apartment units in Pilgrim Tower North.
See Note 2.a. of the notes to  consolidated  financial  statements  contained in
Part I, Item 1,  hereof,  for  information  concerning  a  possible  sale of the
property owned by Pilgrim Tower North.

     Tradewinds West Limited Dividend Housing  Association  (Tradewinds),  has a
Section 8 HAP contract which, as extended, expires April 30, 2004. The Section 8
HAP contract covers 43% of the apartment units in Tradewinds.  It is anticipated
that  Tradewinds will extend its Section 8 HAP contract for a one-year period at
expiration.

     Glenridge  Development  Company  (Glenridge  Gardens)  has a  Section 8 HAP
contract  which,  as extended,  expires May 31, 2004. The Section 8 HAP contract
covers 20% of the  apartment  units in Glenridge  Gardens.  See Note 2.a. of the
notes to consolidated  financial statements contained in Part I, Item 1, hereof,
for information  concerning a possible transfer of the Partnership's interest in
Glenridge Gardens to the purchase money noteholder.

     Naperville  Housing  Partners  (Fairway  Park) has a Section 8 HAP contract
which  expires  June 30,  2004.  The  Section 8 HAP  contract  covers 20% of the
apartment  units in Fairway  Park.  Fairway  Park is  evaluating  what course of
action it will pursue upon expiration of its Section 8 HAP contract.

     As of September 30, 2003, the carrying amount of the Partnership's
investments in and advances to Local Partnerships with Section 8 HAP contracts
expiring in the next 12 months was $3,054,786.

     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.

                                      -19-

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


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

     The Partnership's liquidity, with unrestricted cash resources of $4,430,454
as of September 30, 2003, 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  11,  2003,  there were no
material commitments for capital expenditures.

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $18,160,081 plus aggregate  accrued interest of
$79,209,854  as of September 30, 2003, are payable in full upon the earliest of:
(i) sale or refinancing of the respective Local  Partnership's  rental property;
(ii) payment in full of the respective  Local  Partnership's  permanent loan; or
(iii) maturity.  However,  see Note 2.a. of the notes to consolidated  financial
statements  contained in Part I, Item 1, hereof, for information  concerning the
outstanding  accrued  interest  balance of the purchase  money notes  related to
Highland Village,  even though the property related to Highland Village has been
sold.

     The maturity  dates of the purchase  money notes  related to the  following
properties were extended during 2002, and through November 11, 2003.

<TABLE>
<CAPTION>


                                                                   Original             Extended
         Property                            Principal             Maturity             Maturity
         --------                           -----------            --------             --------
         <S>                                <C>                    <C>                  <C>
         Pilgrim Tower East                 $ 1,450,000 (1)        12/01/99             11/30/03 (2)
         Pilgrim Tower North                  2,065,000            04/30/00             11/30/03 (2)

</TABLE>


     (1)  Remaining principal after a partial payoff.
     (2)  See below for further  information  concerning  the  maturities of the
          purchase  money notes  related to Pilgrim Tower East and Pilgrim Tower
          North.

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of November 11, 2003.

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

         Crescent Gardens                   $  434,000             07/31/99
         Valley View                           920,000             09/01/99 (1)
         Westport Village                      840,000             09/01/99 (1)
         Glenridge Gardens                     640,000             01/01/03 (1)

     (1)  Extended in accordance with the forbearance agreement.

     The purchase money notes related to the following  properties were paid off
at  a  discount,  were  forgiven,  or  the  collateral  that  secured  them  was
transferred to the noteholders, during 2002, and through November 11, 2003.

<TABLE>
<CAPTION>

         Property                            Principal                 Date             Disposition
         --------                           -----------            --------------       -----------
         <S>                                <C>                    <C>                  <C>
         DeAngelis Manor                    $  973,571 (1)         March 2002           Paid Off
         Matthew XXV                           978,367 (1)         March 2002           Paid Off
         Lakes of Northdale                  1,500,000             September 2002       (2)
         Canonsburg House                    1,440,000             January 2003         Transferred
         Char House                          1,430,000             January 2003         Transferred
         Liberty Tower                       1,340,000             January 2003         Transferred
         Wellington Woods                      485,000             January 2003         Transferred
</TABLE>

     (1)  Remaining principal after a partial payoff.
     (2)  Principal and interest were forgiven upon sale of the property related
          to Lakes of Northdale.


                                      -20-

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


     The remaining  purchase money notes mature in 2004  ($11,311,081  aggregate
principal balance) and 2025 ($500,000 principal balance).

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

     The purchase money notes,  which are  nonrecourse to the  Partnership,  are
generally  secured  by  the  Partnership's  interest  in  the  respective  Local
Partnerships.  There is no assurance  that the underlying  properties  will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes'  principal and accrued  interest when due. If a purchase money note
is not paid in accordance with its terms,  the  Partnership  will either have to
renegotiate  the terms of repayment or risk losing its  partnership  interest in
the  respective  Local  Partnership.  In the event  that a  purchase  money note
remains unpaid upon maturity,  the 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, 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  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 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,  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 21 Local  Partnerships in
which the  Partnership  is  invested as of  September  30,  2003,  the ten Local
Partnerships  with  associated  purchase money notes which have matured or which
mature  through  September 30, 2004, and which remain unpaid or unextended as of
November 11, 2003,  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.

                                      -21-

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

<TABLE>
<CAPTION>

                                            Percentage of Total            Partnership's Share of
                                           Distributions Received            Income (Loss) from
             For the Year Ended            from Local Partnerships           Local Partnerships
             ------------------            -----------------------         ----------------------
             <S>                           <C>                             <C>
             December 31, 2002                       0.8%                        $  35,702
             December 31, 2001                      34.1%                        $(538,256)

</TABLE>


     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 nine month period ended September 30, 2003, the receipt of distributions
from Local  Partnerships  and existing cash  resources  were adequate to support
operating cash requirements. Cash and cash equivalents decreased $432,415 during
the nine month period ended  September  30, 2003,  as net cash used in operating
activities  and for the payment of purchase  money note  principal  exceeded the
receipt of distributions  from Local  Partnerships.  The primary uses of cash in
operating  activities  were to pay purchase money note interest,  management and
professional fees, and general and administrative  expenses. For the nine months
ended September 30, 2003, $55,218 of the distributions  received were from Local
Partnerships for which the  Partnership's  carrying value is zero (equity method
suspended).  The  Partnership  expects to  receive a similar or lower  amount of
distributions  from these Local  Partnerships  in future years as more Section 8
HAP  contracts  approach  expiration,  should the related  properties  enter the
Mark-to-Market program with the resulting reduction in rental revenues.

     The  Partnership  has reviewed its operations for 2003 and its  anticipated
future  cash  requirements,  and  has  determined  that  it will  not  make  any
distribution  to Limited  Partners  during 2003.  The Managing  General  Partner
intends to retain all of the Partnership's  remaining undistributed cash for the
possible  repayment,  prepayment or retirement of the Partnership's  outstanding
purchase money notes related to the Local  Partnerships,  and for operating cash
reserves.

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

     The  Partnership  recognized  net loss of  $1,842,725  for the three  month
period ended  September 30, 2003,  compared to net income of $3,272,028  for the
corresponding  period  in  2002,  primarily  due  to a  decrease  in  gain  from
extinguishment  of debt,  a decrease  in share of income from  partnerships,  an
increase in general and administrative expenses due to higher reimbursed payroll
costs,  and a decrease in  interest  revenue due to  declining  interest  rates.
Partially  offsetting  the net loss were a decrease in  interest  expense due to
lower purchase money note balances, a decrease in professional legal fees, and a
nominal  decrease in amortization  of deferred  costs.  The decrease in share of
income from  partnerships was primarily the result of a $1,300,000  distribution
from the sale of Highland Village in 2002.

     The  Partnership's net income for the nine month period ended September 30,
2003, increased $15,888,664 from the corresponding period in 2002, primarily due
to an  increase  in gain from  extinguishment  of debt,  a decrease  in interest
expense as  discussed  above,  a decrease in  professional  fees,  and a nominal
decrease in amortization of deferred costs. Partially offsetting the increase in
net income were a decrease in share of income from  partnerships,  a decrease in
interest  revenue as  discussed  above,  and a nominal  increase  in general and
administrative  expenses.  The decrease in share of income from partnerships was
the net result  of:  (i) a  $1,300,000  distribution  from the sale of  Highland
Village in 2002; (ii) increases in operating  expenses at properties  related to
five Local  Partnerships;  (iii)  increases  in rental  revenues  at  properties
related  to two  Local  Partnerships;  (iv)  decreases  in  interest  income  at
properties   related  to  two  Local   Partnerships;   (v)   decreases  in  cash
distributions  recorded  as income  from four Local  Partnerships  for which the
partnership's  carrying  value is zero (equity method  suspended);  and (vi) the
cessation of losses from three Local  Partnerships  whose related interests were
transferred in January 2003.

                                      -22-

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


     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, 2003, did not include losses of $251,095
and  $716,898,  respectively,  compared  to  excluded  losses  of  $169,901  and
$623,582,  for the  three and nine  month  periods  ended  September  30,  2002,
respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during the nine month period ended September 30, 2003.


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

     In October 2003,  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  October  2003
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.

                                      -23-

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


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

                             Registered Tender Offer
                             -----------------------

     On June  17,  2003,  Equity  Resource  Weston  Fund  (Equity)  initiated  a
registered tender offer to purchase up to 11,025 of the outstanding Units in the
Partnership at a price of $40 per Unit; the offer expired July 17, 2003.  Equity
is not affiliated with the  Partnership or the Managing  General  Partners.  The
price  offered was  determined  solely at the  discretion of Equity and does not
necessarily represent the fair market value of each Unit.

     In response to the Equity  tender  offer,  on June 27,  2003,  the Managing
General  Partner filed a Schedule 14D-9.  In that filing,  the Managing  General
Partner  recommended  that Limited  Partners  reject the Equity offer because it
viewed the offer as inadequate.

                            Unregistered Tender Offer
                            -------------------------

     On July 31, 2003, Peachtree Partners (Peachtree)  initiated an unregistered
tender offer to purchase no more than 4.9%  (including  2,857  Units,  or 3.88%,
already  owned  by  Peachtree  affiliates)  of  the  outstanding  Units  in  the
Partnership at a price of $65 per Unit; the offer expired on September 30, 2003.
Peachtree  is not  affiliated  with  the  Partnership  or 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.

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


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

     a.   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.

     b.   No  Reports  on Form 8-K were  filed  with the  Commission  during the
          quarter ended September 30, 2003.

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 11, 2003                      by:  /s/ Michael J. Tuszka
-----------------                           ------------------------------------
DATE                                        Michael J. Tuszka
                                              Vice President
                                              and Chief Accounting Officer
                                              (Principal Financial Officer
                                              and Principal Accounting Officer)

                                      -25-