<PAGE>

                                    FORM 10-Q
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For the Quarter Ended    September 30, 1997
                         ------------------


Commission file number      0-13523
                         -------------


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
--------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)




           Maryland                                     52-1328767
-----------------------------------------         --------------------
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                Identification No.)



11200 Rockville Pike, Rockville, Maryland                 20852
-----------------------------------------         --------------------
(Address of principal executive offices)                (Zip Code)



                                 (301) 468-9200
-------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X]   No [ ]   

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.



          Class                         Outstanding at September 30, 1997
----------------------------------      ---------------------------------
     (Not applicable)                             (Not applicable)
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                               INDEX TO FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1997



                                                                 Page
                                                                 ----

PART I.   Financial Information (Unaudited)

Item 1.   Financial Statements

          Consolidated Balance Sheets - September 30, 1997 and
            December 31, 1996 . . . . . . . . . . . . . . . .        1

          Consolidated Statements of Operations - for the
            three and nine months ended September 30, 1997
            and 1996  . . . . . . . . . . . . . . . . . . . .        2

          Consolidated Statements of Cash Flows - for the
            nine months ended September 30, 1997 and 1996 . .        3

          Notes to Consolidated Financial Statements  . . . .        4

Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations . . . . . . .       16

PART II.  Other Information

Item 3.   Defaults upon Senior Securities . . . . . . . . . .       26

Item 6.   Exhibits and Reports on Form 8-K  . . . . . . . . .       28

Signature   . . . . . . . . . . . . . . . . . . . . . . . . .       29

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . .       30
<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,
                                                                                                   1997            1996
                                                                                               -------------    ------------
                                                                                                (Unaudited)
<S>                                                                                            <C>              <C>
Investments in and advances to partnerships                                                    $  31,435,480    $  30,456,822
Cash and cash equivalents                                                                         11,387,316        8,871,297
Restricted cash and cash equivalents                                                                  50,400          585,810
Acquisition fees, principally paid to related parties, net of
  accumulated amortization of $371,266 and $358,374, respectively                                    778,497          819,825
Property purchase costs, net of accumulated amortization of
  $360,125 and $346,512, respectively                                                                740,455          777,328
Other assets                                                                                          45,747           37,157
                                                                                               -------------    -------------
      Total assets                                                                             $  44,437,895    $  41,548,239
                                                                                               =============    =============

                                   LIABILITIES AND PARTNERS' DEFICIT

Due on investments in partnerships, net of unamortized discount
  on purchase money notes of $12,578,952 and $16,874,671,
  respectively                                                                                 $  29,468,552    $  26,931,672
Accrued interest payable                                                                          83,957,314       78,413,302
Distributions payable                                                                              1,469,300               --
Accounts payable and accrued expenses                                                                119,785           99,062
Consulting fees payable to related parties                                                             8,869            8,869
                                                                                               -------------    -------------
      Total liabilities                                                                          115,023,820      105,452,905
                                                                                               -------------    -------------

Commitments and contingencies

Partners' capital (deficit):
  Capital paid-in:
    General Partners                                                                                   2,000            2,000
    Limited Partners                                                                              73,501,500       73,501,500
                                                                                               -------------    -------------
                                                                                                  73,503,500       73,503,500
  Less:
    Accumulated distributions to partners                                                         (6,921,002)      (5,451,702)
    Offering costs                                                                                (7,562,894)      (7,562,894)
    Accumulated loss                                                                            (129,605,529)    (124,393,570)
                                                                                               -------------    -------------
      Total partners' deficit                                                                    (70,585,925)     (63,904,666)
                                                                                               -------------    -------------
      Total liabilities and partners' deficit                                                  $  44,437,895    $  41,548,239
                                                                                               =============    =============
</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

                                            (Unaudited)
<TABLE>
<CAPTION>
                                                                  For the three months ended       For the nine months ended
                                                                         September 30,                    September 30,
                                                                -----------------------------    -----------------------------
                                                                    1997            1996             1997            1996
                                                                -------------   -------------    -------------   -------------
<S>                                                             <C>             <C>              <C>             <C>
Share of income from partnerships                               $   2,909,266   $     104,142    $   4,048,884   $     651,509
                                                                -------------   -------------    -------------   -------------
Other revenue and  expenses:
 Revenue:
   Interest and other income                                          152,330         116,929          411,383         417,796
                                                                -------------   -------------    -------------   -------------
 Expenses:
   Interest                                                         3,831,982       3,896,106       11,494,143      11,875,434
   Management fee                                                      93,750          93,750          281,250         281,250
   General and administrative                                          35,990          46,188          119,751         119,715
   Professional fees                                                   25,957          25,467           76,243          80,345
   Amortization                                                        14,065          15,578           42,851          47,274
                                                                -------------   -------------    -------------   -------------
                                                                    4,001,744       4,077,089       12,014,238      12,404,018
                                                                -------------   -------------    -------------   -------------
      Total other revenue and expenses                             (3,849,414)     (3,960,160)     (11,602,855)    (11,986,222)
                                                                -------------   -------------    -------------   -------------

Loss before gain on disposition of investments
  in partnerships                                                    (940,148)     (3,856,018)      (7,553,971)    (11,334,713)

Gain on disposition of investments in partnerships                  1,921,993       4,957,244        1,921,993       7,810,522
                                                                -------------   -------------    -------------   -------------

Income (loss) before extraordinary gain from
  extinguishment of debt                                              981,845       1,101,226       (5,631,978)     (3,524,191)

Extraordinary gain from extinguishment of debt                        420,019      12,064,351          420,019      13,567,049
                                                                -------------   -------------    -------------   -------------

Net income (loss)                                                   1,401,864      13,165,577       (5,211,959)     10,042,858

Accumulated losses, beginning of period                          (131,007,393)   (133,861,696)    (124,393,570)   (130,738,977)
                                                                -------------   -------------    -------------   -------------

Accumulated losses, end of period                               $ 129,605,529   $(120,696,119)   $(129,605,529)  $(120,696,119)
                                                                =============   =============    =============   =============

Income (loss) allocated to General Partners (1.51%)             $      21,168   $     198,800    $     (78,701)  $     151,647
                                                                =============   =============    =============   =============
</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 OPERATIONS - Continued

                                         (Unaudited)
<TABLE>
<CAPTION>
                                                                  For the three months ended       For the nine months ended
                                                                         September 30,                    September 30,
                                                                -----------------------------    -----------------------------
                                                                    1997            1996             1997            1996
                                                                -------------   -------------    -------------   -------------
<S>                                                             <C>             <C>              <C>             <C>
Income (loss) allocated to Initial and Special
  Limited Partners (1.49%)                                      $      20,888   $     196,168    $     (77,658)  $     149,639
                                                                =============   =============    =============   =============

Income (loss) allocated to Additional Limited
  Partners (97%)                                                $   1,359,808   $  12,770,609    $  (5,055,600)  $   9,741,572
                                                                =============   =============    =============   =============

Income (loss) per unit of Additional Limited
  Partnership Interest based on 73,500 units
  outstanding                                                   $       18.50   $      173.75    $      (68.78)  $      132.54
                                                                =============   =============    =============   =============
</TABLE>






























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

                                             -3-
<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,
                                                                                                -----------------------------
                                                                                                    1997             1996
                                                                                                ------------     ------------
<S>                                                                                             <C>              <C>
Cash flows from operating activities:
  Net (loss) income                                                                             $ (5,211,959)    $ 10,042,858

  Adjustments to reconcile net (loss) income to net cash
   used in operating activities:
    Share of income from partnerships                                                             (4,048,884)        (651,509)
    Decrease in accrued interest receivable on
      advances to partnerships                                                                         2,738              148
    Amortization of deferred costs                                                                    42,851           47,274
    Amortization of discount on purchase money notes                                               3,762,057        3,257,308
    Gain on disposition of investments in partnerships                                            (1,921,993)      (7,810,522)
    Extraordinary gain from extinguishment of debt                                                  (420,019)     (13,567,049)
    Payment of purchase money note interest                                                         (350,747)        (278,394)

    Changes in assets and liabilities:
      Increase in other assets                                                                        (8,590)         (15,067)
      Increase in accrued interest payable                                                         7,731,185        8,618,127
      Increase in accounts payable and accrued expenses                                               20,723          320,122
                                                                                                ------------     ------------
         Net cash used in operating activities                                                      (402,638)         (36,704)
                                                                                                ------------     ------------
Cash flows from investing activities:
  Receipt of distributions from partnerships                                                       2,986,747          747,244
  Repayment of advances to partnerships                                                               80,740          143,804
  Decrease (increase) in restricted cash and cash equivalents                                        535,410         (531,100)
  Net proceeds from disposition of investments in partnerships                                     1,957,343       11,819,024
                                                                                                ------------     ------------
         Net cash provided by investing activities                                                 5,560,240       12,178,972
                                                                                                ------------     ------------
Cash flows from financing activities:
  Payment of purchase money note principal                                                           (42,739)          (8,865)
  Pay-off of purchase money notes and related interest                                            (2,598,844)      (7,807,548)
                                                                                                ------------     ------------
         Net cash used in financing activities                                                    (2,641,583)      (7,816,413)
                                                                                                ------------     ------------
Net increase in cash and cash equivalents                                                          2,516,019        4,325,855
Cash and cash equivalents, beginning of period                                                     8,871,297        6,801,118
                                                                                                ------------     ------------
Cash and cash equivalents, end of period                                                        $ 11,387,316     $ 11,126,973
                                                                                                ============     ============
</TABLE>

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

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


1.   BASIS OF PRESENTATION

     In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited consolidated financial statements of Capital Realty
Investors-IV Limited Partnership (the Partnership) contain all adjustments of a
normal recurring nature necessary to present fairly the Partnership's
consolidated financial position as of September 30, 1997 and December 31, 1996
and the consolidated results of its operations for the three and nine months
ended September 30, 1997 and 1996 and its consolidated cash flows for the nine
months ended September 30, 1997 and 1996.

     These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission.  Certain
information and note disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted.  While the Managing General Partner believes
that the disclosures presented are adequate to make the information not mis-
leading, it is suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes included in
the Partnership's Annual Report filed on Form 10-K for the year ended December
31, 1996.

     Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

     The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of purchase money notes having a principal balance of
$42,047,504 (exclusive of unamortized discount on purchase money notes of
$12,578,952) plus accrued interest of $83,957,314 as of September 30, 1997, 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.  Purchase money notes in
an aggregate principal amount of $1,370,000 matured in 1994 but have not been
paid, as discussed below.  Purchase money notes in an aggregate principal amount
of $1,330,000 matured on August 31, 1997, as discussed below.  Purchase money
notes originally due to mature on September 1, 1999, were retired at a discount
on January 2, 1997, in connection with the terms of an escrow agreement, as
discussed below.  The remaining purchase money notes mature from 1999 to 2025. 
The purchase money notes 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 Local Partnership.  The Managing General
Partner is continuing to investigate possible alternatives to reduce the
Partnership's long-term debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note requirements, buying out certain purchase money notes at a discounted
price, extending the due dates of certain purchase money notes, or refinancing
the respective properties' underlying debt and using the Partnership's share of
the proceeds to pay off or buy down certain purchase money note obligations.



                                       -5-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     Interest expense on the Partnership's purchase money notes for the three
and nine months ended September 30, 1997 was $3,831,982 and $11,494,143
respectively, and $3,896,106 and $11,875,434 during the three and nine months
ended September 30, 1996, respectively.  Amortization of the imputed interest on
purchase money notes increased interest expense during the three and nine months
ended September 30, 1997 by $1,254,019 and $3,762,057, respectively, and by
$1,074,829 and $3,257,308 during the three and nine months ended September 30,
1996, respectively.  The accrued interest on the purchase money notes of
$83,957,314 and $78,413,302 as of September 30, 1997 and December 31, 1996,
respectively, is due on the respective maturity dates of the purchase money
notes or earlier, in some instances, if the pertinent Local Partnership has
distributable net cash flow, as defined in the relevant Local Partnership
agreement.  

     On May 23, 1994, the local general partner of New Forest Park Associates
Limited Partnership (Forest Park) filed a notice of intent to participate under
the Low Income Housing Preservation and Resident Homeownership Act of 1990
(LIHPRHA) program.  On July 11, 1996, the local managing general partner's plan
of action regarding the sale of Forest Park under the LIHPRHA program was
approved by HUD.  On September 19, 1996, Forest Park sold the property, a 284-
unit apartment complex located in New Orleans, Louisiana, under the LIHPRHA
program to Forest Park Affordable Housing Inc., a District of Columbia non-
profit organization.  The sale of the property generated net cash proceeds to
the Partnership of approximately $1.2 million at closing.  The proceeds received
at closing were net of approximately $1.7 million used to retire, at a discount,
a portion of the Partnership's purchase money note obligation with respect to
the property.  The proceeds were also net of $531,100 which was used to purchase
a certificate of deposit which was held in escrow until January 2, 1997, at
which time all principal and interest accrued up to three percent per annum on
the certificate of deposit was used to retire the Partnership's remaining
purchase money note obligation with respect to the property.  All interest that
accrued on the certificate of deposit in excess of three percent per annum was
received by the Partnership.  Accordingly, the accompanying financial statements
include $531,100 of restricted cash equivalents as of December 31, 1996, which
represents the remaining principal balance which became due on January 2, 1997,
in accordance with the escrow agreement.  The sale provided proceeds to the
Partnership in excess of its investment in the Local Partnership, and resulted
in an estimated net financial statement gain at closing of approximately $7.2
million, of which approximately $4.8 million resulted from the retirement of the
purchase money note obligation with respect to the property.  Upon finalization
of the audit of the property's operations and an additional payment of
approximately $18,000 received by the Partnership resulting from the final
release of the property's reserves, the sale resulted in a net financial
statement gain of approximately $7.3 million, of which approximately $4.8
million resulted from the retirement of the purchase money note obligation with
respect to the property.  The federal tax gain was approximately $10.1 million. 
The Managing General Partner of the Partnership and/or its affiliates did not
receive any fees relating to the sale. 

     On May 23, 1994, the local general partner of New Walnut Square Associates
Limited Partnership (Walnut Square) filed a notice of intent to participate
under LIHPRHA.  On July 11, 1996, the local managing general partner's plan of
action regarding the sale of Walnut Square under the LIHPRHA program was
approved by HUD.  On September 19, 1996, Walnut Square sold the property, a 284-
unit apartment complex located in New Orleans, Louisiana, under the LIHPRHA

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

program to Walnut Square Affordable Housing, Inc., a District of Columbia non-
profit entity.  The sale of the property generated net cash proceeds to the
Partnership at closing of approximately $966,000.  The proceeds were net of $2.2
million used to retire, at a discount, the Partnership's purchase money note
obligation with respect to the property.  The sale provided proceeds to the
Partnership in excess of its investment in the Local Partnership, and resulted
in an estimated net financial statement gain at closing of approximately $8.4
million, of which approximately $6.8 million resulted from the retirement of the
purchase money note obligation with respect to this property.  Upon finalization
of the audit of the property's operations and an additional payment of
approximately $162,000 received by the purchase money noteholders resulting from
the final release of the property's reserves, the sale resulted in a net
financial statement gain of approximately $8.6 million, of which approximately
$6.7 million resulted from the retirement of the purchase money note obligation
with respect to the property.  The federal tax gain was approximately $11.4
million.  The Managing General Partner of the Partnership and/or its affiliates
did not receive any fees relating to the sale.

     On March 15, 1993, the local general partner of River Run Company (River
Run) filed a notice of intent to participate under LIHPRHA.  On February 27,
1996, the local managing general partner's plan of action regarding the sale of
River Run under the LIHPRHA program was approved by HUD.  On August 27, 1996,
River Run sold the property, a 100-unit apartment complex located in Macomb,
Illinois, under the LIHPRHA program to National Handicap Housing Institute,
Inc., a non-profit entity.  The sale of the property generated net cash proceeds
to the Partnership of approximately $552,000.  The proceeds were net of
approximately $530,000 used to retire, at a discount, the Partnership's purchase
money note obligation with respect to the property.  The sale provided proceeds
to the Partnership in excess of its investment in the Local Partnership, and
resulted in a net financial statement gain in 1996 of approximately $1.4
million, of which approximately $405,000 resulted from the retirement of the
purchase money note obligation with respect to the property.  The federal tax
gain was approximately $3.2 million.   The Managing General Partner of the
Partnership and/or its  affiliates earned net fees of $26,606 for its services
relating to the sale of River Run.  As of October 24, 1997, $8,869 of these fees
have not been paid.

     On May 22, 1992, Clearfield Hills I Limited Partnership (Clearfield Hills
I) filed a notice of intent to participate under the LIHPRHA program.  The sale
of the property was completed on February 6, 1996.  The sale price of
approximately $3.2 million generated sufficient proceeds to the Partnership to
retire, at a discount, the purchase money note obligation of the Partnership
with respect to such property, which matured on October 30, 1994.  The sale
provided proceeds to the Partnership in excess of its investment in the Local
Partnership, and resulted in a net financial statement gain in 1996 of
approximately $1.8 million, of which approximately $50,000 resulted from the
retirement of the purchase money note obligation with respect to the property. 
The federal tax gain was approximately $2.4 million.

     On March 1, 1994, New Village Apartments North (Village North) filed a
notice of intent to participate under the LIHPRHA program.  The sale of the
property was completed on February 6, 1996.  The sale price of approximately
$2.86 million generated sufficient proceeds to the Partnership to retire, at a
discount, the purchase money note obligation of the Partnership with respect to
such property, which matured on September 27, 1994.  The sale provided proceeds

                                       -7-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

to the Partnership in excess of its investment in the Local Partnership, and
resulted in a net financial statement gain in 1996 of approximately $2.6
million, of which approximately $1.5 million resulted from the retirement of the
purchase money note obligation with respect to the property.  The federal tax
gain was approximately $3.3 million.

     The Managing General partner received $1,000 on January 5, 1996 for an
option to purchase the Partnership's limited partner interest in New Second
Lakewood Associates Limited Partnership (Second Lakewood) and an additional
$1,000 on May 3, 1996, to extend the term of the option.  Negotiations between
the Managing General Partner and the option holder continued following the
expiration of the option until November 1996, when they were terminated.  In
January 1997, the local managing general partner received an offer to purchase
the property from a third party, and a purchase agreement was signed effective
February 17, 1997.  On July 2, 1997, Second Lakewood sold the property, a 219-
unit apartment complex located in Schaumberg, Illinois.  The sale of the
property generated cash proceeds to the Partnership of approximately $1.7
million at closing.  On July 9, 1997, the Partnership received $91,066
representing the Partnership's allocable portion of the release of funds held in
security deposit and insurance accounts related to Second Lakewood. 
Additionally, on July 11, 1997 the Partnership received $154,536 representing
the Partnership's allocable portion of the release of the property's real estate
tax escrows.  On August 15, 1997 and September 10, 1997, the Partnership
received additional funds totaling $1,558 related to the Partnership's allocable
portion of the closing out of the property's remaining accounts.  In September
and October, 1997, the Partnership paid $29,177 and $7,831, respectively,
related to outstanding expense invoices of the Local Partnership.  The proceeds
received at and subsequent to closing were in excess of the Partnership's
investment in the Local Partnership and resulted in an estimated net financial
statement gain of approximately $1.9 million.  The federal tax gain is estimated
to be approximately $11 million.

     On October 31, 1996, the Partnership distributed $1,999,119 (or $27.20 per
Additional Limited Partner unit) to the Additional Limited Partners from the
proceeds of the sales of Clearfield Hills I, Village North, River Run, Forest
Park and Walnut Square.  The Managing General Partner plans to distribute
approximately $1.47 million (or approximately $20 per Additional Limited Partner
Unit) to the Additional Limited Partners from the proceeds of the sale of Second
Lakewood by November 30, 1997 to unit holders of record as of September 30,
1997.  The Managing General Partner intends to retain all of the Partnership's
remaining undistributed net sale proceeds for the possible repayment, prepayment
or purchase of the Partnership's outstanding purchase money notes related to
other Local Partnerships.

     Valley Vista Apartments (Valley Vista), a 124 unit high rise apartment
building located in Syracuse, New York, filed a Notice of Intent to participate
in the LIHPRHA program with the U.S. Department of Housing and Urban Development
(HUD) in November 1992.  After a series of delays, Valley Vista was accepted
into the LIHPRHA program on September 2, 1993.  Due to unforseen delays in
determining a final property valuation, Valley Vista was removed from the
Preservation Funding Queue (a mechanism for allocating available LIHPRHA funds).
In June 1997, Congress approved the 1997 Emergency Supplemental Appropriations
Act for Recovery from National Disasters, and for Overseas Peacekeeping Efforts,
including those in Bosnia.  This Act included $3.5 million to process the
refinancing of Valley Vista's mortgage loan under the Capital Grants program. 

                                       -8-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

On August 22, 1997, Valley Vista closed on the refinancing of its mortgage loan.
Proceeds of approximately $2.1 million generated from the refinancing were used
to retire, at a discount, the remaining purchase money note obligation of the
Partnership with respect to such property, resulting in a gain on extinguishment
of approximately $420,000.  The proceeds from the refinancing used to retire the
Partnership's purchase money note obligation were in excess of the Partnership's
basis in Valley Vista and are included in share of income from partnerships. 
Subject to HUD and New York state agencies' approvals, the Partnership will
assign its partnership interest in Valley Vista to the local managing general
partner and withdraw from the Local Partnership.  The Partnership anticipates
receiving $910,000 at such time.

     The Partnership defaulted on its purchase money notes relating to Redden
Development Company (Redden Gardens) on August 31, 1997 when the notes matured
and were not paid.  The defaulted amount included principal and accrued interest
of $1,330,000 and $2,783,593, respectively.  As of October 30, 1997, principal
and accrued interest of $1,330,000 and $2,840,054, respectively were due.  In
accordance with the purchase money note agreement, the Partnership has sixty
days to cure the default.  The Managing General Partner proposed a five year
extension on the purchase money notes.  This offer was rejected by the purchase
money noteholders, and as of October 30, 1997, no agreement has been reached. 
The Managing General Partner commissioned a rental market study and is
evaluating the feasibility of converting the property to market-rate.  No
conclusion has been reached as of October 30, 1997.  There is no assurance that
the property will be converted nor is there any assurance that an agreement will
be reached with the purchase money noteholders.  Accordingly, there can be no
assurance that the Partnership will be able to retain its interest in the Local
Partnership.  The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership. 
Therefore, should the investment in Redden Gardens not produce sufficient value
to satisfy the purchase money notes related to Redden Gardens, the Partnership's
exposure to loss is limited, as the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership.  Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.

     The Partnership defaulted on its purchase money note relating to Holiday
Village Apartments on July 27, 1994 when the note matured and was not paid.  The
defaulted amount included principal and accrued interest of $1,370,000 and
$2,862,342, respectively.  As of October 30, 1997, principal and accrued
interest totaling $1,370,000 and $4,733,582, respectively, were due.  In June
1994, an offer was made to extend the maturity date of this note to coincide
with the potential refinancing of the first mortgage.  There is no assurance
that a refinancing of the first mortgage will be obtained.  The Managing General
Partner and the noteholder continue to negotiate settlement options, and as of
October 30, 1997, negotiations between the Managing General Partner and the
noteholder were ongoing.  There is no assurance that an agreement will be
reached.  Should the noteholder begin foreclosure proceedings on the
Partnership's interest in the related Local Partnership, the Partnership intends
to vigorously defend any action by the noteholder.  However, there is no
assurance that the Partnership will be able to retain its interest in the Local
Partnership.  The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's

                                       -9-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership. 
Therefore, should the investment in Holiday Village Apartments not produce
sufficient value to satisfy the related purchase money note, the Partnership's
exposure to loss is limited, as the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership.  Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.

     The Managing General Partner is currently negotiating an extension on the
purchase money notes related to Highland Village.  The purchase money notes,
which aggregate a principal amount of $1.1 million are due to mature on October
31, 1999.  In connection with the proposed extension of the purchase money
notes, the Managing General Partner, the local managing general partner and the
purchase money noteholders are jointly exploring various options to refinance
the Massachusetts Housing Finance Agency (MHFA) and HUD Section 236 interest
rate subsidized mortgage loan related to this property.  There is no assurance
that the noteholders will agree to an extension on the purchase money notes, or
that a refinancing of the mortgage loan will be obtained.

     The local managing general partner of Jewish Federation has agreed to
donate a portion of land at the property to an affiliated entity of the local
managing general partner, subject to all necessary governmental approvals. 
There can be no assurance that the approvals will be obtained.  

     The Managing General Partner has entered into an agreement with the
purchase money noteholders related to Jewish Federation Apartments Associates
(Jewish Federation) to extend the maturity dates of the associated purchase
money notes for an additional five years.  The purchase money notes, which
aggregate a principal amount of $1.3 million, are due to mature on October 31,
1999.  The extension, however, is subject to the closing of the transfer of a
portion of the land at the property, as discussed immediately above.  There is
no assurance that an agreement will be reached with the purchase money
noteholders.

     The report of the auditors on the financial statements of Garden Court
Associates Limited Partnership (Garden Court) for the year ended December 31,
1996 indicated that substantial doubt exists about the ability of the Local
Partnership to continue as a going concern due to negative cash flow resulting
from decreasing occupancy levels.  As of September 30, 1997, Garden Court
reported a net operating loss of approximately $78,000 for 1997 and a 63%
occupancy level.  Garden Court has been withholding management fees payable to
the local managing general partner in order to remain current on the mortgage
related to the property.  The local managing general partner met with the lender
and HUD, the insurer of the mortgage, to discuss possible alternatives to
address cash flow issues at the property.  The Partnership's investment in
Garden Court was previously reduced to zero as a result of losses from the Local
Partnership during prior years.  In addition, the Partnership did not issue any
purchase money notes or debt instruments in connection with its investment in
Garden Court.  Therefore, the uncertainty about the Local Partnership's
continued ownership of the property does not impact the Partnership's financial
condition.  Furthermore, the complete loss of this investment would not have a
material impact on the operations of the Partnership.

     The local managing general partner of Campbell Terrace Associates Limited
Partnership (Campbell Terrace) has received an offer from a third party to

                                      -10-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

purchase the property.  The local managing general partner and the Managing
General Partner are analyzing the offer and a purchase contract is being
negotiated.  There is no assurance that any sale will occur as a result of these
negotiations.

     In 1989, Second Lakewood was experiencing rent losses due to units being
taken off the market because of roof leakage. The Partnership advanced a total
of $750,000 during 1990 to fund roof replacement in order to maintain the
marketability and income of the property.  As of September 30, 1997 and December
31, 1996, the outstanding loan to Second Lakewood totalled $0 and $80,740,
respectively.  Accrued interest on the loan was $0 and $2,738 as of September
30, 1997 and December 31, 1996, respectively.

     The letter of credit related to the tax-exempt bonds on Lakes of Northdale,
which originally matured in June 1995, had been extended to February 15, 1996. 
The letter of credit fee increased from its previous level of 1% per annum to a
maximum of 4% per annum in October 1995.  During June 1996, the Local
Partnership received a new letter of credit with a three-year term and a three-
year renewal option.  In conjunction with the new letter of credit, the
Partnership successfully negotiated with the holder of the related purchase
money note to extend the term thereof to that of the letter of credit.

     Some of the rental properties owned by the Local Partnerships have
mortgages which are federally insured under Section 236 or Section 221(d)(3)of
the National Housing Act, as amended.  LIHPRHA, which provided property owners
with restricted opportunities to sell low income housing, ended effective
September 30, 1996.  However, HUD received approximately $175 million to fund
sales of qualifying properties under the LIHPRHA program during the federal
government's fiscal year 1997, which began October 1, 1996.  In October 1997,
the HUD appropriations bill does not include any funding for the LIHPRHA
program.  Therefore, this program is effectively terminated.

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

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of project-based rental housing assistance payments provided by
HUD pursuant to Section 8 HAP contracts.  Under Section 8 HAP contracts, HUD
guaranteed rental properties a high monthly rental payment for each low and
moderate income apartment unit maintained in the complex.  Over the years,
annual increases have pushed rents on many of the Section 8 HAP  contracts above
the market rate for comparable neighborhoods.  In an effort to deal with the
increasing burden of funding Section 8 HAP contracts, many of which are now
expiring, in 1995 HUD released its Reinvention Blueprint, and in 1996 a revision
to its Reinvention Blueprint, which contained proposals that have come to be

                                      -11-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

known as "Mark-to-Market".  Under the initiative, HUD would eliminate the
Section 8 project-based subsidy and provide the residents with "sticky vouchers"
which would allow residents to move to other developments should they so choose.
However, with the elimination of the Section 8 HAP subsidies,  most rental
properties will not be able to maintain sufficient income to pay debt service. 
Therefore, the Mark-to-Market initiative will allow for a part of the existing
first mortgage to become a "soft" second mortgage which will accrue interest at
a low 1% interest rate.  The splitting of the existing first mortgage into a new
first and second mortgage may generate ordinary taxable income.  Unfortunately,
there is no corresponding tax relief legislation at this time.

       In October 1997, both the House and the Senate passed the FY 1998 HUD
spending bill which includes Mark-to-Market legislation and President Clinton is
expected to sign the appropriations bill.  Between now and October 1, 1998 all
expiring Section 8 contracts with rents less than 120% of fair market rents
(FMR's) will be renewed for one-year.  Properties with rents in excess of 120%
of FMR's will be subject to the terms of the current Mark-to-Market
demonstration program.  Effective October 1, 1998, all properties with expiring
Section 8 contracts will be subject to Mark-to-Market.  The Section 8 HAP
contracts for the following properties expire during the government's fiscal
year 1998:



































                                      -12-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>
                                                                     Units
                                                                 Authorized for          Expiration of
                                          Number of             Rental Assistance          Section 8
       Property                          Rental Units            Under Section 8         HAP Contract
       --------                          ------------           -----------------        -------------
       <S>                               <C>                    <C>                      <C>
       Chippewa County                        109                     108                    07/14/98
       Cottonwood Park                        126                       6                    06/30/98
       Holiday Village                         80                       6                    06/01/98
       Matthew XXV                             95                      95                    06/18/98
       Pilgrim Tower North                    258                     205                    10/31/97
       Redden Gardens                         150                      29                    09/30/98
       Tradewinds Terrace                     122                      52                    09/30/98
       Westport Village                       121                      12                    01/01/98

</TABLE>

     With the potential elimination of the Section 8 HAP contracts, there is no
assurance that these rental properties would be able to maintain the rental
income and occupancy levels necessary to pay operating costs and debt service.

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

     The following are combined statements of operations for the thirty-seven
and thirty-eight Local Partnerships in which the Partnership had invested as of
September 30, 1997 and 1996, respectively.  The 1996 statements contain
information on Clearfield Hills I, Village North, River Run, Forest Park and
Walnut Square through the date of sale.  Additionally, the 1997 statements
contain information on Second Lakewood through the date of sale.  The statements
are compiled from information supplied by the management agents of the projects
and are unaudited.












                                                                -13-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

                                                              For the three months ended         For the nine months ended
                                                                     September 30,                      September 30,
                                                            -----------------------------      -----------------------------
                                                                1997             1996              1997             1996
                                                            ------------     ------------      ------------     ------------
<S>                                                         <C>              <C>               <C>              <C>
Revenue:
  Rental revenue                                            $  8,689,237     $  9,539,308      $ 27,049,404     $ 29,099,236
  Other                                                          537,091          606,283         1,675,871        1,675,034
                                                            ------------     ------------      ------------     ------------
                                                               9,226,328       10,145,591        28,725,275       30,774,270
                                                            ------------     ------------      ------------     ------------
Expenses:
  Operating                                                    5,077,369        6,367,741        16,805,148       19,122,335
  Interest                                                     1,703,384        1,987,571         5,475,592        5,972,489
  Depreciation and amortization                                1,840,243        2,000,303         5,654,253        6,026,800
                                                            ------------     ------------      ------------     ------------
                                                               8,620,996       10,355,615        27,934,993       31,121,624
                                                            ------------     ------------      ------------     ------------
Net income (loss)                                           $    605,332     $   (210,024)     $    790,282     $   (347,354)
                                                            ============     ============      ============     ============

</TABLE>

     As of September 30, 1997 and December 31, 1996, the Partnership's share of
cumulative losses of eight of the thirty-seven and eleven of the thirty-eight,
respectively, Local Partnerships exceeds the amount of the Partnership's
investments in and advances to those Local Partnerships by $16,118,730 and
$15,165,646, respectively. Since the Partnership has no further obligation to
advance funds or provide financing to these Local Partnerships, the excess
losses have not been reflected in the accompanying consolidated financial
statements.

3.   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 managing the Partnership.  The Partnership paid $18,468 and $61,848 for the
three and nine months ended September 30, 1997, respectively, and $18,954 and
$78,279 for the three and nine months ended September 30, 1996, respectively, as
direct reimbursement of expenses incurred on behalf of the Partnership. 
Additionally, 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, as discussed above, of $93,750 and $281,250 for the three and
nine months ended September 30, 1997 and 1996, respectively.





                                      -14-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


4.   CONTINGENCIES

     In 1990, CRI, as Managing General Partner of the Partnership and various
other entities, subcontracted certain property-level asset management functions
for certain properties to Capital Management Strategies, Inc. (CMS).  Among
these properties were properties owned by some of the Local Partnerships in
which the Partnership invested.  CMS was formed by Martin C. Schwartzberg, a
nominal general partner of the Partnership and a former stockholder of CRI, when
he retired from CRI and its related businesses as of January 1, 1990.  Mr.
Schwartzberg agreed not to act as a general partner with respect to any of the
CRI-sponsored partnerships, including this Partnership, and has not done so
since that time.  In late 1995, a dispute arose between CRI and CMS over the
funding level of the 1996 contract for CMS.  On November 9, 1995, CRI filed a
complaint against CMS to determine the proper amount of fees to be paid in 1996
under the asset management agreement.  CMS answered on January 10, 1996, but
asserted no counterclaims.

     Thereafter, Mr. Schwartzberg launched a hostile consent solicitation to be
designated as managing general partner of approximately 125 private partnerships
sponsored by CRI.  On January 18, 1996, Mr. Schwartzberg and CMS filed a
complaint in the Circuit Court of Montgomery County, Maryland (the Circuit
Court), against CRI and Messrs. Dockser and Willoughby (who are general partners
of the Partnership) alleging, among other things, that CRI and Messrs. Dockser
and Willoughby breached the asset management agreement pursuant to which Mr.
Schwartzberg's company, CMS, agreed to perform limited functions related to
property-level issues for a portion of CRI's subsidized housing portfolio
(including some of the properties in which the Partnership invested), by
reducing the proposed budget for 1996.  The Partnership was not named as a
defendant in this action.  Messrs. Dockser and Willoughby entered an answer
denying all of Mr. Schwartzberg's claims.  On February 6, 1996, CRI terminated
the CMS contract for cause.  (CRI subsequently retained an independent asset
management company to perform functions previously performed by CMS.)  Mr.
Schwartzberg and CMS responded to the contract termination by filing a motion
for injunctive relief in the Circuit Court, asking the court to enjoin CRI from
terminating the contract.  In a ruling issued on February 12, 1996, the Circuit
Court, among other things, refused to grant the injunction requested by CMS.  On
February 12, 1996, the Circuit Court also issued a memorandum opinion and order
enjoining CMS and Mr. Schwartzberg from disclosing information made confidential
under the asset management agreement.

     Following subsequent litigation, none of which involved the Partnership, on
June 12, 1996, Mr. Schwartzberg, CRI and others entered an agreement (which
contemplates the execution of a subsequent definitive agreement) to resolve the
disputes between CRI and CMS.  The Partnership was not a signatory to the
agreement.  As part of the resolution, Mr. Schwartzberg withdrew any derogatory
statements he made about CRI and its principals.  Upon execution of the
definitive agreement, Mr. Schwartzberg shall withdraw as a General Partner of
this Partnership and his interest will become that of a Special Limited Partner.
As of October 24, 1997, CRI and Mr. Schwartzberg were unable to agree on the
language of various provisions of the definitive agreement and have agreed to
submit the open issues to arbitration.  The Partnership is not a party to the
arbitration proceeding.





                                      -15-
<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 contains information that may be considered forward looking.  This
information contains a number of risks and uncertainties, as discussed herein
and in the Partnership's Annual Report filed on Form 10-K, that could cause
actual results to differ materially.

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

     The Partnership's liquidity, with unrestricted cash resources of
$11,387,316 (or approximately $150.28 per Additional Limited Partner unit) and
$8,871,297 (or approximately $117.08 per Additional Limited Partner unit) as of
September 30, 1997 and December 31, 1996, respectively, along with anticipated
future cash distributions from the Local Partnerships, is expected to meet its
current and anticipated operating cash needs, including a distribution to the
Additional Limited Partners by November 30, 1997, as discussed below.  As of
September 30, 1997, $50,400 of cash resources was restricted for future interest
payments on one of the purchase money notes.  On January 2, 1997 $535,410 of
restricted cash resources was used to retire the Partnership's remaining
purchase money note obligation with respect to the Forest Park property, as
discussed below.  As of October 24, 1997, there were no material commitments for
capital expenditures.  

     The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of purchase money notes having a principal balance of
$42,047,504 (exclusive of unamortized discount on purchase money notes of
$12,578,952) plus accrued interest of $83,957,314 as of September 30, 1997, 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.  Purchase money notes in
an aggregate principal amount of $1,370,000 matured in 1994 but have not been
paid, as discussed below.  Purchase money notes in an aggregate principal amount
of $1,330,000 matured on August 31, 1997, as discussed below.  Purchase money
notes originally due to mature on September 1, 1999, were retired at a discount
on January 2, 1997, in connection with the terms of an escrow agreement, as
discussed below.  The remaining purchase money notes mature from 1999 to 2025. 
The purchase money notes 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 Local Partnership.  The Managing General
Partner is continuing to investigate possible alternatives to reduce the
Partnership's long-term debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note requirements, buying out certain purchase money notes at a discounted
price, extending the due dates of certain purchase money notes, or refinancing
the respective properties' underlying debt and using the Partnership's share of
the proceeds to pay off or buy down certain purchase money note obligations.

     On May 23, 1994, the local general partner of New Forest Park Associates
Limited Partnership (Forest Park) filed a notice of intent to participate under
the Low Income Housing Preservation and Resident Homeownership Act of 1990
(LIHPRHA) program.  On July 11, 1996, the local managing general partner's plan

                                      -16-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

of action regarding the sale of Forest Park under the LIHPRHA program was
approved by HUD.  On September 19, 1996, Forest Park sold the property, a 284-
unit apartment complex located in New Orleans, Louisiana, under the LIHPRHA
program to Forest Park Affordable Housing Inc., a District of Columbia non-
profit organization.  The sale of the property generated net cash proceeds to
the Partnership of approximately $1.2 million at closing.  The proceeds received
at closing were net of approximately $1.7 million used to retire, at a discount,
a portion of the Partnership's purchase money note obligation with respect to
the property.  The proceeds were also net of $531,100 which was used to purchase
a certificate of deposit which was held in escrow until January 2, 1997, at
which time all principal and interest accrued up to three percent per annum on
the certificate of deposit was used to retire the Partnership's remaining
purchase money note obligation with respect to the property.  All interest that
accrued on the certificate of deposit in excess of three percent per annum was
received by the Partnership.  Accordingly, the accompanying financial statements
include $531,100 of restricted cash equivalents as of December 31, 1996, which
represents the remaining principal balance which became due on January 2, 1997,
in accordance with the escrow agreement.  The sale provided proceeds to the
Partnership in excess of its investment in the Local Partnership, and resulted
in an estimated net financial statement gain at closing of approximately $7.2
million, of which approximately $4.8 million resulted from the retirement of the
purchase money note obligation with respect to the property.  Upon finalization
of the audit of the property's operations and an additional payment of
approximately $18,000 received by the Partnership resulting from the final
release of the property's reserves, the sale resulted in a net financial
statement gain of approximately $7.3 million, of which approximately $4.8
million resulted from the retirement of the purchase money note obligation with
respect to the property.  The federal tax gain was approximately $10.1 million. 
The Managing General Partner of the Partnership and/or its affiliates did not
receive any fees relating to the sale. 

     On May 23, 1994, the local general partner of New Walnut Square Associates
Limited Partnership (Walnut Square) filed a notice of intent to participate
under LIHPRHA.  On July 11, 1996, the local managing general partner's plan of
action regarding the sale of Walnut Square under the LIHPRHA program was
approved by HUD.  On September 19, 1996, Walnut Square sold the property, a 284-
unit apartment complex located in New Orleans, Louisiana, under the LIHPRHA
program to Walnut Square Affordable Housing, Inc., a District of Columbia non-
profit entity.  The sale of the property generated net cash proceeds to the
Partnership at closing of approximately $966,000.  The proceeds were net of $2.2
million used to retire, at a discount, the Partnership's purchase money note
obligation with respect to the property.  The sale provided proceeds to the
Partnership in excess of its investment in the Local Partnership, and resulted
in an estimated net financial statement gain at closing of approximately $8.4
million, of which approximately $6.8 million resulted from the retirement of the
purchase money note obligation with respect to this property.  Upon finalization
of the audit of the property's operations and an additional payment of
approximately $162,000 received by the purchase money noteholders resulting from
the final release of the property's reserves, the sale resulted in a net
financial statement gain of approximately $8.6 million, of which approximately
$6.7 million resulted from the retirement of the purchase money note obligation
with respect to the property.  The federal tax gain was approximately $11.4
million.  The Managing General Partner of the Partnership and/or its affiliates
did not receive any fees relating to the sale.



                                      -17-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

     On March 15, 1993, the local general partner of River Run Company (River
Run) filed a notice of intent to participate under LIHPRHA.  On February 27,
1996, the local managing general partner's plan of action regarding the sale of
River Run under the LIHPRHA program was approved by HUD.  On August 27, 1996,
River Run sold the property, a 100-unit apartment complex located in Macomb,
Illinois, under the LIHPRHA program to National Handicap Housing Institute,
Inc., a non-profit entity.  The sale of the property generated net cash proceeds
to the Partnership of approximately $552,000.  The proceeds were net of
approximately $530,000 used to retire, at a discount, the Partnership's purchase
money note obligation with respect to the property.  The sale provided proceeds
to the Partnership in excess of its investment in the Local Partnership, and
resulted in a net financial statement gain in 1996 of approximately $1.4
million, of which approximately $405,000 resulted from the retirement of the
purchase money note obligation with respect to the property.  The federal tax
gain was approximately $3.2 million.   The Managing General Partner of the
Partnership and/or its  affiliates earned net fees of $26,606 for its services
relating to the sale of River Run.  As of October 24, 1997, $8,869 of these fees
have not been paid.

     On May 22, 1992, Clearfield Hills I Limited Partnership (Clearfield Hills
I) filed a notice of intent to participate under the LIHPRHA program.  The sale
of the property was completed on February 6, 1996.  The sale price of
approximately $3.2 million generated sufficient proceeds to the Partnership to
retire, at a discount, the purchase money note obligation of the Partnership
with respect to such property, which matured on October 30, 1994.  The sale
provided proceeds to the Partnership in excess of its investment in the Local
Partnership, and resulted in a net financial statement gain in 1996 of
approximately $1.8 million, of which approximately $50,000 resulted from the
retirement of the purchase money note obligation with respect to the property. 
The federal tax gain was approximately $2.4 million.

     On March 1, 1994, New Village Apartments North (Village North) filed a
notice of intent to participate under the LIHPRHA program.  The sale of the
property was completed on February 6, 1996.  The sale price of approximately
$2.86 million generated sufficient proceeds to the Partnership to retire, at a
discount, the purchase money note obligation of the Partnership with respect to
such property, which matured on September 27, 1994.  The sale provided proceeds
to the Partnership in excess of its investment in the Local Partnership, and
resulted in a net financial statement gain in 1996 of approximately $2.6
million, of which approximately $1.5 million resulted from the retirement of the
purchase money note obligation with respect to the property.  The federal tax
gain was approximately $3.3 million.

     The Managing General partner received $1,000 on January 5, 1996 for an
option to purchase the Partnership's limited partner interest in New Second
Lakewood Associates Limited Partnership (Second Lakewood) and an additional
$1,000 on May 3, 1996, to extend the term of the option.  Negotiations between
the Managing General Partner and the option holder continued following the
expiration of the option until November 1996, when they were terminated.  In
January 1997, the local managing general partner received an offer to purchase
the property from a third party, and a purchase agreement was signed effective
February 17, 1997.  On July 2, 1997, Second Lakewood sold the property, a 219-
unit apartment complex located in Schaumberg, Illinois.  The sale of the
property generated cash proceeds to the Partnership of approximately $1.7
million at closing.  On July 9, 1997, the Partnership received $91,066
representing the Partnership's allocable portion of the release of funds held in

                                      -18-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

security deposit and insurance accounts related to Second Lakewood. 
Additionally, on July 11, 1997 the Partnership received $154,536 representing
the Partnership's allocable portion of the release of the property's real estate
tax escrows.  On August 15, 1997 and September 10, 1997, the Partnership
received additional funds totaling $1,558 related to the Partnership's allocable
portion of the closing out of the property's remaining accounts.  In September
and October, 1997, the Partnership paid $29,177 and $7,831, respectively,
related to outstanding expense invoices of the Local Partnership.  The proceeds
received at and subsequent to closing were in excess of the Partnership's
investment in the Local Partnership and resulted in an estimated net financial
statement gain of approximately $1.9 million.  The federal tax gain is estimated
to be approximately $11 million.

     On October 31, 1996, the Partnership distributed $1,999,119 (or $27.20 per
Additional Limited Partner unit) to the Additional Limited Partners from the
proceeds of the sales of Clearfield Hills I, Village North, River Run, Forest
Park and Walnut Square.  The Managing General Partner plans to distribute
approximately $1.47 million (or approximately $20 per Additional Limited Partner
Unit) to the Additional Limited Partners from the proceeds of the sale of Second
Lakewood by November 30, 1997 to unit holders of record as of September 30,
1997.  The Managing General Partner intends to retain all of the Partnership's
remaining undistributed net sale proceeds for the possible repayment, prepayment
or purchase of the Partnership's outstanding purchase money notes related to
other Local Partnerships.

     Valley Vista Apartments (Valley Vista), a 124 unit high rise apartment
building located in Syracuse, New York, filed a Notice of Intent to participate
in the LIHPRHA program with the U.S. Department of Housing and Urban Development
(HUD) in November 1992.  After a series of delays, Valley Vista was accepted
into the LIHPRHA program on September 2, 1993.  Due to unforseen delays in
determining a final property valuation, Valley Vista was removed from the
Preservation Funding Queue (a mechanism for allocating available LIHPRHA funds).
In June 1997, Congress approved the 1997 Emergency Supplemental Appropriations
Act for Recovery from National Disasters, and for Overseas Peacekeeping Efforts,
including those in Bosnia.  This Act included $3.5 million to process the
refinancing of Valley Vista's mortgage loan under the Capital Grant's program. 
On August 22, 1997, Valley Vista closed on the refinancing of its mortgage loan.
Proceeds of approximately $2.1 million generated from the refinancing were used
to retire, at a discount, the remaining purchase money note obligation of the
Partnership with respect to such property, resulting in a gain on extinguishment
of approximately $420,000.  The proceeds from the refinancing used to retire the
Partnership's purchase money note obligation were in excess of the Partnership's
basis in Valley Vista and are included in share of income from partnerships. 
Subject to HUD and New York state agencies' approvals, the Partnership will
assign its partnership interest in Valley Vista to the local managing general
partner and withdraw from the Local Partnership.  The Partnership anticipates
receiving $910,000 at such time.

     The Partnership defaulted on its purchase money notes relating to Redden
Development Company (Redden Gardens) on August 31, 1997 when the notes matured
and were not paid.  The defaulted amount included principal and accrued interest
of $1,330,000 and $2,783,593, respectively.  As of October 30, 1997, principal
and accrued interest of $1,330,000 and $2,840,054, respectively were due.  In
accordance with the purchase money note agreement, the Partnership has sixty
days to cure the default.  The Managing General Partner proposed a five year
extension on the purchase money notes.  This offer was rejected by the purchase

                                      -19-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

money noteholders, and as of October 30, 1997, no agreement has been reached. 
The Managing General Partner commissioned a rental market study and is
evaluating the feasibility of converting the property to market-rate.  No
conclusion has been reached as of October 24, 1997.  There is no assurance that
the property will be converted nor is there any assurance that an agreement will
be reached with the purchase money noteholders.  Accordingly, there can be no
assurance that the Partnership will be able to retain its interest in the Local
Partnership.  The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership. 
Therefore, should the investment in Redden Gardens not produce sufficient value
to satisfy the purchase money notes related to Redden Gardens, the Partnership's
exposure to loss is limited, as the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership.  Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.

     The Partnership defaulted on its purchase money note relating to Holiday
Village Apartments on July 27, 1994 when the note matured and was not paid.  The
defaulted amount included principal and accrued interest of $1,370,000 and
$2,862,342, respectively.  As of October 30, 1997, principal and accrued
interest totaling $1,370,000 and $4,733,582, respectively, were due.  In June
1994, an offer was made to extend the maturity date of this note to coincide
with the potential refinancing of the first mortgage.  There is no assurance
that a refinancing of the first mortgage will be obtained.  The Managing General
Partner and the noteholder continue to negotiate settlement options, and as of
October 30, 1997, negotiations between the Managing General Partner and the
noteholder were ongoing.  There is no assurance that an agreement will be
reached.  Should the noteholder begin foreclosure proceedings on the
Partnership's interest in the related Local Partnership, the Partnership intends
to vigorously defend any action by the noteholder.  However, there is no
assurance that the Partnership will be able to retain its interest in the Local
Partnership.  The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership. 
Therefore, should the investment in Holiday Village Apartments not produce
sufficient value to satisfy the related purchase money note, the Partnership's
exposure to loss is limited, as the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership.  Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.

     The Managing General Partner is currently negotiating an extension on the
purchase money notes related to Highland Village.  The purchase money notes,
which aggregate a principal amount of $1.1 million are due to mature on October
31, 1999.  In connection with the proposed extension of the purchase money
notes, the Managing General Partner, the local managing general partner and the
purchase money noteholders are jointly exploring various options to refinance
the Massachusetts Housing Finance Agency (MHFA) and HUD Section 236 interest
rate subsidized mortgage loan related to this property.  There is no assurance
that the noteholders will agree to an extension on the purchase money notes, or
that a refinancing of the mortgage loan will be obtained.



                                      -20-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

     The Managing General Partner has entered into an agreement with the
purchase money noteholders related to Jewish Federation Apartments Associates
(Jewish Federation) to extend the maturity dates of the associated purchase
money notes for an additional five years.  The purchase money notes, which
aggregate a principal amount of $1.3 million, are due to mature on October 31,
1999.  The extension, however, is subject to the closing of the transfer of a
portion of the land at the property, as discussed below.  There is no assurance
that an agreement will be reached with the purchase money noteholders.

     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 months ended September 30, 1997, proceeds from the disposition of
Second Lakewood and the Valley Vista refinancing, as well as the receipt of
distributions from Local Partnerships were adequate to support operating cash
requirements and the pay-off of the Forest Park and Valley Vista purchase money
notes, as discussed above.

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

     The Partnership's net income for the three months ended September 30, 1997
decreased from the corresponding period in 1996 primarily due to the gain on
extinguishment of the Forest Park, Walnut Square and River Run purchase money
notes during 1996 which exceeded the gain on extinguishment of the Valley Vista
purchase money notes during 1997.  Contributing to the decrease in the
Partnership's net income was the gain on disposition of the aforementioned
properties during 1996 which exceeded the gain on disposition of Second Lakewood
during 1997.  Partially offsetting the decrease in the Partnership's net income
was an increase in share of income from partnerships primarily due to proceeds
generated from Valley Vista which were in excess of the Partnership's investment
in Valley Vista, as discussed above.

     The Partnership's net loss for the nine months ended September 30, 1997
increased from the corresponding period in 1996 primarily due to a decrease in
the extraordinary gain on extinguishment of debt and a decrease in the gain on
disposition of investments in partnerships due to the 1996 sales of the
properties discussed above as well as Village North and Clearfield Hills I. 
Partially offsetting the increase in the Partnership's net loss was an increase
in share of income from partnerships due to the Valley Vista refinancing
proceeds as discussed above.  Contributing to the increase in share of income
from partnerships was decreased operating expenses at two properties and
increased rental income at another property.  Also partially offsetting the
increase in the Partnership's net loss was a decrease in interest expense due to
the pay-off of the purchase money notes related to the 1996 sales, as discussed
above.

     For financial reporting purposes, the Partnership, as a limited partner in
the Local Partnerships, does not record losses from the Local Partnerships in
excess of its investment to the extent the Partnership has no further obligation
to advance funds or provide financing to the Local Partnerships.  As a result,
the Partnership's recognized losses for the three and nine months ended
September 30, 1997 did not include losses of $243,476 and $953,084,
respectively, compared to excluded losses of $314,653 and $996,068 for the three
and nine months ended September 30, 1996, respectively.



                                      -21-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

     The local managing general partner of Jewish Federation has agreed to
donate a portion of land at the property to an affiliated entity of the local
managing general partner, subject to all necessary governmental approvals. 
There can be no assurance that the approvals will be obtained.

     The report of the auditors on the financial statements of Garden Court
Associates Limited Partnership (Garden Court) for the year ended December 31,
1996 indicated that substantial doubt exists about the ability of the Local
Partnership to continue as a going concern due to negative cash flow resulting
from decreasing occupancy levels.  As of September 30, 1997, Garden Court
reported a net operating loss of approximately $78,000 for 1997 and a 63%
occupancy level.  Garden Court has been withholding management fees payable to
the local managing general partner in order to remain current on the mortgage
related to the property.  The local managing general partner met with the lender
and HUD, the insurer of the mortgage, to discuss possible alternatives to
address cash flow issues at the property.  The Partnership's investment in
Garden Court was previously reduced to zero as a result of losses from the Local
Partnership during prior years.  In addition, the Partnership did not issue any
purchase money notes or debt instruments in connection with its investment in
Garden Court.  Therefore, the uncertainty about the Local Partnership's
continued ownership of the property does not impact the Partnership's financial
condition.  Furthermore, the complete loss of this investment would not have a
material impact on the operations of the Partnership.

     The local managing general partner of Campbell Terrace Associates Limited
Partnership (Campbell Terrace) has received an offer from a third party to
purchase the property.  The local managing general partner and the Managing
General Partner are analyzing the offer and a purchase contract is being
negotiated.  There is no assurance that any sale will occur as a result of these
negotiations.

     In 1989, Second Lakewood was experiencing rent losses due to units being
taken off the market because of roof leakage. The Partnership advanced a total
of $750,000 during 1990 to fund roof replacement in order to maintain the
marketability and income of the property.  As of September 30, 1997 and December
31, 1996, the outstanding loan to Second Lakewood totalled $0 and $80,740,
respectively.  Accrued interest on the loan was $0 and $2,738 as of September
30, 1997 and December 31, 1996, respectively.

     The letter of credit related to the tax-exempt bonds on Lakes of Northdale,
which originally matured in June 1995, had been extended to February 15, 1996. 
The letter of credit fee increased from its previous level of 1% per annum to a
maximum of 4% per annum in October 1995.  During June 1996, the Local
Partnership received a new letter of credit with a three-year term and a three-
year renewal option.  In conjunction with the new letter of credit, the
Partnership successfully negotiated with the holder of the related purchase
money note to extend the term thereof to that of the letter of credit.

     Some of the rental properties owned by the Local Partnerships have
mortgages which are federally insured under Section 236 or Section 221(d)(3)of
the National Housing Act, as amended.  LIHPRHA, which provided property owners
with restricted opportunities to sell low income housing, ended effective
September 30, 1996.  However, HUD received approximately $175 million to fund




                                      -22-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

sales of qualifying properties under the LIHPRHA program during the federal
government's fiscal year 1997, which began October 1, 1996.  In October 1997,
the HUD appropriations bill does not include any funding for the LIHPRHA
program.  Therefore, this program is effectively terminated.

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

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of project-based rental housing assistance payments provided by
HUD pursuant to Section 8 HAP contracts.  Under Section 8 HAP contracts, HUD
guaranteed rental properties a high monthly rental payment for each low and
moderate income apartment unit maintained in the complex.  Over the years,
annual increases have pushed rents on many of the Section 8 HAP  contracts above
the market rate for comparable neighborhoods.  In an effort to deal with the
increasing burden of funding Section 8 HAP contracts, many of which are now
expiring, in 1995 HUD released its Reinvention Blueprint, and in 1996 a revision
to its Reinvention Blueprint, which contained proposals that have come to be
known as "Mark-to-Market".  Under the initiative, HUD would eliminate the
Section 8 project-based subsidy and provide the residents with "sticky vouchers"
which would allow residents to move to other developments should they so choose.
However, with the elimination of the Section 8 HAP subsidies,  most rental
properties will not be able to maintain sufficient income to pay debt service. 
Therefore, the Mark-to-Market initiative will allow for a part of the existing
first mortgage to become a "soft" second mortgage which will accrue interest at
a low 1% interest rate.  The splitting of the existing first mortgage into a new
first and second mortgage may generate ordinary taxable income.  Unfortunately,
there is no corresponding tax relief legislation at this time.

       In October 1997, both the House and the Senate passed the FY 1998 HUD
spending bill which includes Mark-to-Market legislation and President Clinton is
expected to sign the appropriations bill.  Between now and October 1, 1998 all
expiring Section 8 contracts with rents less than 120% of fair market rents
(FMR's) will be renewed for one-year.  Properties with rents in excess of 120%
of FMR's will be subject to the terms of the current Mark-to-Market
demonstration program.  Effective October 1, 1998, all properties with expiring
Section 8 contracts will be subject to Mark-to-Market.  The Section 8 HAP
contracts for the following properties expire during the government's fiscal
year 1998:








                                      -23-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

<TABLE>
<CAPTION>

                                                               Units
                                                           Authorized for         Expiration of
                                         Number of        Rental Assistance         Section 8
       Property                         Rental Units       Under Section 8        HAP Contract
       --------                         ------------      -----------------       -------------
       <S>                              <C>               <C>                     <C>
       Chippewa County                       109                108                  07/14/98
       Cottonwood Park                       126                  6                  06/30/98
       Holiday Village                        80                  6                  06/01/98
       Matthew XXV                            95                 95                  06/18/98
       Pilgrim Tower North                   258                205                  10/31/97
       Redden Gardens                        150                 29                  09/30/98
       Tradewinds Terrace                    122                 52                  09/30/98
       Westport Village                      121                 12                  01/01/98

</TABLE>

     With the potential elimination of the Section 8 HAP contracts, there is no
assurance that these rental properties would be able to maintain the rental
income and occupancy levels necessary to pay operating costs and debt service.

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

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

                                     General
                                     -------

     In 1990, CRI, as Managing General Partner of the Partnership and various
other entities, subcontracted certain property-level asset management functions
for certain properties to Capital Management Strategies, Inc. (CMS).  Among
these properties were properties owned by some of the Local Partnerships in
which the Partnership invested.  CMS was formed by Martin C. Schwartzberg, a
nominal general partner of the Partnership and a former stockholder of CRI, when
he retired from CRI and its related businesses as of January 1, 1990.  Mr.
Schwartzberg agreed not to act as a general partner with respect to any of the
CRI-sponsored partnerships, including this Partnership, and has not done so
since that time.  In late 1995, a dispute arose between CRI and CMS over the




                                                                -24-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS - Continued
              -----------------------------------

funding level of the 1996 contract for CMS.  On November 9, 1995, CRI filed a
complaint against CMS to determine the proper amount of fees to be paid in 1996
under the asset management agreement.  CMS answered on January 10, 1996, but
asserted no counterclaims.

     Thereafter, Mr. Schwartzberg launched a hostile consent solicitation to be
designated as managing general partner of approximately 125 private partnerships
sponsored by CRI.  On January 18, 1996, Mr. Schwartzberg and CMS filed a
complaint in the Circuit Court of Montgomery County, Maryland (the Circuit
Court), against CRI and Messrs. Dockser and Willoughby (who are general partners
of the Partnership) alleging, among other things, that CRI and Messrs. Dockser
and Willoughby breached the asset management agreement pursuant to which Mr.
Schwartzberg's company, CMS, agreed to perform limited functions related to
property-level issues for a portion of CRI's subsidized housing portfolio
(including some of the properties in which the Partnership invested), by
reducing the proposed budget for 1996.  The Partnership was not named as a
defendant in this action.  Messrs. Dockser and Willoughby entered an answer
denying all of Mr. Schwartzberg's claims.  On February 6, 1996, CRI terminated
the CMS contract for cause.  (CRI subsequently retained an independent asset
management company to perform functions previously performed by CMS.)  Mr.
Schwartzberg and CMS responded to the contract termination by filing a motion
for injunctive relief in the Circuit Court, asking the court to enjoin CRI from
terminating the contract.  In a ruling issued on February 12, 1996, the Circuit
Court, among other things, refused to grant the injunction requested by CMS.  On
February 12, 1996, the Circuit Court also issued a memorandum opinion and order
enjoining CMS and Mr. Schwartzberg from disclosing information made confidential
under the asset management agreement.

     Following subsequent litigation, none of which involved the Partnership, on
June 12, 1996, Mr. Schwartzberg, CRI and others entered an agreement (which
contemplates the execution of a subsequent definitive agreement) to resolve the
disputes between CRI and CMS.  The Partnership was not a signatory to the
agreement.  As part of the resolution, Mr. Schwartzberg withdrew any derogatory
statements he made about CRI and its principals.  Upon execution of the
definitive agreement, Mr. Schwartzberg shall withdraw as a General Partner of
this Partnership and his interest will become that of a Special Limited Partner.
As of October 24, 1997, CRI and Mr. Schwartzberg were unable to agree on the
language of various provisions of the definitive agreement and have agreed to
submit the open issues to arbitration.  The Partnership is not a party to the
arbitration proceeding.


PART II.  OTHER INFORMATION
          -----------------
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
          -------------------------------

     The Partnership defaulted on its purchase money notes relating to Redden
Development Company (Redden Gardens) on August 31, 1997 when the notes matured
and were not paid.  The defaulted amount included principal and accrued interest
of $1,330,000 and $2,783,593, respectively.  As of October 30, 1997, principal
and accrued interest of $1,330,000 and $2,840,054, respectively were due.  In
accordance with the purchase money note agreement, the Partnership has sixty
days to cure the default.  The Managing General Partner proposed a five year
extension on the purchase money notes.  This offer was rejected by the purchase
money noteholders, and as of October 30, 1997, no agreement has been reached. 

                                      -25-
<PAGE>
PART II.  OTHER INFORMATION
          -----------------
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES - Continued
          -------------------------------

The Managing General Partner commissioned a rental market study and is
evaluating the feasibility of converting the property to market-rate.  No
conclusion has been reached as of October 24, 1997.  There is no assurance that
the property will be converted nor is there any assurance that an agreement will
be reached with the purchase money noteholders.  Accordingly, there can be no
assurance that the Partnership will be able to retain its interest in the Local
Partnership.  The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership. 
Therefore, should the investment in Redden Gardens not produce sufficient value
to satisfy the purchase money notes related to Redden Gardens, the Partnership's
exposure to loss is limited since the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership.  Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.

     The Partnership defaulted on its purchase money note relating to Holiday
Village Apartments on July 27, 1994 when the note matured and was not paid.  The
defaulted amount included principal and accrued interest of $1,370,000 and
$2,862,342, respectively.  As of October 30, 1997, principal and accrued
interest totaling $1,370,000 and $4,733,582, respectively, were due.  In June
1994, an offer was made to extend the maturity date of this note to coincide
with the potential refinancing of the first mortgage.  There is no assurance
that a refinancing of the first mortgage will be obtained.  The Managing General
Partner and the noteholder continue to negotiate settlement options, and as of
October 30, 1997, negotiations between the Managing General Partner and the
noteholder were ongoing.  There is no assurance that an agreement will be
reached.  Should the noteholder begin foreclosure proceedings on the
Partnership's interest in the related Local Partnership, the Partnership intends
to vigorously defend any action by the noteholder.  However, there is no
assurance that the Partnership will be able to retain its interest in the Local
Partnership.  The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership. 
Therefore, should the investment in Holiday Village Apartments not produce
sufficient value to satisfy the related purchase money note, the Partnership's
exposure to loss is limited, as the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership.  Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------

     No reports on Form 8-K were filed with the Commission during the quarter
ended September 30, 1997.

     All other items are not applicable.








                                      -26-
<PAGE>
                                    SIGNATURE


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly 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


October 30, 1997              By:  /s/ Michael J. Tuszka
---------------------------        ---------------------------------
Date                               Michael J. Tuszka
                                   Vice President/Chief Accounting
                                     Officer


                                   Signing on behalf of the
                                     Registrant and as Principal
                                     Financial and Principal
                                     Accounting Officer




































                                      -27-
<PAGE>


                                  EXHIBIT INDEX
                                  -------------


Exhibit                                         Method of Filing
-------                                   -----------------------------

27        Financial Data Schedule         Filed herewith electronically






















































                                      -28-