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



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


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



                                   FORM 10-QSB


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

                For the quarterly period ended September 30, 2004


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                         Commission file number 0-13523

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


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



        Internal Revenue Service - Employer Identification No. 52-1328767

                 11200 Rockville Pike, Rockville, Maryland 20852

                                 (301) 468-9200


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





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






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



                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2004


                                                                          Page

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets
           - September 30, 2004 and December 31, 2003.....................   1

         Consolidated Statements of Operations and Accumulated Losses
           - for the three and nine months ended September 30, 2004
             and 2003.....................................................   2

         Consolidated Statements of Cash Flows
           - for the nine months ended September 30, 2004
             and 2003.....................................................   3

         Notes to Consolidated Financial Statements
           - September 30, 2004 and 2003..................................   4

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations......................................  17

Item 3.  Controls and Procedures..........................................  22


PART II - OTHER INFORMATION

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

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

Item 6.  Exhibits.........................................................  24

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

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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>

                                                                                      September 30,     December 31,
                                                                                          2004             2003
                                                                                      -------------    -------------
                                                                                       (Unaudited)
<S>                                                                                   <C>              <C>
Investments in partnerships .......................................................   $   4,051,625    $   6,431,282
Investment in partnerships held for sale or transfer ..............................       4,849,928        8,262,869
Investment in partnerships held in escrow .........................................         887,983          829,611
Cash and cash equivalents .........................................................       9,137,885        4,365,068
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $136,397 and $200,353, respectively ..........         136,905          223,021
Property purchase costs,
  net of accumulated amortization of $155,631 and $196,398, respectively ..........         149,681          219,602
Other assets ......................................................................             349            4,390
                                                                                      -------------    -------------

      Total assets ................................................................   $  19,214,356    $  20,335,843
                                                                                      =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships ................................................   $  17,520,081    $  18,160,081
Accrued interest payable ..........................................................      83,665,581       81,028,484
Accounts payable and accrued expenses .............................................         134,237          155,795
                                                                                      -------------    -------------

      Total liabilities ...........................................................     101,319,899       99,344,360
                                                                                      -------------    -------------

Commitments and contingencies

Partners' deficit:

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

                                                                                         73,503,500       73,503,500

  Less:
    Accumulated distributions to partners .........................................     (15,027,227)      (9,746,963)
    Offering costs ................................................................      (7,562,894)      (7,562,894)
    Accumulated losses ............................................................    (133,018,922)    (135,202,160)
                                                                                      -------------    -------------

      Total partners' deficit .....................................................     (82,105,543)     (79,008,517)
                                                                                      -------------    -------------

      Total liabilities and partners' deficit .....................................   $  19,214,356    $  20,335,843
                                                                                      =============    =============
</TABLE>


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

                                       -1-

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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             AND ACCUMULATED LOSSES

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                         For the three months ended              For the nine months ended
                                                               September 30,                           September 30,
                                                       ---------------------------------      ---------------------------------
                                                            2004               2003                2004                2003
                                                       -------------       -------------      -------------       -------------
<S>                                                    <C>                 <C>                <C>                 <C>
Share of income from partnerships                      $     443,503       $     215,041      $     181,382       $     602,310
                                                       -------------       -------------      -------------       -------------

Other revenue and  expenses:

  Revenue:
    Interest                                                  23,512               6,358             46,605              25,401
    Gain from extinguishment of debt                              --                  --          3,779,954          21,844,501
                                                       -------------       -------------      -------------       -------------

                                                              23,512               6,358          3,826,559          21,869,902
                                                       -------------       -------------      -------------       -------------

  Expenses:
    Interest                                               1,927,773           1,842,170          5,813,297           5,526,510
    Management fee                                            93,750              93,750            281,250             281,250
    General and administrative                                67,130              89,237            206,947             249,374
    Professional fees                                         29,676              34,150             99,676             104,451
    Amortization of deferred costs                             4,854               4,817             25,554              14,451
                                                       -------------       -------------      -------------       -------------

                                                           2,123,183           2,064,124          6,426,724           6,176,036
                                                       -------------       -------------      -------------       -------------

      Total other revenue and expenses                    (2,099,671)         (2,057,766)        (2,600,165)         15,693,866
                                                       -------------       -------------      -------------       -------------

(Loss) income before gain on disposition
  of investment in partnership                            (1,656,168)         (1,842,725)        (2,418,783)         16,296,176

Gain on disposition of investment
  in partnership                                               8,212                  --          4,602,021                  --
                                                       -------------       -------------      -------------       -------------

Net (loss) income                                         (1,647,956)         (1,842,725)         2,183,238          16,296,176

Accumulated losses, beginning of period                 (131,370,966)       (131,427,487)      (135,202,160)       (149,566,388)
                                                       -------------       -------------      -------------       -------------

Accumulated losses, end of period                      $(133,018,922)      $(133,270,212)     $(133,018,922)      $(133,270,212)
                                                       =============       =============      =============       =============


Net (loss) income allocated
  to General Partners (1.51%)                          $     (24,884)      $     (27,825)     $      32,967       $     246,072
                                                       =============       =============      =============       =============

Net (loss) income allocated
  to Initial and Special
  Limited Partners (1.49%)                             $     (24,555)      $     (27,457)     $      32,530       $     242,813
                                                       =============       =============      =============       =============

Net (loss) income allocated
  to Additional Limited Partners (97%)                 $  (1,598,517)      $  (1,787,443)     $   2,117,741       $  15,807,291
                                                       =============       =============      =============       =============

Net (loss) income per unit of
  Additional Limited Partner Interest,
    based on 73,337 and 73,342 units
    outstanding at September 30, 2004 and
    2003, respectively                                 $      (21.80)      $      (24.37)     $       28.88       $      215.53
                                                       =============       =============      =============       =============
</TABLE>


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

                                       -2-

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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                   For the nine months ended
                                                                                          September 30,
                                                                                  ----------------------------
                                                                                      2004            2003
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
Cash flows from operating activities:
  Net income ..................................................................   $  2,183,238    $ 16,296,176

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships .........................................       (181,382)       (602,310)
    Gain from extinguishment of debt ..........................................     (3,779,954)    (21,844,501)
    Amortization of deferred costs ............................................         25,554          14,451
    Gain on disposition of investment in partnership ..........................     (4,602,021)             --

    Changes in assets and liabilities:
      Decrease in other assets ................................................          4,041              47
      Increase in accrued interest payable ....................................      5,813,297       5,526,510
      Payment of purchase money note interest .................................             --         (48,013)
      Decrease in accounts payable and accrued expenses .......................        (21,558)         29,347
                                                                                  ------------    ------------

        Net cash used in operating activities .................................       (558,785)       (628,293)
                                                                                  ------------    ------------

Cash flows from investing activities:
  Proceeds from disposition of investment in partnership,
    net of disposition fee of $500,000 paid to related party ..................     10,439,986              --
  Receipt of distributions from partnerships ..................................        171,880         295,878
                                                                                  ------------    ------------

        Net cash provided by investing activities .............................     10,611,866         295,878
                                                                                  ------------    ------------

Cash flows from financing activities:
  Distribution to Limited Partners ............................................     (5,280,264)             --
  Payment of purchase money note principal ....................................             --        (100,000)
                                                                                  ------------    ------------

        Net cash used in financing activities .................................     (5,280,264)       (100,000)
                                                                                  ------------    ------------

Net increase (decrease) in cash and cash equivalents ..........................      4,772,817        (432,415)

Cash and cash equivalents, beginning of period ................................      4,365,068       4,862,869
                                                                                  ------------    ------------

Cash and cash equivalents, end of period ......................................   $  9,137,885    $  4,430,454
                                                                                  ============    ============

</TABLE>

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

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


1.   BASIS OF PRESENTATION

     In the opinion of C.R.I.,  Inc. (CRI), the Managing  General  Partner,  the
accompanying   unaudited   consolidated   financial   statements   reflect   all
adjustments,  consisting  of normal  recurring  accruals,  necessary  for a fair
presentation of the financial  position of Capital Realty  Investors-IV  Limited
Partnership  (the  Partnership) as of September 30, 2004, and the results of its
operations  for the three and nine month  periods  ended  September 30, 2004 and
2003, and its cash flows for the nine month periods ended September 30, 2004 and
2003.  The results of operations  for the interim  periods  ended  September 30,
2004, are not necessarily  indicative of the results to be expected for the full
year.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in conformity  with  accounting  principles  generally  accepted in the
United  States of America  and with the  instructions  to Form  10-QSB.  Certain
information and accounting policies and footnote  disclosures  normally included
in  financial  statements  prepared in  conformity  with  accounting  principles
generally  accepted  in the United  States of  America  have been  condensed  or
omitted pursuant to such instructions.  These condensed  consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements and notes thereto included in the Partnership's annual report on Form
10-KSB at December 31, 2003. Certain balances in the consolidated  balance sheet
at December 31, 2003, have been reclassified to conform them to the presentation
in the consolidated balance sheet at September 30, 2004.

     In December  2003,  the Financial  Accounting  Standards  Board issued FASB
Interpretation  No. 46  (revised  December  2003) (FIN 46-R),  Consolidation  of
Variable  Interest  Entities.  FIN 46-R clarifies the  application of Accounting
Research Bulletin 51, Consolidated  Financial  Statements,  for certain entities
that do not  have  sufficient  equity  at risk for the  entity  to  finance  its
activities without additional  subordinated financial support from other parties
or in which equity  investors do not have the  characteristics  of a controlling
financial interest  ("variable interest  entities").  Variable interest entities
within  the  scope of FIN 46-R  will be  required  to be  consolidated  by their
primary  beneficiary.  The primary  beneficiary of a variable interest entity is
determined  to be the party that  absorbs a majority  of the  entity's  expected
losses,  receives a majority of its expected  returns,  or both. The Partnership
must apply the  provisions  of FIN 46-R to all  entities  subject to FIN 46-R no
later than the end of the first  reporting  period that ends after  December 15,
2004 (as of December  31,  2004,  for the  Partnership).  The  Managing  General
Partner is in the process of  determining  what impact,  if any, the adoption of
the provisions of FIN 46-R will have on the  Partnership's  financial  condition
and  results  of  operations   related  to  the  Partnership's   investments  in
partnerships  (Local  Partnerships),   and  has  complied  with  the  disclosure
requirements  of FIN 46-R in these  financial  statements.  As of September  30,
2004,  the  Partnership's  maximum loss exposure  related to its  investments in
partnerships is limited to the remaining balance of $9,789,536.

                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS

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

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

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $17,520,081 plus aggregate  accrued interest of
$83,665,581  as of September 30, 2004, are payable in full upon the earliest of:
(i) sale or refinancing of the respective Local  Partnership's  rental property;
(ii) payment in full of the respective  Local  Partnership's  permanent loan; or
(iii) maturity. However, see the discussion relating to Highland Village, below,
for  information  concerning the  outstanding  accrued  interest  balance of the
purchase  money notes  related to  Highland  Village,  even though the  property
related to Highland Village has been sold.

     The  collateral  that  secured  the  purchase  money  notes  related to the
following properties was transferred to the noteholders during 2003, and through
November 15, 2004.

     Property                 Principal         Date          Disposition
     --------                -----------    ------------      -----------

     Canonsburg House        $1,440,000     January 2003      Transferred
     Char House               1,430,000     January 2003      Transferred
     Liberty Tower            1,340,000     January 2003      Transferred
     Wellington Woods           485,000     January 2003      Transferred
     Glenridge Gardens          640,000     February 2004     Transferred

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of November 15, 2004.

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

     Crescent Gardens - Second Note         $  434,000          07/31/99
     Valley View                               920,000          09/01/99
     Westport Village                          840,000          09/01/99
     Pilgrim Tower East                      1,450,000          11/30/03
     Pilgrim Tower North                     2,065,000          11/30/03
     Crescent Gardens - First Note             434,000          07/31/04
     Harborview                              3,000,000          08/01/04
     Cedar Point                             1,320,000          08/30/04
     Thornwood House                         1,775,000          08/30/04
     Jewish Federation                       1,350,000          10/31/04

     The  purchase  money  note  related  to  Asbury  Tower  Associates  Limited
Partnership  (Asbury Tower) was due to mature on August 31, 2004.  However,  the
noteholder  has agreed to extend  the  maturity  date on a month to month  basis
until  such  time as the  noteholder  provides  a 30 day  advance  notice to the
Partnership.  As of November 15, 2004, no such notice has been  received.  As of
September 30, 2004, principal due on the purchase money note was $3,432,081.

     The  remaining  purchase  money note  matures in 2025  ($500,000  principal
balance).

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

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

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

     The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note  requirements,  paying off certain  purchase  money  notes at a  discounted
price, extending the due dates of certain purchase money notes,  refinancing the
respective  properties'  underlying  debt, or selling the underlying real estate
and using the  Partnership's  share of the  proceeds to pay or buy down  certain
purchase money note  obligations.  Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these  strategies  will be  successful in the future.  If the
Managing  General  Partner is unable to negotiate  an  extension  or  discounted
payoff,  in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships.  In the event of a foreclosure or other transfer
of the Partnership's  interest, the excess of the nonrecourse  indebtedness over
the  carrying  amount  of the  Partnership's  investment  in the  related  Local
Partnership  will result in a taxable gain. This gain will be taxable to Limited
Partners at a federal tax rate of up to 25.0%,  as it will reflect  recapture of
depreciation  deductions claimed in prior years.  Additionally,  the Partnership
would lose its investment in the Local Partnership and,  likewise,  its share of
any future cash  distributed by the Local  Partnership  from rental  operations,
mortgage  debt  refinancings,  or the sale of the real  estate.  Of the 19 Local
Partnerships  in which the Partnership is invested as of September 30, 2004, the
ten Local  Partnerships with associated  purchase money notes which have matured
or which  mature  through  September  30,  2005,  and  which  remain  unpaid  or
unextended as of November 15, 2004, represented the following percentages of the
Partnership's total distributions  received from Local Partnerships and share of
income from Local Partnerships for the immediately preceding two calendar years.

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued


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

     December 31, 2003               10.1%                    $(442,314)
     December 31, 2002                2.9%                    $(82,378)

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

     Interest  expense on the  Partnership's  purchase money notes for the three
and nine month periods ended  September 30, 2004, was $1,927,773 and $5,813,297,
respectively, and $1,842,170 and $5,526,510 for the three and nine month periods
ended  September 30, 2003,  respectively.  The accrued  interest  payable on the
purchase money notes of $83,665,581 and $81,028,484 as of September 30, 2004 and
December 31, 2003, respectively,  is due on the respective maturity dates of the
purchase money notes or earlier,  in some instances,  if (and to the extent of a
portion thereof) the related Local  Partnership has distributable net cash flow,
as defined in the relevant Local Partnership agreement.

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

     The  Partnership  defaulted  on its six  purchase  money  notes  related to
Canonsburg Housing Associates Limited Partnership (Canonsburg House), Char House
Highrise  Association  Limited  Partnership  (Char  House),  and  Liberty  Tower
Associates  Limited  Partnership  (Liberty  Tower) on December 1, 1999, when the
notes matured and were not paid. The default amount included aggregate principal
and  accrued   interest  of  $4,510,000  and  $12,951,810,   respectively.   The
Partnership entered into a settlement agreement on October 22, 2001, pursuant to
which it obtained an extension of the maturity date of the three larger notes to
January 2003 and paid off the three  smaller notes (to other  noteholders)  at a
discount  at the  settlement  date.  Under the  extension  agreement,  documents
transferring the  Partnership's  interests in Canonsburg  House,  Char House and
Liberty  Tower to the  noteholder  were  placed in escrow to be  released to the
noteholder  upon the  earlier  of a future  default  by the  Partnership  on the
purchase  money notes or January 3, 2003.  In January  2003,  the  Partnership's
interests in these three Local  Partnerships,  relating to the  remaining  three
purchase money notes, were transferred to the noteholder. As of January 6, 2003,
remaining   principal  and  accrued  interest  of  $4,210,000  and  $18,732,176,
respectively,  were due.  The transfer of the  Partnership's  interests in these
three  Local  Partnerships  resulted  in gain  from  extinguishment  of debt for
financial  statement  purposes  of  $18,719,253  in 2003,  and in total gain for
federal tax purposes of $20,642,707 in 2003.

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

     The  Partnership  defaulted on its purchase money note related to Southwest
Development  Company (Cedar Point) on August 30, 2004, when the note matured and
was not paid.  The default  amount  included  principal and accrued  interest of
$1,320,000 and $3,122,592,  respectively. As of November 15, 2004, principal and
accrued  interest of  $1,320,000  and  $3,160,776,  respectively,  were due. The
Partnership has agreed in principle to assign its interest in Cedar Point to the
noteholder  in  satisfaction  of the  nonrecourse  note.  However,  there  is no
assurance  that a transfer  of the  Partnership's  interest  in Cedar Point will
occur.

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

     Due to the impending transfer of the Partnership's  interest in Cedar Point
to the noteholder, the Partnership's basis in the Local Partnership,  along with
the net  unamortized  amount of acquisition  fees and property  purchase  costs,
which  totaled  $1,734,778  at September  30,  2004,  has been  reclassified  to
investment  in  partnerships  held  for  sale or  transfer  in the  accompanying
consolidated balance sheet at that date.

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

     The  Partnership  defaulted  on its two  purchase  money  notes  related to
Crescent Gardens Associates Limited  Partnership  (Crescent Gardens) on July 31,
1999,  when the notes  matured and were not paid.  The default  amount  included
aggregate   principal   and  accrued   interest  of  $868,000  and   $2,033,388,
respectively. The Partnership successfully negotiated an agreement to extend the
maturity date of one of the purchase  money notes (First  Crescent  Note) in the
original principal amount of $434,000,  effective October 15, 1999.  Pursuant to
the extension  agreement,  the Partnership made payments to the noteholder to be
applied against accrued but unpaid interest. The agreement extended the maturity
date to July 31, 2004, subject to semi-annual interest payments, and reduced the
interest  rate of the First  Crescent  Note.  The  Partnership  did not make the
semi-annual  interest  payment  due in January  2004,  and is  currently  in the
process of transferring  the collateral for the First Crescent Note (one-half of
the  Partnership's  limited  partner  interest in the Local  Partnership) to its
current  noteholder in satisfaction  of that note.  There is no assurance that a
transfer of the  Partnership's  interest in Crescent  Gardens to the  noteholder
will occur. The Partnership has been contacted by only one of the holders of the
other note (Second  Crescent  Note) and thus cannot predict the course of action
with regard to the Second Crescent Note. As of November 15, 2004,  principal and
accrued interest of $434,000 and $900,136,  respectively,  were due on the First
Crescent  Note.  As of November  15,  2004,  principal  and accrued  interest of
$434,000 and  $1,469,112,  respectively,  were due on the Second  Crescent Note.
Crescent  Gardens  completed  mortgage  restructuring  under the  Mark-to-Market
program during 2003,  and the associated  loan  restructuring  requirement  will
likely  inhibit  the  local  managing  general  partner's  ability  to sell this
property.  It is anticipated  that the property will now operate at a break-even
level, and that future cash distributions are highly unlikely.

     Due to the impending transfer of one-half of the Partnership's  interest in
Crescent  Gardens to the noteholder of the First Crescent Note,  one-half of the
Partnership's  basis in the Local  Partnership  along with  one-half  of the net
unamortized  amount of  acquisition  fees and  property  purchase  costs,  which
totaled  $8,625 at September 30, 2004,  has been  reclassified  to investment in
partnerships held for sale or transfer in the accompanying  consolidated balance
sheet at that date.

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

     On March 19,  2002,  DeAngelis  Manor was sold.  Proceeds  received  by the
Partnership  from the sale of the property  were used to pay off, at a discount,
the remaining  purchase money note related to DeAngelis Manor,  although,  as of
November 15, 2004,  the note has not been  cancelled  pending  final  receipt of
accumulated cash from the property's  previous operations and payment thereof to
the purchase money noteholder.  The final  cancellation of the note will have no
financial impact to the Partnership.

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2. INVESTMENTS IN PARTNERSHIPS - Continued

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

     The  Partnership  defaulted on its purchase money note related to Glenridge
Development Company (Glenridge Gardens) on August 1, 1999, when the note matured
and was not paid. The default amount included  principal and accrued interest of
$740,000 and  $1,928,809,  respectively.  As of February 4, 2004,  principal and
accrued interest of $640,000 and $3,176,201, respectively, were due. On February
4, 2004, the Partnership's  interest in Glenridge Gardens was transferred to the
purchase  money  noteholder.  The  transfer  of the  Partnership's  interest  in
Glenridge  Gardens  resulted in gain from  extinguishment  of debt for financial
statement  purposes  of  $3,779,954  in 2004,  and in total gain for federal tax
purposes of $5,208,679 in 2004.

     Due to the subsequent  transfer of the Partnership's  interest in Glenridge
Gardens to the noteholder,  the  Partnership's  basis in the Local  Partnership,
along with the net unamortized  amount of acquisition fees and property purchase
costs,  which  totaled  $36,247  at  December  31,  2003,  was  reclassified  to
investment  in  partnerships  held in  escrow in the  accompanying  consolidated
balance sheet at that date.

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

     The Partnership defaulted on its purchase money notes related to Harborview
Apartments Associates Limited Partnership  (Harborview  Apartments) on August 1,
1999,  when the notes  matured and were not paid.  The default  amount  included
aggregate   principal  and  accrued   interest  of  $3,000,000  and  $5,342,321,
respectively.  On October 31, 2000, the Partnership  and  noteholders  agreed to
extend the maturity date of the purchase  money notes to August 1, 2004, and the
Partnership  placed an assignment of its interest in Harborview  Apartments into
escrow. As of November 15, 2004, the notes were again in default,  and principal
and accrued interest of $3,000,000 and $7,279,768,  respectively,  were due. The
noteholders are attempting to finalize regulatory  authority for the transfer of
interests in satisfaction of the  outstanding  principal and interest  balances.
There  is no  assurance  that  a  transfer  of  the  Partnership's  interest  in
Harborview to the noteholders will occur.

     Due to the impending  transfer of the Partnership's  interest in Harborview
Apartments to the noteholder,  the Partnership's basis in the Local Partnership,
along with the net unamortized  amount of acquisition fees and property purchase
costs,  which  totaled  $887,983 and $793,364 at September 30, 2004 and December
31, 2003, respectively, has been reclassified to investment in partnerships held
in escrow in the accompanying consolidated balance sheets.

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

     The  Partnership  defaulted on its purchase money notes related to Highland
Village  Associates  (Highland  Village)  on October  31,  1999,  when the notes
matured and were not paid.  The default  amount  included  principal and accrued
interest of $1,100,000  and  $4,123,565,  respectively.  In February  2001,  the
Partnership  and the  noteholder  agreed  to  extend  the  maturity  date of the
purchase money notes to October 31, 2004, provided that the maturity date of the
notes may be accelerated to any earlier date  designated by the noteholder  upon
not less than six months' notice to the  Partnership  from the  noteholder  (the
"Restructuring Agreement").

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

     On April 26, 2002, the property  related to Highland  Village was sold to a
limited  partnership  whose general  partner is also the local managing  general
partner of Highland  Village.  In accordance with the terms of the Restructuring
Agreement,  the Partnership's share of the proceeds was distributed  directly to
the  noteholder,  and was applied  first to principal  until all  principal  was
repaid ($1,100,000), and thereafter to interest ($186,870).

     However,  as of September  30, 2004,  the  noteholder  has not provided the
required six months' notice to the  Partnership of  acceleration of the maturity
date of the notes,  and the  Partnership  did not remove  the  remaining  unpaid
accrued  interest balance of $5,486,253 from its books at that date, even though
the  nonrecourse  notes are  essentially  worthless  because the collateral that
secures them (the Partnership's interest in Highland Village) has no value since
Highland  Village sold its only assets.  As a result,  the  Partnership  stopped
accruing interest on the notes effective the date of the sale of the property on
April 26,  2002.  As of the October  31, 2004  maturity  date,  the  Partnership
removed the remaining  unpaid accrued  interest  balance of $5,486,253  from its
books. Gain from  extinguishment  of debt, in the amount of $5,486,253,  will be
recognized by the Partnership during the fourth quarter of 2004.

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

     The  Partnership  defaulted  on its  purchase  money note related to Jewish
Federation  Apartments  Associates (Jewish Federation) on October 31, 2004, when
the note matured and was not paid.  The default  amount  included  principal and
accrued interest of $1,350,000 and $10,185,885, respectively. As of November 15,
2004,   principal   and  accrued   interest  of  $1,350,000   and   $10,235,624,
respectively,  were due. The  Partnership  has agreed in principle to assign its
interest  in  Jewish  Federation  to  the  noteholder  in  satisfaction  of  the
nonrecourse  note.  However,  there  is no  assurance  that  a  transfer  of the
Partnership's interest in Jewish Federation will occur.

     Due to the  impending  transfer  of the  Partnership's  interest  in Jewish
Federation to the noteholder,  the Partnership's basis in the Local Partnership,
along with the net unamortized  amount of acquisition fees and property purchase
costs,  which totaled  $138,582 at September 30, 2004, has been  reclassified to
investment  in  partnerships  held  for  sale or  transfer  in the  accompanying
consolidated balance sheet at that date.

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower East Associates  Limited  Partnership  (Pilgrim Tower East) on December 1,
1999,  when the note  matured  and was not paid.  The  default  amount  included
principal and accrued interest of $1,650,000 and $2,719,372, respectively. As of
November 15, 2004,  principal and accrued interest of $1,450,000 and $3,788,810,
respectively,  were due. The Partnership and the noteholder signed a contract to
sell the  Partnership's  interest  in Pilgrim  Tower East to the  noteholder  in
exchange  for the  outstanding  principal  and accrued  interest on the purchase
money note and two $100,000  payments on the purchase  money note,  one of which
was paid in  February  2002,  and one of which  was paid in  January  2003.  The
contract for the sale of the  Partnership's  interest  expired in November 2003,
however,  the parties are  currently  negotiating  an extension to provide for a
closing  scheduled  for January 2005.  There is no assurance  that a sale of the
Partnership's interest in Pilgrim Tower East will occur.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

     Due to the impending  sale of the  Partnership's  interest in Pilgrim Tower
East,  the  Partnership's  basis in the Local  Partnership,  along  with the net
unamortized  amount of  acquisition  fees and  property  purchase  costs,  which
totaled  $39,732 at both  September  30, 2004 and December  31,  2003,  has been
reclassified  to  investment  in  partnerships  held for sale or transfer in the
accompanying consolidated balance sheets.

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower North Associates  Limited  Partnership  (Pilgrim Tower North) on April 30,
2000,  when the note  matured  and was not paid.  The  default  amount  included
principal and accrued interest of $2,165,000 and $18,922,763,  respectively.  As
of  November  15,  2004,  principal  and  accrued  interest  of  $2,065,000  and
$23,809,682,  respectively,  were due. The local general  partner entered into a
contract  with the  noteholder  which  allows the  noteholder  to  purchase  the
property in exchange for the principal and accrued  interest  outstanding on the
purchase  money note and  assumption  or  prepayment  by the  noteholder  of the
mortgage note, the flexible  subsidy note and all related debt  associated  with
the  property.  In addition,  in exchange for the  noteholder's  forbearance  to
January 31, 2005, the Partnership  made a principal  payment applied to the note
in January 2002. The local general partner and the noteholder are negotiating an
extension of the closing date of the sale to January 2005. There is no assurance
that a sale of the property will occur.

     Due to the  impending  sale of the  property  related to the  Partnership's
investment in Pilgrim Tower North to the noteholder,  the Partnership's basis in
the Local Partnership, along with the net unamortized amount of acquisition fees
and  property  purchase  costs,  which  totaled  $2,250,673  and  $2,347,376  at
September 30, 2004 and December 31, 2003, respectively, has been reclassified to
investment  in  partnerships  held  for  sale or  transfer  in the  accompanying
consolidated balance sheets.

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

     The  Partnership  defaulted on its purchase money note related to Thornwood
House Associates (Thornwood House) on August 30, 2004, when the note matured and
was not paid.  The default  amount  included  principal and accrued  interest of
$1,775,000 and $4,025,568,  respectively. As of November 15, 2004, principal and
accrued  interest of  $1,775,000  and  $4,076,422,  respectively,  were due. The
Partnership  has agreed in principle to assign its interest to the noteholder in
satisfaction of the  non-recourse  note.  However,  there is no assurance that a
transfer of the Partnership's interest in Thornwood House will occur.

     Due to the  impending  transfer of the  Partnerships  interest in Thornwood
House to the noteholder, the Partnership's basis in the Local Partnership, along
with the net unamortized amount of acquisition fees and property purchase costs,
which  totaled  $645,741  at  September  30,  2004,  has  been  reclassified  to
investment  in  partnerships  held  for  sale or  transfer  in the  accompanying
consolidated balance sheet at that date.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

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

     The  Partnership  defaulted on its purchase  money notes  related to Valley
View  Associates  (Valley View) on September 1, 1999, when the notes matured and
were not paid.  The default  amount  included  aggregate  principal  and accrued
interest of $920,000  and  $1,788,829,  respectively.  As of November  15, 2004,
principal and accrued  interest of $920,000 and $2,456,674,  respectively,  were
due.  The  Partnership  was sued by the  noteholders  but there has not been any
legal action  since 2000.  The  Partnership  and the  noteholders  had agreed in
principle  that the  Partnership  would deposit  assignments of its interests in
Valley View in escrow,  together with an option agreement  pursuant to which the
noteholders  could  purchase  the  interests  for  the  outstanding  debt if the
property  were not sold and/or the notes were not repaid by January 8, 2001.  At
that time, the  Partnership's  basis in the Local Partnership along with the net
unamortized  amount of  acquisition  fees and  property  purchase  costs,  which
totaled $37,315,  was reclassified to investment in partnerships held in escrow.
Until June 2004,  there had been no  communication  with the  noteholders  since
2000. Therefore,  effective December 31, 2003, the acquisition fees and property
purchase costs which had been reclassified to investment in partnerships held in
escrow were returned to their respective  accounts.  However,  in June 2004, the
Partnership  was notified  that the  noteholders  were seeking to implement  the
transfer of the Partnership's interest in Valley View to the noteholders.  There
can be no  assurance  that a transfer of  Partnership's  interest in Valley View
will occur.

     Due to the impending  transfer of Partnership's  interest in Valley View to
the noteholders,  the Partnership's  basis in the Local Partnership,  along with
the net  unamortized  amount of acquisition  fees and property  purchase  costs,
which totaled $31,797 at September 30, 2004, has been reclassified to investment
in  partnerships  held for sale or  transfer  in the  accompanying  consolidated
balance sheet at that date.

                                Wellington Woods
                                ----------------

     The  Partnership  defaulted on its purchase money notes related to Clarkson
Associates  of  Wellington  Woods  Limited  Partnership  (Wellington  Woods)  on
December 1, 1999,  when the notes matured and were not paid.  The default amount
included  aggregate  principal and accrued  interest of $485,000 and $2,169,679,
respectively. As of January 6, 2003, aggregate principal and accrued interest of
$485,000 and $3,288,849, respectively, were due.

     On or about January 16, 2003, the  Partnership  tendered the assignments of
its interest in Wellington  Woods to the  noteholders.  Although the noteholders
have not yet accepted the assignments, the Partnership considers its interest to
have been transferred.  The transfer of the Partnership's interest in Wellington
Woods  resulted  in gain from  extinguishment  of debt for  financial  statement
purposes of  $3,167,610  in 2003,  and in total gain for federal tax purposes of
$3,163,537 in 2003.

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

     The  Partnership  defaulted on its purchase money notes related to Westport
Associates  (Westport  Village) on September 1, 1999, when the notes matured and
were not paid. The default  amount  included  principal and accrued  interest of
$840,000 and $1,615,644,  respectively.  As of November 15, 2004,  principal and
accrued  interest  of  $840,000  and  $2,221,464,  respectively,  were due.  The
Partnership  was sued by the noteholders but there has not been any legal action
since 2000. The Partnership and the noteholders had agreed in principle that the
Partnership  would deposit  assignments of its interests in Westport  Village in
escrow,  together  with an option  agreement  pursuant to which the  noteholders
could purchase the interests for the  outstanding  debt if the property were not
sold  and/or the notes were not  repaid by  January 8, 2001.  At that time,  the
Partnership's  basis in the Local  Partnership,  along with the net  unamortized
amount of acquisition fees and property  purchase costs,  which totaled $46,989,
was reclassified to investment in partnerships  held in escrow.  However,  there
has been no  communication  with the  noteholders  concerning  implementing  the
settlement since 2000.  Therefore,  effective December 31, 2003, the acquisition
fees and property  purchase costs which had been  reclassified  to investment in
partnerships held in escrow were returned to their respective accounts.

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

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

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

     On June 16, 2003, the local managing general partner executed a contract to
sell the property owned by Campbell Terrace Associates  (Campbell  Terrace).  On
March 31,  2004,  Campbell  Terrace  was sold;  cash  proceeds  received  by the
Partnership  in April 2004  totaled  $10,931,774.  The sale  resulted in gain on
disposition of investment in  partnership of $4,593,811 for financial  statement
purposes and a total gain of  approximately  $9.0 million for federal income tax
purposes in 2004. In accordance with the terms of the Partnership Agreement,  in
April 2004 the Managing  General  Partner was paid a disposition fee of $500,000
related  to the sale.  The fee was  accrued  at March 31,  2004,  and was netted
against the related gain on  disposition  of investment in  partnership at March
31, 2004.

     Due to the impending sale of the property related to the Partnership's
investment in Campbell Terrace, the Partnership's basis in the Local
Partnership, along with the net unamortized amount of acquisition fees and
property purchase costs, which totaled $5,875,761 at December 31, 2003, was
reclassified to investment in partnerships held for sale in the accompanying
consolidated balance sheet at that date.

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

     The Local Managing General Partner of Madison Square Ltd.  Dividend Housing
Association  (Madison Square)  requested debt relief effective  October 1, 2001.
The property has depleted its  operating  cash and  replacement  reserve  funds.
Therefore, the Local Managing General Partner requested from the lender that the
debt  payments  be  reduced to  interest  only  payments  until such time as the
property can be sold.  Effective  January 1, 2002, the lender approved  interest
only payments and a reduction in the rate for a period of five years.  The Local
Managing General Partner has been searching for a not-for-profit organization to
purchase the  property,  but has received no firm offer as of November 15, 2004.
As of September  30, 2004,  the  Partnership's  remaining  investment in Madison
Square,  which  consisted  of net  unamortized  acquisition  fees  and  property
purchase costs, was $14,168.

                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

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

     Combined  statements of operations for the 19 and 21 Local  Partnerships in
which  the  Partnership  was  invested  as  of  September  30,  2004  and  2003,
respectively,   follow.   The  combined   statements  have  been  compiled  from
information  supplied  by the  management  agents  of  the  properties  and  are
unaudited.  The information for each of the periods is presented  separately for
those Local  Partnerships  which have investment basis (equity method),  and for
those Local Partnerships which have cumulative losses in excess of the amount of
the  Partnership's  investments  in  those  Local  Partnerships  (equity  method
suspended). Appended after the combined statements is information concerning the
Partnership's  share of income from partnerships  related to cash  distributions
recorded as income, and related to the Partnership's  share of income from Local
Partnerships.

                                         COMBINED STATEMENTS OF OPERATIONS
                                                    (Unaudited)

<TABLE>
<CAPTION>
                                                                   For the three months ended
                                                                         September 30,
                                                  ------------------------------------------------------------
                                                             2004                             2003
                                                  ------------------------------------------------------------
                                                    Equity                           Equity
                                                    Method        Suspended          Method         Suspended
                                                  ----------      ----------       ----------       ----------
         <S>                                      <C>             <C>              <C>              <C>
         Number of Local Partnerships                  9              10               10               11
                                                       =              ==               ==               ==

         Revenue:
           Rental                                 $2,969,120      $2,650,570       $3,516,083       $2,826,310
           Other                                     123,101         102,614          184,706          129,126
                                                  ----------      ----------       ----------       ----------

             Total revenue                         3,092,221       2,753,184        3,700,789        2,955,436
                                                  ----------      ----------       ----------       ----------

         Expenses:
           Operating                               1,853,009       1,884,807        2,483,511        1,939,467
           Interest                                  307,749         472,018          367,437          546,902
           Depreciation and amortization             482,945         540,163          632,180          557,297
                                                  ----------      ----------       ----------       ----------

             Total expenses                        2,643,703       2,896,988        3,483,128        3,043,666
                                                  ----------      ----------       ----------       ----------

         Net income (loss)                        $  448,518      $ (143,804)      $  217,661       $  (88,230)
                                                  ==========      ==========       ==========       ==========

         Cash distribution                        $       --      $       --       $   15,010       $       --
                                                  ==========      ==========       ==========       ==========

         Cash distribution recorded
           as reduction of investments
           in partnerships                        $       --      $       --       $   15,010       $       --
                                                  ==========      ==========       ==========       ==========

         Partnership's share of Local
           Partnership net income (loss)             443,503              --          215,041               --
                                                  --------------------------       ---------------------------

         Share of income from partnerships                $443,503                             $215,041
                                                          ========                             ========
</TABLE>

                                      -14-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


2.   INVESTMENTS IN PARTNERSHIPS - Continued

<TABLE>
<CAPTION>

                                                                  For the nine months ended
                                                                        September 30,
                                                  ------------------------------------------------------------
                                                             2004                             2003
                                                  --------------------------       ---------------------------
                                                    Equity                           Equity
                                                    Method        Suspended          Method         Suspended
                                                  ----------      ----------       -----------      ----------
         <S>                                      <C>             <C>              <C>              <C>
         Number of Local Partnerships                  9              10               10               11
                                                       =              ==               ==               ==

         Revenue:
           Rental                                 $8,143,565      $7,951,710       $10,306,031      $8,467,960
           Other                                     370,665         307,841           609,338         384,323
                                                  ----------      ----------       -----------      ----------

             Total revenue                         8,514,230       8,259,551        10,915,369       8,852,283
                                                  ----------      ----------       -----------      ----------

         Expenses:
           Operating                               6,045,766       5,654,420         7,362,737       5,794,642
           Interest                                  923,251       1,416,053         1,102,314       1,640,712
           Depreciation and amortization           1,448,841       1,620,488         1,896,544       1,671,894
                                                  ----------      ----------       -----------      ----------

             Total expenses                        8,417,858       8,690,961        10,361,595       9,107,248
                                                  ----------      ----------       -----------      ----------

         Net income (loss)                        $   96,372      $ (431,410)      $   553,774      $ (254,965)
                                                  ==========      ==========       ===========      ==========

         Cash distributions                       $   84,776      $   87,104       $   240,660      $   55,218
                                                  ==========      ==========       ===========      ==========

         Cash distributions recorded
           as reduction of investments
           in partnerships                        $   84,776      $       --       $   240,660      $       --
                                                  ==========      ==========       ===========      ==========

         Cash distributions recorded
           as income                              $       --      $   87,104       $        --      $   55,218

         Partnership's share of Local
           Partnership net income (loss)              94,278              --           547,092              --
                                                  ------------------------------------------------------------

         Share of income from partnerships                 $181,382                           $602,310
                                                           ========                           ========
</TABLE>

     Cash  distributions  received from Local Partnerships which have investment
basis (equity method) are recorded as a reduction of investments in partnerships
and as  cash  receipts  on the  respective  consolidated  balance  sheets.  Cash
distributions  received from Local  Partnerships which have cumulative losses in
excess  of  the  amount  of  the   Partnership's   investments  in  those  Local
Partnerships  (equity  method  suspended)  are  recorded as share of income from
partnerships on the respective consolidated statements of operations and as cash
receipts on the respective consolidated balance sheets. As of September 30, 2004
and 2003, the Partnership's  share of cumulative losses to date for 10 and 11 of
the 19 and 21 Local  Partnerships,  respectively,  exceeded  the  amount  of the
Partnership's  investments  in  those  Local  Partnerships  by  $10,545,505  and
$9,924,345,  respectively.  As the  Partnership  has no  further  obligation  to
advance  funds or provide  financing  to these  Local  Partnerships,  the excess
losses  have not  been  reflected  in the  accompanying  consolidated  financial
statements.

                                      -15-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2004 and 2003

                                   (Unaudited)


3.   RELATED PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to reimburse the Managing  General  Partner for its direct expenses
in connection with managing the  Partnership.  The Partnership  paid $41,412 and
$139,463  for the  three  and nine  month  periods  ended  September  30,  2004,
respectively,  and $45,752  and  $162,427  for the three and nine month  periods
ended  September  30, 2003,  respectively,  to the Managing  General  Partner as
direct  reimbursement of expenses  incurred on behalf of the  Partnership.  Such
expenses are included in general and administrative expenses in the accompanying
consolidated statements of operations.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to pay the Managing General Partner an annual incentive  management
fee  (Management  Fee) after all other expenses of the Partnership are paid. The
Partnership  paid the Managing  General  Partner a Management Fee of $93,750 for
each of the three month periods ended  September 30, 2004 and 2003, and $281,250
for each of the nine month periods ended September 30, 2004 and 2003.

     In accordance  with the terms of the  Partnership  Agreement,  the Managing
General  Partner  and/or its  affiliates  may receive a fee of not more than two
percent  of the  sale  price  of an  investment  in a Local  Partnership  or the
property  it  owns,  payable  under  certain  conditions  upon  the  sale  of an
investment in a Local  Partnership  or the property it owns.  The payment of the
fee is subject to certain  restrictions,  including the achievement of a certain
level of sale  proceeds  and making  certain  minimum  distributions  to limited
partners. In April 2004, the Managing General Partner was paid a disposition fee
of  $500,000  related  to the sale of the  property  owned by  Campbell  Terrace
Associates on March 31, 2004.  The fee has been netted  against the related gain
on disposition of investment in partnership.


4.   CASH DISTRIBUTION

     On May 21, 2004, the Managing  General Partner made a cash  distribution of
$5,280,264  ($72 per Unit) to  Additional  Limited  Partners who were holders of
record as of April 1, 2004. The distribution consisted of proceeds received from
the sale of the property owned by Campbell Terrace.

                                      # # #

                                      -16-

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


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

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

     The  Partnership has disclosed its selection and application of significant
accounting policies in Note 1 of the notes to consolidated  financial statements
included in the Partnership's annual report on Form 10-KSB at December 31, 2003.
The   Partnership   accounts  for  its   investments  in   partnerships   (Local
Partnerships)  by the equity method because the Partnership is a limited partner
in the Local  Partnerships.  As such the  Partnership  has no  control  over the
selection and application of accounting  policies,  or the use of estimates,  by
the  Local  Partnerships.  Environmental  and  operational  trends,  events  and
uncertainties  that might affect the properties owned by the Local  Partnerships
would not necessarily have a significant impact on the Partnership's application
of the equity method of  accounting,  since the equity method has been suspended
for ten Local  Partnerships which have cumulative losses in excess of the amount
of the Partnership's investments in those Local Partnerships.

                          New Accounting Pronouncement
                          ----------------------------

     In December  2003,  the Financial  Accounting  Standards  Board issued FASB
Interpretation  No. 46  (revised  December  2003) (FIN 46-R),  Consolidation  of
Variable  Interest  Entities.  FIN 46-R clarifies the  application of Accounting
Research Bulletin 51, Consolidated  Financial  Statements,  for certain entities
that do not  have  sufficient  equity  at risk for the  entity  to  finance  its
activities without additional  subordinated financial support from other parties
or in which equity  investors do not have the  characteristics  of a controlling
financial interest  ("variable interest  entities").  Variable interest entities
within  the  scope of FIN 46-R  will be  required  to be  consolidated  by their
primary  beneficiary.  The primary  beneficiary of a variable interest entity is
determined  to be the party that  absorbs a majority  of the  entity's  expected
losses,  receives a majority of its expected  returns,  or both. The Partnership
must apply the  provisions  of FIN 46-R to all  entities  subject to FIN 46-R no
later than the end of the first  reporting  period that ends after  December 15,
2004 (as of December  31,  2004,  for the  Partnership).  The  Managing  General
Partner is in the process of  determining  what impact,  if any, the adoption of
the provisions of FIN 46-R will have on the  Partnership's  financial  condition
and results of  operations  related to the  Partnership's  investments  in Local
Partnerships.

                                     General
                                     -------

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

                                      -17-

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


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

     Mark-to-Market (M2M) implementation will reduce rental income at properties
that are currently  subsidized  at  higher-than-market  rental  rates,  and will
therefore  lower cash flow  available to meet  mortgage  payments and  operating
expenses.  In some instances,  a property will be able to meet its existing debt
service  payments  after the  reduction  in rental  income.  In this  case,  the
property  may enter  the M2M  "Lite"  program,  which  would not  require a debt
restructuring.  In the remaining  instances,  the affected  property may undergo
debt restructuring  according to terms determined by an individual  property and
operations  evaluation.  This would  involve  reducing the first  mortgage  loan
balance to an amount  supportable  by the  property's  operations,  taking  into
account the property's operating expenses and reduced income. The balance of the
amount  written  down from the  first  mortgage  loan  would be  converted  to a
non-performing but accruing (soft) second mortgage loan. When the existing first
mortgage loan is bifurcated  into a first and second  mortgage  loan,  the newly
created second  mortgage loan will accrue  interest at a below-market  rate. The
Internal  Revenue  Service issued a ruling in July 1998, that concluded that the
below-market  rate of interest would not generate  additional  ordinary  income.
Each property subject to M2M will be affected in a different  manner,  and it is
difficult  to  predict  the  exact  form  of  restructuring,  or  potential  tax
liabilities to the Limited Partners, at this time. All properties, upon entering
the M2M program  (excluding  M2M Lite),  are required to enter into an agreement
restricting the property's use to affordable housing for 30 years.

     Finally, under HUD's "Mark-up-to-Market"  program, properties with expiring
Section 8 HAP  contracts  that are located in high-rent  areas as defined by HUD
are eligible for rent increases  which would be necessary to bring Section 8 HAP
contract  rents in line with market rate rents.  For  properties  that enter the
program and have interest rate  subsidized FHA loans,  the rents are adjusted to
take into  account  the  benefits  the  property is already  receiving  from the
below-market  interest rate by means of a HUD-determined  adjustment factor. The
purpose of this program is to provide  incentives to owners of  properties  with
expiring  Section 8 HAP contracts not to convert these properties to market rate
housing.

     In return for  receiving  market  rate rents under  Mark-up-to-Market,  the
property  owner must enter into a five-year  conditional  Section 8 HAP contract
with HUD,  subject  to the  annual  availability  of  funding  by  Congress.  In
addition,  property  owners who enter into the  Mark-up-to-  Market  program may
receive  increased  cash flow,  as the limited  dividend will be increased in an
amount equal to the increase in gross rental revenues.

     Naperville  Housing  Partners  (Fairway  Park) has a Section 8 HAP contract
which  expires  January 1, 2005.  The Section 8 HAP  contract  covers 20% of the
apartment units in Fairway Park.

                                      -18-

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


     Pilgrim Tower North Associates  Limited  Partnership  (Pilgrim Tower North)
has a Section 8 HAP contract which, as extended,  expires February 28, 2005. The
Section 8 HAP contract covers 79% of the apartment units in Pilgrim Tower North.
See Note 2.a. of the notes to  consolidated  financial  statements  contained in
Part I, Item 1,  hereof,  for  information  concerning  a  possible  sale of the
property owned by Pilgrim Tower North.

     Tradewinds West Limited  Dividend  Housing  Association  (Tradewinds) has a
Section 8 HAP contract  which expires April 30, 2005. The Section 8 HAP contract
covers 43% of the apartment  units in  Tradewinds.  It is  anticipated  that the
Local  Partnership  will extend its Section 8 HAP contract for a one-year period
at its expiration.

     Harborview Apartments Associates  (Harborview) has a Section 8 HAP contract
which expires May 31, 2005. The Section 8 HAP contract covers  substantially all
of  the  apartment  units  in  Harborview.  It is  anticipated  that  the  Local
Partnership  will extend its Section 8 HAP contract for a one-year period at its
expiration.

     As of  September  30,  2004,  the  carrying  amount  of  the  Partnership's
investments in Local  Partnerships with Section 8 HAP contracts  expiring in the
next 12 months was $3,867,138.

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

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

     The Partnership's liquidity, with unrestricted cash resources of $9,137,885
as of September 30, 2004, along with anticipated  future cash distributions from
Local  Partnerships,  is  expected  to be  adequate  to  meet  its  current  and
anticipated  operating  cash  needs.  As of  November  15,  2004,  there were no
material  commitments  for capital  expenditures.  The Managing  General Partner
currently  intends to retain all of the  Partnership's  remaining  undistributed
cash pending  resolution of the Partnership's  outstanding  purchase money notes
and related accrued interest, and for operating cash reserves.

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the  form  of  nonrecourse  purchase  money  notes  having  an
aggregate  principal  balance of $17,520,081 plus aggregate  accrued interest of
$83,665,581  as of September 30, 2004, are payable in full upon the earliest of:
(i) sale or refinancing of the respective Local  Partnership's  rental property;
(ii) payment in full of the respective  Local  Partnership's  permanent loan; or
(iii) maturity.  However,  see Note 2.a. of the notes to consolidated  financial
statements  contained in Part I, Item 1, hereof, for information  concerning the
outstanding  accrued  interest  balance of the purchase  money notes  related to
Highland Village,  even though the property related to Highland Village has been
sold.

     The  collateral  that  secured  the  purchase  money  notes  related to the
following properties was transferred to the noteholders during 2003, and through
November 15, 2004.

     Property                 Principal         Date             Disposition
     --------                -----------    ------------         -----------

     Canonsburg House        $1,440,000     January 2003         Transferred
     Char House               1,430,000     January 2003         Transferred
     Liberty Tower            1,340,000     January 2003         Transferred
     Wellington Woods           485,000     January 2003         Transferred
     Glenridge Gardens          640,000     February 2004        Transferred


                                      -19-

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


     The purchase money notes related to the following  properties  have matured
and have not been paid or extended as of November 15, 2004.

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

     Crescent Gardens - Second Note    $  434,000          07/31/99
     Valley View                          920,000          09/01/99
     Westport Village                     840,000          09/01/99
     Pilgrim Tower East                 1,450,000          11/30/03
     Pilgrim Tower North                2,065,000          11/30/03
     Crescent Gardens - First Note        434,000          07/31/04
     Harborview                         3,000,000          08/01/04
     Cedar Point                        1,320,000          08/30/04
     Thornwood House                    1,775,000          08/30/04
     Jewish Federation                  1,350,000          10/31/04

     The  purchase  money  note  related  to  Asbury  Tower  Associates  Limited
Partnership  (Asbury Tower) was due to mature on August 31, 2004.  However,  the
noteholder  has agreed to extend  the  maturity  date on a month to month  basis
until  such  time as the  noteholder  provides  a 30 day  advance  notice to the
Partnership.  As of November 15, 2004, no such notice has been  received.  As of
September 30, 2004, principal due on the purchase money note was $3,432,081.

     The  remaining  purchase  money note  matures in 2025  ($500,000  principal
balance).

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

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

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

     The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations.  These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note  requirements,  paying off certain  purchase  money  notes at a  discounted
price, extending the due dates of certain purchase money notes,  refinancing the
respective  properties'  underlying  debt, or selling the underlying real estate
and using the  Partnership's  share of the  proceeds to pay or buy down  certain
purchase money note  obligations.  Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these  strategies  will be  successful in the future.  If the


                                      -20-

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


Managing  General  Partner is unable to negotiate  an  extension  or  discounted
payoff,  in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships.  In the event of a foreclosure or other transfer
of the Partnership's  interest, the excess of the nonrecourse  indebtedness over
the  carrying  amount  of the  Partnership's  investment  in the  related  Local
Partnership  will result in a taxable gain. This gain will be taxable to Limited
Partners at a federal tax rate of up to 25.0%,  as it will reflect  recapture of
depreciation  deductions claimed in prior years.  Additionally,  the Partnership
would lose its investment in the Local Partnership and,  likewise,  its share of
any future cash  distributed by the Local  Partnership  from rental  operations,
mortgage  debt  refinancings,  or the sale of the real  estate.  Of the 19 Local
Partnerships  in which the Partnership is invested as of September 30, 2004, the
ten Local  Partnerships with associated  purchase money notes which have matured
or which  mature  through  September  30,  2005,  and  which  remain  unpaid  or
unextended as of November 15, 2004, represented the following percentages of the
Partnership's total distributions  received from Local Partnerships and share of
income from Local Partnerships for the immediately preceding two calendar years.

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

     December 31, 2003               10.1%                     $(442,314)
     December 31, 2002                2.9%                     $(82,378)


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

     The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient  cash is available for operating  requirements.
For  the  nine  month  period  ended  September  30,  2004,  the  proceeds  from
disposition  of  investment  in  partnership,   together  with  the  receipt  of
distributions from Local Partnerships and existing cash resources, were adequate
to support  operating cash  requirements.  The primary uses of cash in operating
activities  were to pay  management  and  professional  fees,  and  general  and
administrative  expenses.  Cash and cash equivalents increased $4,772,817 during
the nine  month  period  ended  September  30,  2004,  primarily  as a result of
proceeds  received  from the sale of the  property  owned  by  Campbell  Terrace
Associates  (Campbell  Terrace)  after  distribution  of a  portion  thereof  to
Additional Limited Partners. For the nine month period ended September 30, 2004,
$87,104 of the  distributions  received from Local  Partnerships were from Local
Partnerships  which  have  cumulative  losses  in  excess  of the  amount of the
Partnership's investments in those Local Partnerships (equity method suspended).
The  Partnership  expects to receive a similar or lower amount of  distributions
from these Local  Partnerships  in future years as more Section 8 HAP  contracts
approach  expiration,  should the related  properties  enter the  Mark-to-Market
program with the resulting reduction in rental revenues.

     On May 21, 2004, the Managing  General Partner made a cash  distribution of
$5,280,264  ($72 per Unit) to  Additional  Limited  Partners who were holders of
record as of April 1, 2004. The distribution consisted of proceeds received from
the sale of the property owned by Campbell Terrace.

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

     The  Partnership  recognized  net loss of  $1,647,956  for the three  month
period ended  September  30, 2004,  compared to net loss of  $1,842,725  for the
corresponding  period in 2003,  primarily  due to an increase in share of income
from  partnerships,  and also due to a decrease  in general  and  administrative
expenses due to lower reimbursed payroll costs, a decrease in professional legal
fees, and an increase in interest revenue due to higher cash and cash equivalent
balances, partially offset by an increase in interest expense due to compounding
interest on three purchase money notes, a nominal  increase in  amortization  of
deferred  costs and a gain on  disposition  of  investment in  partnership.  The
increase  in  share  of  income  from  partnerships  was  primarily  due  to the
recognition   of  $327,000  of  interest   reduction   subsidies  by  two  Local
Partnerships during the third quarter of 2004.

                                      -21-


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


     The  Partnership's net income for the nine month period ended September 30,
2004, decreased $14,112,938 from the corresponding period in 2003, primarily due
to a decrease in gain from extinguishment of debt, and also due to a decrease in
share of income from  partnerships,  as discussed above, an increase in interest
expense,  as discussed above, and an increase in amortization of deferred costs,
partially offset by gain on disposition of investment in partnership  related to
the sale of Campbell  Terrace in 2004, a decrease in general and  administrative
expenses due to lower reimbursed payroll costs, an increase in interest revenue,
as discussed above, and a nominal decrease in professional legal fees.

     For financial reporting purposes, the Partnership,  as a limited partner in
the Local  Partnerships,  does not record losses from the Local  Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result,  the  Partnership's  share of income from partnerships for the three and
nine month periods ended  September 30, 2004 did not include  losses of $260,737
and  $782,212,  respectively,  compared  to  excluded  losses  of  $251,095  and
$716,898,  for the  three and nine  month  periods  ended  September  30,  2003,
respectively.  Distributions  of $0 and  $87,104,  received  from zero and three
Local  Partnerships  during the three and nine month periods ended September 30,
2004,  respectively,   and  which  have  cumulative  losses  in  excess  of  the
Partnership's investments in those Local Partnerships (equity method suspended),
were  recorded  as  increases  in  the   Partnership's   share  of  income  from
partnerships when received, compared to distributions of $0 and $55,218 received
from zero and two Local  Partnerships  during the three and nine  month  periods
ended September 30, 2003, respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during the nine month period ended September 30, 2004.


Item 3. Controls and Procedures

     In October 2004,  representatives  of the Managing  General  Partner of the
Partnership  carried out an  evaluation of the  effectiveness  of the design and
operation of the Partnership's  disclosure controls and procedures,  pursuant to
Exchange Act Rules  13a-15 and 15d-15.  The  Managing  General  Partner does not
expect that the  Partnership's  disclosure  controls and procedures will prevent
all error and all fraud.  A control  system,  no matter how well  conceived  and
operated,  can provide only  reasonable  assurance  that the  objectives  of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource  constraints,  and the benefits of controls must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues have been detected.  These inherent  limitations  include the
realities that judgments in  decision-making  can be faulty, and that breakdowns
can occur  because  of simple  error or  mistake.  The  design of any  system of
controls also is based in part upon certain  assumptions about the likelihood of
future  events,  and there can be no  assurance  that any design will succeed in
achieving its stated goals under all  potential  future  conditions.  Over time,
controls may become inadequate  because of changes in conditions,  or the degree
of compliance  with the policies or procedures may  deteriorate.  Because of the
inherent  limitations in a cost-effective  control system,  misstatements due to
error or  fraud  may  occur  and not be  detected.  Based  on the  October  2004


                                      -22-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 3. Controls and Procedures - Continued


evaluation,  and subject to the foregoing,  the Principal  Executive Officer and
Principal Financial Officer concluded that the Partnership's disclosure controls
and  procedures are effective as of the end of the period covered by this report
to alert them in a timely  manner to any  material  information  relating to the
Partnership that must be included in the Partnership's periodic SEC filings, and
particularly  during  the  period in which  this  report is being  prepared.  In
addition,  there have been no significant changes in the Partnership's  internal
control over financial  reporting that occurred  during the  Partnership's  most
recent fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Partnership's internal control over financial reporting.


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

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


Item 5. Other Information

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

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

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

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

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

     On July 31, 2003, Peachtree Partners (Peachtree)  initiated an unregistered
tender  offer to  purchase  no more  than 4.9% of the  outstanding  Units in the
Partnership  (including  2,857  Units,  or  3.88%,  already  owned by  Peachtree
affiliates)  at a price of $65 per Unit.  The offer expired  September 30, 2003.
Peachtree  is not  affiliated  with  the  Partnership  or the  Managing  General
Partner.  The price offered was determined solely at the discretion of Peachtree
and does not necessarily represent the fair market value of each Unit.

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

                                Cash Distribution
                                -----------------

     On May 21, 2004, the Managing  General Partner made a cash  distribution of
$5,280,264  ($72 per Unit) to  Additional  Limited  Partners who were holders of
record as of April 1, 2004. The distribution consisted of proceeds received from
the sale of the property owned by Campbell Terrace.



                                      -23-

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


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

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

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

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

All other Items are not applicable.

                                      -24-

<PAGE>
                                    SIGNATURE

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


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

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




November 15, 2004                      by:  /s/ Michael J. Tuszka
-----------------                           ------------------------------------
DATE                                        Michael J. Tuszka
                                              Vice President
                                              and Chief Accounting Officer
                                              (Principal Financial Officer
                                              and Principal Accounting Officer)

                                                       -25-

<PAGE>