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


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


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



                                   FORM 10-QSB


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



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

                For the quarterly period ended September 30, 2001


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



                         Commission file number 0-13523

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


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



        Internal Revenue Service - Employer Identification No. 52-1328767

                 11200 Rockville Pike, Rockville, Maryland 20852

                                 (301) 468-9200


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




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



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

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001





                                                                           Page

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets
          - September 30, 2001 and December 31, 2000........................  1

        Consolidated Statements of Operations and Accumulated Losses
          - for the three and nine months ended
            September 30, 2001 and 2000.....................................  2

        Consolidated Statements of Cash Flows
          - for the nine months ended September 30, 2001 and 2000...........  3

        Notes to Consolidated Financial Statements
          - September 30, 2001 and 2000.....................................  4

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


PART II - OTHER INFORMATION

Item 3. Defaults Upon Senior Securities..................................... 24

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

Item 6. Exhibits and Reports on Form 8-K.................................... 25

Signature................................................................... 26

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


                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS



                                     ASSETS

<TABLE>
<CAPTION>
                                                                                      September 30,     December 31,
                                                                                          2001             2000
                                                                                      -------------     ------------
                                                                                       (Unaudited)
<S>                                                                                   <C>              <C>
Investments in and advances to partnerships .......................................   $  27,706,481    $  26,150,075
Investment in partnership held for sale ...........................................            --            474,054
Investment in partnerships held in escrow .........................................         120,550        4,160,314
Cash and cash equivalents .........................................................       5,164,808        8,049,221
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $354,195 and $338,458, respectively ..........         485,101          500,837
Property purchase costs,
  net of accumulated amortization of $288,936 and $276,267, respectively ..........         386,744          399,413
Sales proceeds receivable .........................................................            --          1,545,628
Other assets ......................................................................           1,142             --
                                                                                      -------------    -------------

      Total assets ................................................................   $  33,864,826    $  41,279,542
                                                                                      =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships ................................................   $  28,140,081    $  34,535,081
Accrued interest payable ..........................................................      93,782,342      103,424,862
Accounts payable and accrued expenses .............................................         149,368          474,328
                                                                                      -------------    -------------

      Total liabilities ...........................................................     122,071,791      138,434,271
                                                                                      -------------    -------------

Commitments and contingencies

Partners' capital (deficit):

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

                                                                                         73,503,500       73,503,500

  Less:
    Accumulated distributions to partners .........................................      (9,122,210)      (8,388,540)
    Offering costs ................................................................      (7,562,894)      (7,562,894)
    Accumulated losses ............................................................    (145,025,361)    (154,706,795)
                                                                                      -------------    -------------

      Total partners' deficit .....................................................     (88,206,965)     (97,154,729)
                                                                                      -------------    -------------

      Total liabilities and partners' deficit .....................................   $  33,864,826    $  41,279,542
                                                                                      =============    =============
</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,
                                                       ------------------------------    ------------------------------
                                                            2001             2000             2001            2000
                                                       -------------    -------------    -------------    -------------
<S>                                                    <C>              <C>              <C>              <C>
Share of income from partnerships ..................   $     972,400    $     923,885    $   2,127,350    $   2,941,199
                                                       -------------    -------------    -------------    -------------

Other revenue and expenses:

  Revenue:
    Interest and other income ......................          41,597          127,442          209,656          344,596
                                                       -------------    -------------    -------------    -------------

  Expenses:
    Interest .......................................       2,519,698        2,912,502        7,798,365        9,188,132
    Management fee .................................          93,750           93,750          281,250          281,250
    General and administrative .....................          80,488           73,512          241,463          229,736
    Professional fees ..............................          66,408           42,108          151,658          128,378
    Amortization of deferred costs .................           9,469           11,811           28,406           35,433
                                                       -------------    -------------    -------------    -------------

                                                           2,769,813        3,133,683        8,501,142        9,862,929
                                                       -------------    -------------    -------------    -------------

      Total other revenue and expenses .............      (2,728,216)      (3,006,241)      (8,291,486)      (9,518,333)
                                                       -------------    -------------    -------------    -------------

Loss before gain on disposition
  of investments in partnerships ...................      (1,755,816)      (2,082,356)      (6,164,136)      (6,577,134)
                                                       -------------    -------------    -------------    -------------

Gain on disposition of investments in partnerships .            --          3,520,913          676,391        3,520,913
                                                       -------------    -------------    -------------    -------------

(Loss) income before extraordinary gain
  from extinguishment of debt ......................      (1,755,816)       1,438,557       (5,487,745)      (3,056,221)

Extraordinary gain from extinguishment of debt .....       2,141,273        8,204,935       15,169,179        8,204,935
                                                       -------------    -------------    -------------    -------------

Net income .........................................         385,457        9,643,492        9,681,434        5,148,714

Accumulated losses, beginning of period ............    (145,410,818)    (167,799,161)    (154,706,795)    (163,304,383)
                                                       -------------    -------------    -------------    -------------

Accumulated losses, end of period ..................   $(145,025,361)   $(158,155,669)   $(145,025,361)   $(158,155,669)
                                                       =============    =============    =============    =============


Net income allocated
  to General Partners (1.51%) ......................   $       5,821    $     145,617    $     146,190    $      77,745
                                                       =============    =============    =============    =============

Net income allocated
  to Initial and Special Limited Partners (1.49%) ..   $       5,743    $     143,688    $     144,253    $      76,716
                                                       =============    =============    =============    =============

Net income allocated
  to Additional Limited Partners (97%) .............   $     373,893    $   9,354,187    $   9,390,991    $   4,994,253
                                                       =============    =============    =============    =============

Net income per unit of Additional Limited
  Partner Interest based on 73,500 units outstanding   $        5.09    $      127.27    $      127.77    $       67.95
                                                       =============    =============    =============    =============
</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,
                                                                                  ----------------------------
                                                                                      2001            2000
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
Cash flows from operating activities:
  Net income ..................................................................   $  9,681,434    $  5,148,714

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships .........................................     (2,127,350)     (2,941,199)
    Amortization of discount on purchase money notes ..........................           --            42,968
    Amortization of deferred costs ............................................         28,406          35,433
    Gain on disposition of investments in partnerships ........................       (676,391)     (3,520,913)
    Extraordinary gain from extinguishment of debt ............................    (15,169,179)     (8,204,935)

    Changes in assets and liabilities:
      Increase in other assets ................................................         (1,142)         (2,749)
      Increase in accrued interest payable ....................................      7,798,365       9,145,164
      Payment of purchase money note interest .................................       (241,619)       (828,570)
      Decrease in accounts payable and accrued expenses .......................       (324,960)        (39,324)
                                                                                  ------------    ------------

        Net cash used in operating activities .................................     (1,032,436)     (1,165,411)
                                                                                  ------------    ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships ..................................        586,065       1,161,926
  Decrease in sales proceeds receivable .......................................      1,545,628            --
  Proceeds from disposition of investments in partnerships ....................      1,135,324         831,146
                                                                                  ------------    ------------

        Net cash provided by investing activities .............................      3,267,017       1,993,072
                                                                                  ------------    ------------

Cash flows from financing activities:
  Distribution to Additional Limited Partners .................................       (733,670)           --
  Payoff of purchase money note principal and related interest ................     (4,385,324)           --
  Payment of purchase money note principal ....................................           --           (50,000)
                                                                                  ------------    ------------

        Net cash used in financing activities .................................     (5,118,994)        (50,000)
                                                                                  ------------    ------------

Net (decrease) increase in cash and cash equivalents ..........................     (2,884,413)        777,661

Cash and cash equivalents, beginning of period ................................      8,049,221       7,607,687
                                                                                  ------------    ------------

Cash and cash equivalents, end of period ......................................   $  5,164,808    $  8,385,348
                                                                                  ============    ============



Supplemental disclosure of cash flow information:
  Cash paid during the period for interest ....................................   $  1,166,943    $    828,570
                                                                                  ============    ============
</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, 2001 and 2000

                                   (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, 2001, and the results of its
operations for the three and nine months ended  September 30, 2001 and 2000, and
its cash  flows for the nine  months  ended  September  30,  2001 and 2000.  The
results of operations for the interim  periods ended September 30, 2001, are not
necessarily indicative of the results to be expected for the full year.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in conformity  with  accounting  principles  generally  accepted in the
United States and with the instructions to Form 10-QSB.  Certain information and
accounting  policies and  footnote  disclosures  normally  included in financial
statements prepared in conformity with accounting  principles generally accepted
in  the  United  States  have  been  condensed  or  omitted   pursuant  to  such
instructions.  These condensed  consolidated financial statements should be read
in  conjunction  with the  consolidated  financial  statements and notes thereto
included in the Partnership's annual report on Form 10-KSB at December 31, 2000.


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

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

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

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the form of purchase money notes having an aggregate principal
balance of  $28,140,081  plus  aggregate  accrued  interest of $93,782,342 as of
September  30,  2001,  are  payable  in full upon the  earliest  of: (i) sale or
refinancing of the respective Local Partnership's rental property;  (ii) payment
in full of the respective Local Partnership's permanent loan; or (iii) maturity.

     The maturity  dates of the purchase  money notes  related to the  following
properties were extended during 2001 and 2000.

                                                     Original       Extended
         Property                    Principal       Maturity       Maturity
         --------                    ----------      --------       --------
         Harborview Apartments       $3,000,000      08/01/99       08/01/04
         Cedar Point                  1,320,000      08/30/99       08/30/04
         Thornwood House              1,775,000      08/30/99       08/30/04
         Highland Village             1,100,000      10/31/99       10/31/04
         Jewish Federation            1,350,000      10/31/99       10/31/04
         Canonsburg House             1,440,000      12/01/99       01/04/03
         Char House                   1,430,000      12/01/99       01/04/03
         Liberty Tower                1,340,000      12/01/99       01/04/03




                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The purchase money notes related to the following  properties  have matured
and have not been paid or extended.

         Property                     Principal      Maturity
         --------                    ----------      --------
         De Angelis Manor            $1,015,000      07/01/99
         Matthew XXV                  1,020,000      07/01/99
         Crescent Gardens               434,000      07/31/99
         Pilgrim Tower East           1,650,000      12/01/99
         Wellington Woods               485,000      12/01/99
         Pilgrim Tower North          2,165,000      04/30/00
         Valley View                    920,000      01/01/01 (1)
         Westport Village               840,000      01/01/01 (1)
         Glenridge Gardens              690,000      01/01/01 (2)

     (1)  Extended in accordance with the forbearance agreement.
     (2)  Original maturity was August 1, 1999.

     The purchase money notes related to the following  properties were paid off
at a discount,  or the  collateral  that  secured  them was  transferred  to the
noteholders, during 2000 or 2001.

         Property                 Principal      Date              Disposition
         --------                ----------      ----              -----------
         Holiday Village         $1,370,000      July 2000         Paid Off
         Redden Gardens           1,330,000      September 2000    Transferred
         Wollaston Manor          2,125,000      December 2000     Paid Off
         Chippewa County            860,000      January 2001      Paid Off
         Hometown Village         1,495,000      January 2001      Transferred
         Scoville Center          1,400,000      January 2001      Transferred
         Cottonwood Park            975,000      May 2001          Paid Off
         Tradewinds Terrace         925,000      May 2001          Paid Off
         Riverview Manor            740,000      July 2001         Paid Off
         Canonsburg House           100,000      October 2001      Paid Off
         Char House                 100,000      October 2001      Paid Off
         Liberty Tower              100,000      October 2001      Paid Off

     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 noteholders may have the right to foreclose on
the Partnership's  interest in the related Local Partnership.  In the event of a
foreclosure, the excess of the nonrecourse indebtedness over the carrying amount
of the Partnership's investment in the related Local Partnership would be deemed
cancellation of indebtedness  income, which would be taxable to Limited Partners
at a  federal  tax  rate  of  up to  38.6%.  Additionally,  in  the  event  of a
foreclosure,  the Partnership would lose its investment in the Local Partnership
and,  likewise,  its  share of any  future  cash flow  distributed  by the Local
Partnership from rental operations,  mortgage debt refinancings,  or the sale of
the real estate.

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     The following  chart presents  information  related to purchase money notes
which have  matured,  have been  extended to mature,  or are scheduled to mature
through September 30, 2002, and which remain unpaid or unextended as of November
9, 2001.  Excluded  from the  following  chart are  purchase  money  notes which
matured through September 30, 2001, and which have been paid off, cancelled,  or
extended on or before November 9, 2001.

<TABLE>
<CAPTION>
                                                                          Aggregate                 Carrying Amount
                                               Aggregate                   Accrued                  of Partnership's
                                               Principal                   Interest                 Investments in
                   Number of                    Balance                    Balance                  Underlying Local
   Purchase        Underlying                    as of                      as of                     Partnerships
  Money Note         Local       Percentage    September     Percentage   September    Percentage   as of September     Percentage
(PMN) Maturity    Partnerships    of Total      30, 2001      of Total     30, 2001     of Total        30, 2001         of Total
--------------    ------------   ----------    -----------   ---------    ----------   ----------   ----------------    ----------
<S>               <C>            <C>           <C>           <C>          <C>          <C>          <C>                 <C>
3rd Quarter 1999        5            17%       $ 4,229,000         15%    $12,080,450        13%       $ 7,933,746           29%
4th Quarter 1999        2             7%         2,135,000          8%      5,890,907         6%           837,661            3%
2nd Quarter 2000        1             3%         2,165,000          8%     15,356,487        16%         2,692,241           10%
1st Quarter 2001        1             3%           690,000          2%      2,476,372         3%                --           --
3rd Quarter 2002        1             3%         1,500,000          5%      2,487,637         3%                --           --
                     ----          ----        -----------      -----     -----------      ----        -----------         ----
Total through
 9/30/2002             10            33%       $10,719,000         38%    $38,291,853        41%       $11,463,648           42%
                     ====          ====        ===========      =====     ===========      ====        ===========         ====
Total, Local
  Partnerships         29 (1)       100%       $28,140,081        100%    $93,782,342       100%       $27,706,481          100%
                     ====          ====        ===========      =====     ===========      ====        ===========         ====
</TABLE>


(1)  Twenty  of the 29 Local  Partnerships  have  related  purchase  money  note
     obligations.

     The  Managing  General  Partner  is  continuing  to  investigate   possible
alternatives to reduce the Partnership's  debt obligations.  These  alternatives
include, among others, retaining the cash available for distribution to meet the
purchase money note  requirements,  paying off certain purchase money notes at a
discounted  price,  extending  the due dates of certain  purchase  money  notes,
refinancing  the  respective   properties'   underlying  debt,  or  selling  the
underlying real estate and using the Partnership's  share of the proceeds to pay
or buy down  certain  purchase  money note  obligations.  Although  the Managing
General Partner has had some success  applying these strategies in the past, the
Managing  General Partner cannot assure that these strategies will be successful
in the  future.  If the  Managing  General  Partner  is unable to  negotiate  an
extension  or  discounted  payoff,  in the event that the  purchase  money notes
remain unpaid upon maturity,  the noteholders may have the right to foreclose on
the Partnership's interest in the related Local Partnerships.  In the event of a
foreclosure, the excess of the nonrecourse indebtedness over the

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

carrying amount of the Partnership's investment in the related Local Partnership
would be deemed cancellation of indebtedness  income,  which would be taxable to
Limited  Partners  at a federal  tax rate of up to 38.6%.  Additionally,  in the
event of a foreclosure,  the Partnership  would lose its investment in the Local
Partnership and, likewise,  its share of any future cash flow distributed by the
Local Partnership from rental  operations,  mortgage debt  refinancings,  or the
sale of the real estate.  Of the 29 Local  Partnerships in which the Partnership
is invested as of September 30, 2001, the 10 Local  Partnerships with associated
purchase  money notes which mature  through  September 30, 2002 and which remain
unpaid  or  unextended  as  of  November  9,  2001,  represented  the  following
percentages  of  the  Partnership's  total  distributions  received  from  Local
Partnerships  and share of income from Local  Partnerships  for the  immediately
preceding two calendar years.

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

          December 31, 2000             17%                    $581,397
          December 31, 1999             16%                    $338,907

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity  of its 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, 2001 was $2,519,698 and  $7,798,365,
respectively, and $2,912,502 and $9,188,132 for the three and nine month periods
ended  September 30, 2000,  respectively.  Amortization  of discount on purchase
money  notes  increased  interest  expense  for the  nine  month  periods  ended
September  30,  2001  and  2000 by $0 and  $42,968,  respectively.  The  accrued
interest  payable on the purchase money notes of $93,782,342 and $103,424,862 as
of  September  30,  2001 and  December  31,  2000,  respectively,  is due on the
respective  maturity  dates of the  purchase  money  notes or  earlier,  in some
instances,  if (and to the  extent  of a  portion  thereof)  the  related  Local
Partnership  has  distributable  net cash flow, as defined in the relevant Local
Partnership agreement.

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

     The  Partnership  defaulted  on its six  purchase  money  notes  related to
Canonsburg Housing Associates Limited Partnership (Canonsburg House), Char House
Highrise  Association  Limited  Partnership  (Char  House),  and  Liberty  Tower
Associates  Limited  Partnership  (Liberty  Tower) on  December 1, 1999 when the
notes matured and were not paid. The default amount included aggregate principal
and accrued interest of $4,510,000 and $12,951,810, respectively. As of November
9, 2001, aggregate principal and accrued interest of $4,510,000 and $16,336,954,
respectively,  were due.  The  Partnership  tried to  negotiate  to  extend  the
maturity  date of the  purchase  money notes for up to five years.  However,  on
September  8, 2000,  the  Partnership  received  service  of three  suits by the
noteholder  of one of the notes with  respect to each of the three  partnerships
for  foreclosure  on the  Partnership's  interests.  The  Partnership  filed its
answers on October  24,  2000,  although  it  continued  to  negotiate  with the
plaintiff.  The Partnership entered into a settlement  agreement in October 2001
pursuant to which it obtained an  extension  of the  maturity  date of the three
larger notes to January 2003. The Partnership also negotiated

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

a discounted payoff of the three smaller notes, and the funds were released from
escrow  on  October  22,  2001.  The  discounted   payoffs  will  result  in  an
extraordinary  gain from  extinguishment  of debt of  $1,351,664  for  financial
statement purposes and in cancellation of indebtedness  income of $1,351,664 for
federal tax purposes in 2001.

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

     The  Partnership  defaulted on its purchase  money note related to Chippewa
County  Housing  Partners  (Chippewa  County)  on  August  1, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of $860,000 and  $2,297,462,  respectively.  In March 2000, in exchange
for a non-refundable  deposit, the noteholders agreed to forbear from exercising
their  remedies until July 1, 2000. In June 2000, in exchange for a further non-
refundable  deposit,   the  noteholders  agreed  to  continue  to  forbear  from
exercising   their  remedies  until  January  4,  2001.  In  January  2001,  the
Partnership paid off the note at a discount.  The discounted  payoff resulted in
extraordinary  gain from  extinguishment  of debt of  $2,164,719  for  financial
statement purposes and in cancellation of indebtedness  income of $2,164,719 for
federal tax purposes in 2001.

                                 Cottonwood Park
                                 ---------------

     The  Partnership  defaulted on its  purchase  money note related to Shawnee
Heights Limited  Partnership  (Cottonwood  Park) on August 1, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of $975,000 and $2,576,421,  respectively. In May 2000, the noteholders
filed suit to  foreclose  on the  Partnership's  interest  in  Cottonwood  Park.
However,  the parties  negotiated an agreement which allowed for a possible sale
of the property. On May 30, 2001, Cottonwood Park was sold. Proceeds received by
the  Partnership  from  the sale of the  property  were  used to pay  off,  at a
discount,  the  purchase  money note  related to  Cottonwood  Park.  The sale of
Cottonwood  Park resulted in gain on disposition of investments in  partnerships
of $676,391 and in extraordinary gain from  extinguishment of debt of $3,029,351
for financial  statement  purposes in 2001,  and a total gain of $4,973,428  for
federal tax purposes in 2001.

     Due to the  impending  sale of the  property  related to the  Partnership's
investment in Cottonwood Park, the Partnership's basis in the Local Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled $474,054, was reclassified to investment in partnership held for sale in
the accompanying consolidated balance sheet at December 31, 2000.

                                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.

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

The  agreement  extends  the  maturity  date up to July  31,  2004,  subject  to
semi-annual  interest  payments,  and  reduces  the  interest  rate of the First
Crescent Note. The  Partnership has been contacted by only one of the holders of
the other note  (Second  Crescent  Note) and thus  cannot  predict the course of
action  with  regard to the  Second  Crescent  Note.  As of  November  9,  2001,
principal and accrued  interest of $434,000 and $1,211,189,  respectively,  were
due  on  the  Second   Crescent   Note.  The  property   recently   entered  the
Mark-to-Market  program, 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.

                                De Angelis Manor
                                ----------------

     The  Partnership  defaulted on its purchase  money notes  related to Natick
Associates (De Angelis  Manor) on July 1, 1999,  when the notes matured and were
not paid. The default amount included  aggregate  principal and accrued interest
of $1,015,000 and $2,670,689,  respectively.  As of November 9, 2001,  aggregate
principal and accrued interest of $1,015,000 and $3,507,725,  respectively, were
due. The Partnership is currently trying to negotiate a discounted payoff of the
purchase  money notes in  connection  with a sale of the  property.  There is no
assurance that a discounted payoff of the purchase money notes will be obtained,
or that a sale will occur.

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

     The  Partnership  defaulted on its purchase money note related to Glenridge
Development  Company (Glenridge Gardens) on August 1, 1999 when the note matured
and was not paid. The default amount included  principal and accrued interest of
$740,000  and  $1,928,809,  respectively.  As of  November  9,  2001,  aggregate
principal and accrued  interest of $690,000 and $2,505,078,  respectively,  were
due. On June 16,  2000,  the  Partnership  and  noteholder  agreed to extend the
maturity  date of the  purchase  money note to January  2001,  in exchange for a
payment which was applied to the purchase  money note principal  balance.  Under
the extension agreement,  documents  transferring the Partnership's  interest in
Glenridge  Gardens to the noteholder were placed in escrow to be released to the
noteholder upon a future default by the Partnership. The Partnership has reached
an agreement  with the  noteholder to extend the maturity  date through  January
2002 and  documentation  is in process.  There is no assurance that an extension
will be obtained.  As of November 9, 2001, the purchase money noteholder has not
taken action to transfer the Partnership's interest in Glenridge Gardens.

     Due to the  possible  transfer of the  Partnership's  interest in the Local
Partnership to the noteholder, the Partnership's basis in the Local Partnership,
along with net unamortized  acquisition fees and property purchase costs,  which
totaled  $36,247,  has been  reclassified to investment in partnerships  held in
escrow in the accompanying consolidated balance sheets at September 30, 2001 and
December 31, 2000.

                                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,

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

respectively.  In April 2001,  the  Partnership  and the  noteholders  agreed to
extend the maturity  date of the purchase  money notes to October 31, 2004.  The
noteholders  retain the right to  accelerate  the maturity  date of the notes on
nine months' notice.  The local managing general partner and the noteholders are
jointly  exploring  various  options to  refinance  with  Massachusetts  Housing
Finance Agency (MHFA) the HUD Section 236 interest rate subsidized mortgage loan
related to this property. In connection with the extension of the purchase money
note,  the  Partnership  and its affiliated  general  partner did not retain any
consent rights to approve a sale,  refinancing or other restructuring.  There is
no assurance that refinancing of the mortgage loan will occur.

                                 Holiday Village
                                 ---------------

     The  Partnership  defaulted on its  purchase  money note related to Holiday
Village Apartments  (Holiday Village) on July 27, 1994 when the note matured and
was not paid.  The default  amount  included  principal and accrued  interest of
$1,370,000 and $2,862,342,  respectively.  The Managing  General Partner and the
noteholder reached an agreement on a discounted payoff of the note in connection
with,  and  contingent  upon,  the sale of the  property  agreed to by the Local
Partnership and an unrelated third party. On July 21, 2000,  Holiday Village was
sold.  Proceeds  received by the Partnership  from the sale of the property were
used to pay off,  at a  discount,  the  purchase  money note  related to Holiday
Village.  The  sale of  Holiday  Village  resulted  in gain  on  disposition  of
investments  in  partnerships  of  $3,520,913  and in  extraordinary  gain  from
extinguishment of debt of $3,969,834 for financial  statement  purposes in 2000,
and a total gain of $8,370,626 for federal tax purposes in 2000.

                                Hometown Village
                                ----------------

     The  Partnership  defaulted on its purchase  money note related to Hometown
Villages Limited Partnership  (Hometown Village) on August 1, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of $1,495,000 and $5,010,398,  respectively. In March 2000, in exchange
for a non-refundable  deposit, the noteholders agreed to forbear from exercising
their  remedies  until July 1, 2000.  In June 2000,  in  exchange  for a further
non-refundable  deposit,  the  noteholders  agreed to continue  to forbear  from
exercising   their  remedies  until  January  4,  2001.  In  January  2001,  the
Partnership's  interest in Hometown  Village was transferred to the noteholders.
The  transfer  of  the  Partnership's   interest  in  Hometown  Village  to  the
noteholders  resulted  in  extraordinary  gain  from  extinguishment  of debt of
$4,271,262  for financial  statement  purposes in 2001, and in  cancellation  of
indebtedness  income of  approximately  $7.9 million for federal tax purposes in
2001.

     Due to the transfer of the Partnership's  interest in Hometown Village, the
Partnership's  basis  in the  Local  Partnership,  along  with  net  unamortized
acquisition  fees and property  purchase costs,  which totaled  $3,121,315,  was
reclassified  to investment in partnerships  held in escrow in the  accompanying
consolidated balance sheet at December 31, 2000.

                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     The purchase money note related to Jewish Federation  Apartments Associates
(Jewish Federation), in the principal amount of $1,350,000, was due to mature on
October  31,  1999.  In 1997,  the  Managing  General  Partner  entered  into an
agreement  with the  noteholder  to extend  the  maturity  date for five  years,
subject to the donation and transfer by the Local  Partnership  of an unimproved
portion of the property to an entity  affiliated with the local managing general
partner  and the  noteholder.  On May 21,  1999,  the  noteholder  extended  the
maturity  date of the purchase  money note to April 30,  2000,  and on April 24,
2000,  the noteholder  further  extended the maturity date to April 30, 2001, to
allow time for the donation and transfer to occur.  In 2000,  the local managing
general  partner  received  HUD  approval  for the  donation and transfer of the
unimproved portion of the property,  and the transfer took place effective March
30, 2001.  Upon such transfer,  the maturity date of the purchase money note was
extended to October 31, 2004, in accordance with the 1997 agreement.

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

     The  Partnership  defaulted on its purchase money notes related to Diakonia
Associates  (Matthew  XXV) on July 1, 1999,  when the notes matured and were not
paid. The default amount included  aggregate  principal and accrued  interest of
$1,020,000  and  $2,695,752,  respectively.  As of November  9, 2001,  aggregate
principal and accrued interest of $1,020,000 and $3,539,100,  respectively, were
due. The Partnership is currently trying to negotiate a discounted payoff of the
purchase money notes in connection with a potential sale of the property.  There
is no  assurance  that a discounted  payoff of the purchase  money notes will be
obtained, or that a sale will occur.

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower East Associates  Limited  Partnership  (Pilgrim Tower East) on December 1,
1999,  when the note  matured  and was not paid.  The  default  amount  included
principal and accrued interest of $1,650,000 and $2,719,372, respectively. As of
November 9, 2001,  principal and accrued  interest of $1,650,000 and $3,126,692,
respectively,  were due.  The  Partnership  and the  noteholder  have reached an
agreement in principle to sell the Partnership's  interest in Pilgrim Tower East
to the  noteholder  over a three-year  period in exchange for the  principal and
accrued  interest  outstanding on the purchase money note and annual payments on
the purchase money note. There is no assurance that a sale will occur.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     The  Partnership  defaulted on its  purchase  money note related to Pilgrim
Tower North Associates  Limited  Partnership  (Pilgrim Tower North) on April 30,
2000  when the note  matured  and was not  paid.  The  default  amount  included
principal and accrued interest of $2,165,000 and $12,480,569,  respectively.  As
of  November  9,  2001,   principal  and  accrued  interest  of  $2,165,000  and
$15,587,307,  respectively,  were due. The  Partnership has reached an agreement
with the  noteholder  in  principal  which  allows the  assignee to purchase the
Partnership's  interest in Pilgrim Tower North in exchange for the principal and
accrued interest outstanding on the purchase money note and a payment applied to
the note. There is no assurance that a sale will occur.

                                 Redden Gardens
                                 --------------

     The  Partnership  defaulted  on its  purchase  money note related to Redden
Development  Company  (Redden  Gardens) on August 31, 1997 when the note matured
and was not paid. The default amount included  principal and accrued interest of
$1,330,000 and $2,783,593,  respectively.  The noteholders extended the maturity
date of the  purchase  money  note  to  January  3,  2000,  at  which  time  the
Partnership  again  defaulted on the purchase money note. In connection with the
extension,  the  Partnership  had placed in escrow  documents  transferring  its
interest in Redden Gardens to the noteholders, to be released to the noteholders
upon a  future  default  by the  Partnership  on the  purchase  money  note.  On
September 12, 2000, the  noteholders  exercised their right to have the escrowed
documents released to them.

     The  transfer  of the  Partnership's  interest  in  Redden  Gardens  to the
noteholders  resulted in an extraordinary  gain from  extinguishment  of debt of
$4,300,075  for  financial  statement  purposes  in  2000,  and a total  gain of
$6,190,013 for federal tax purposes in 2000.

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

     The Partnership  defaulted on its purchase money notes related to Riverview
Manor Company Limited  Partnership  (Riverview Manor) on September 30, 1999 when
the notes  matured and were not paid.  The  default  amount  included  aggregate
principal and accrued interest of $740,000 and $1,853,014, respectively. On July
23, 2001, the Partnership  paid off the purchase money notes at a discount.  The
discounted payoff resulted in extraordinary gain from  extinguishment of debt of
$2,141,273  for  financial  statement  purposes in 2001 and in  cancellation  of
indebtedness income of $2,141,273 for federal tax purposes in 2001.

                                 Scoville Center
                                 ---------------

     The  Partnership  defaulted on its purchase  money notes  related to Beloit
Housing Partners (Scoville Center) on October 1, 1999 when the notes matured and
were not paid. The default  amount  included  principal and accrued  interest of
$1,400,000  and  $2,123,397,  respectively.  In March 2000,  in  exchange  for a
non-refundable  deposit, the noteholders agreed to forbear from exercising their
remedies  until  July 1, 2000.  In June 2000,  in  exchange  for a further  non-
refundable  deposit,   the  noteholders  agreed  to  continue  to  forbear  from
exercising   their  remedies  until  January  4,  2001.  In  January  2001,  the
Partnership's interest in Scoville Center was

                                      -12-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

transferred to the noteholders.  The transfer of the  Partnership's  interest in
Scoville  Center  to  the  noteholders   resulted  in  extraordinary  gain  from
extinguishment of debt of $2,698,797 for financial  statement  purposes in 2001,
and in a cancellation of indebtedness  income of approximately  $5.9 million for
federal tax purposes in 2001.

     Due to the transfer of the Partnership's  interest in Scoville Center,  the
Partnership's  basis  in the  Local  Partnership,  along  with  net  unamortized
acquisition  fees and  property  purchase  cost,  which  totaled  $918,448,  was
reclassified  to investment in partnerships  held in escrow in the  accompanying
consolidated balance sheet at December 31, 2000.

                               Tradewinds Terrace
                               ------------------

     The Partnership  defaulted on its purchase money note related to Tradewinds
West LDHA Limited Partnership (Tradewinds Terrace) on December 3, 1999, when the
note matured and was not paid. The default amount included principal and accrued
interest  of  $925,000  and  $1,228,429,  respectively.  On May  24,  2001,  the
Partnership paid off the note at a discount.  The discounted  payoff resulted in
extraordinary  gain  from  extinguishment  of debt  of  $863,777  for  financial
statement  purposes  in 2001,  and in  cancellation  of  indebtedness  income of
$863,777 for federal tax purposes in 2001.

                                   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 9, 2001,
aggregate   principal   and  accrued   interest  of  $920,000  and   $2,069,253,
respectively,  were due. The  Partnership  has been sued by the  noteholders for
payment  and  for  confirmation  of  the  transfer  of  the  collateral  to  the
noteholders.  On January 7, 2000, the Partnership  filed a motion to dismiss the
suit.  The  noteholders   subsequently   filed  an  amended   complaint  seeking
confirmation  of the  transfer  of the  collateral  to the  noteholders  but not
seeking payment.  On February 9, 2000, the Partnership filed a motion to dismiss
the amended complaint, which was granted. A further amended complaint and motion
to dismiss have been filed,  but no ruling on the latest motion has been made as
of  November  9,  2001.  The  Partnership  and the  noteholders  have  agreed in
principle  that the  Partnership  will deposit  assignments  of its interests in
Valley View in escrow,  together with an option agreement  pursuant to which the
noteholders may purchase the interests for the outstanding  debt if the property
is not sold and/or the notes are not repaid by a future  date to be  negotiated.
There is no assurance that any settlement will be finalized.

     Due to the impending transfer of the Partnership's interest in Valley View,
the net  unamortized  amounts of acquisition  fees and property  purchase costs,
which totaled $37,315,  has been reclassified to investment in partnerships held
in escrow in the accompanying  consolidated balance sheets at September 30, 2001
and December 31, 2000.

                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

     The  Partnership  defaulted on its purchase money notes related to Clarkson
Associates  of  Wellington  Woods  Limited  Partnership  (Wellington  Woods)  on
December 1, 1999,  when the notes matured and were not paid.  The default amount
included  aggregate  principal and accrued  interest of $485,000 and $2,169,679,
respectively.  As of November 9, 2001,  aggregate principal and accrued interest
of $485,000 and  $2,826,543,  respectively,  were due. The  Partnership had been
negotiating  with the  noteholders  to extend the maturity  date of the purchase
money note for five years, in exchange for a partial payment.

     In August, 2000, one of the purchase money noteholders sued the Partnership
for damages and  foreclosure of the security  interests in the Wellington  Woods
Local  Partnership.  Subsequently,  the plaintiff and the second  purchase money
noteholder  filed an  amended  complaint.  The  parties  had been  discussing  a
settlement  involving extension of the maturity date of the purchase money notes
to  January  2, 2004,  in  exchange  for a partial  payment.  The  Partnership's
interest  in the  Local  Partnership  would be held in  escrow.  The  settlement
documents   were  being   negotiated.   However,   in  the   absence  of  recent
communications,  the Partnership  has filed an answer to the amended  complaint.
There can be no assurance that the settlement will be consummated.

                                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 9, 2001,  principal and
accrued  interest  of  $840,000  and  $1,870,273,  respectively,  were due.  The
Partnership has been sued by the noteholders for payment and for confirmation of
the  transfer of the  collateral  to the  noteholders.  On January 7, 2000,  the
Partnership  filed a motion to dismiss the suit.  The  noteholders  subsequently
filed  an  amended  complaint  seeking  confirmation  of  the  transfer  of  the
collateral to the noteholders but not seeking payment.  On February 9, 2000, the
Partnership filed a motion to dismiss the amended complaint,  which was granted.
A further amended complaint and motion to dismiss have been filed, but no ruling
on the latest motion has been made as of November 9, 2001. The  Partnership  and
the  noteholders  have agreed in  principle  that the  Partnership  will deposit
assignments  of its  interests in Westport  Village in escrow,  together with an
option  agreement  pursuant to which the  noteholders may purchase the interests
for the  outstanding  debt if the property was not sold and/or the notes are not
repaid  by a  future  date to be  negotiated.  There  is no  assurance  that any
settlement will be finalized.

     Due to the  impending  transfer of the  Partnership's  interest in Westport
Village,  the net unamortized  amounts of acquisition fees and property purchase
costs,   which  totaled  $46,989,   has  been   reclassified  to  investment  in
partnerships held in escrow in the accompanying  consolidated  balance sheets at
September 30, 2001 and December 31, 2000.

                                      -14-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                 Wollaston Manor
                                 ---------------

     The Partnership  defaulted on its purchase money notes related to Wollaston
Manor Associates (Wollaston Manor) on October 1, 1999 when the notes matured and
were not paid.  The default  amount  included  aggregate  principal  and accrued
interest of  $2,125,000  and  $4,111,380,  respectively.  On December  28, 2000,
Wollaston Manor was sold.  Proceeds received by the Partnership from the sale of
the  property  were used to pay off, at a  discount,  the  purchase  money notes
related to  Wollaston  Manor.  The sale of Wollaston  Manor  resulted in gain on
disposition of investments in  partnerships  of $4,135,937 and in  extraordinary
gain from  extinguishment of debt of $2,518,332 for financial statement purposes
in 2000,  and in a total gain of $8,868,806 for federal tax purposes in 2000. In
January  2001,  the  Managing  General  Partner  was paid a  disposition  fee of
$186,682 relating to the sale.

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

     To cover operating  deficits  incurred in prior years by Lakes of Northdale
Limited  Partnership  (Lakes  of  Northdale),  the  Partnership  advanced  funds
totaling  $54,500 as of both  September  30,  2001 and  December  31,  2000.  No
advances  have been  made to Lakes of  Northdale  since  September  1989.  These
non-interest  bearing  advances are payable from cash flow of Lakes of Northdale
after  payment of first  mortgage  debt  service and after  satisfaction  by the
Partnership  of certain other  interest  obligations on the purchase money notes
relating to the Local  Partnership.  For  financial  reporting  purposes,  these
advances have been reduced to zero by the  Partnership  as a result of losses at
the Local Partnership level during prior years.

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

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

     The Local Managing  General Partner  informed the Managing  General Partner
that the Lakes of Northdale  property is being  marketed  for sale,  although no
offers have yet been received. The Partnership must consent to any sale.

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

     The Local Managing General Partner of Madison Square Ltd.  Dividend Housing
Association  (Madison  Square) has requested  debt relief  effective  October 1,
2001. The property has run out of operating cash and replacement  reserve funds,
therefore, the Local Managing General Partner has requested from the lender that
the debt payments be reduced to interest  only  payments  until such time as the
property can be sold. The Local Managing  General Partner has been searching for
a non-profit  organization  to purchase  this asset but has no firm offers as of
yet. As of September 30, 2001,  the  Partnership's  investment in Madison Square
was $0.

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

     Combined  statements of operations for the 29 and 33 Local  Partnerships in
which  the  Partnership  was  invested  as  of  September  30,  2001  and  2000,
respectively,   follow.   The  combined   statements  have  been  compiled  from
information supplied by the management agents of the

                                      -15-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

projects and are unaudited.  The combined statements of operations for the three
and nine months ended September 30, 2001 and 2000,  include  information for the
Local Partnerships through date of transfer or sale.

                        COMBINED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                       For the three months ended         For the nine months ended
                                             September 30,                       September 30,
                                      ---------------------------        ---------------------------
                                         2001             2000              2001             2000
                                      ----------       ----------        -----------      ----------
<S>                                   <C>              <C>               <C>              <C>
Revenue:
  Rental                              $7,727,783       $8,403,416        $23,141,594      $25,759,298
  Other, principally interest            588,429          621,833          1,762,249        1,712,542
                                      ----------       ----------        -----------      -----------

    Total revenue                      8,316,212        9,025,249         24,903,843       27,471,840
                                      ----------       ----------        -----------      -----------

Expenses:
  Operating                            4,530,503        4,981,606         14,525,222       15,301,141
  Interest                             1,293,613        1,391,699          3,881,672        4,187,744
  Depreciation and amortization        1,550,070        1,812,348          4,701,439        5,507,026
                                      ----------       ----------        -----------      -----------

    Total expenses                     7,374,186        8,185,653         23,108,333       24,995,911
                                      ----------       ----------        -----------      -----------

Net income                            $  942,026       $  839,596        $ 1,795,510      $ 2,475,929
                                      ==========       ==========        ===========      ===========
</TABLE>


     As of September 30, 2001 and 2000,  the  Partnership's  share of cumulative
losses to date for ten and six of the 29 and 33 Local Partnerships  exceeded the
amount  of  the  Partnership's  investments  in  and  advances  to  those  Local
Partnerships by $13,123,812 and  $12,736,850,  respectively.  As the Partnership
has no further  obligation to advance funds or provide  financing to these Local
Partnerships,  the excess  losses have not been  reflected  in the  accompanying
consolidated financial statements.


3.   AFFORDABLE HOUSING LEGISLATION

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

                                      -16-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


3.   AFFORDABLE HOUSING LEGISLATION - Continued

     Mark-to-Market  implementation will reduce rental income at properties that
are currently subsidized at higher-than-market  rental rates, and will therefore
lower cash flow available to meet mortgage payments and operating expenses. Each
affected property may undergo debt  restructuring  according to terms determined
by an individual property and operations  evaluation.  This may involve reducing
the first mortgage loan balance to an amount supportable by the property, taking
into account the property's  operating  expenses and reduced income. The balance
of the amount  written down from the first  mortgage loan will be converted to a
non-performing but accruing (soft) second mortgage loan.

     Crescent  Gardens  Associates  Limited   Partnership   (Crescent  Gardens),
Glenridge   Development  Company  (Glenridge   Gardens),   Pilgrim  Tower  North
Associates  Limited  Partnership  (Pilgrim Tower North) and Tradewinds West LDHA
Limited Partnership (Tradewinds Terrace) in which the Partnership is invested as
of September 30, 2001 have Section 8 HAP contracts  which, as extended,  will or
were to expire in 2001.  The Section 8 HAP contract  covers all of the apartment
units in  Crescent  Gardens,  and  20%,  79% and 36% of the  apartment  units in
Glenridge  Gardens,  Pilgrim Tower North and Tradewinds  Terrace,  respectively.
Crescent Gardens recently entered the Mark-to-Market  program. The Section 8 HAP
contract for Glenridge  Gardens was extended to May 2002.  Pilgrim  Towers North
was extended to February 2004 and Tradewinds Terrace was extended to April 2004.
Three of the properties have related purchase money notes which have matured, as
discussed in Note 2.a.

     With the  uncertainty  of continued  project-based  Section 8 subsidies for
properties  with expiring  Section 8 HAP  contracts,  there is no assurance that
rental  properties  with Section 8 HAP  contract  rents in excess of fair market
rents will be able to maintain the rental income and occupancy  levels necessary
to pay  operating  costs and debt  service.  As a result,  it is not possible to
predict  the  impact on the Local  Partnerships'  operations  and the  resulting
impact on the Partnership's investments in and advances to Local Partnerships at
this time. As of September 30, 2001, the Partnership's  remaining  investment in
Local  Partnerships with Section 8 HAP contracts  expiring in the next 12 months
was $0.


4.   RELATED PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to reimburse the Managing  General  Partner for its direct expenses
in connection with managing the  Partnership.  The Partnership  paid $43,483 and
$173,417  for the  three  and nine  month  periods  ended  September  30,  2001,
respectively,  and $54,885  and  $192,109  for the three and nine month  periods
ended  September  30, 2000,  respectively,  to the Managing  General  Partner as
direct  reimbursement of expenses  incurred on behalf of the  Partnership.  Such
expenses are included in the accompanying  consolidated statements of operations
as general and administrative expenses.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to pay the Managing General Partner an annual incentive  management
fee  (Management  Fee) after all other expenses of the Partnership are paid. The
Partnership  paid the Managing  General  Partner a Management Fee of $93,750 and
$281,250 for each of the three and nine month periods  ended  September 30, 2001
and 2000.


                                      -17-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2001 and 2000

                                   (Unaudited)


4.   RELATED PARTY TRANSACTIONS - Continued

     The Managing General Partner and/or its affiliates may receive a fee of not
more than two percent of the sales price of an investment in a Local Partnership
or the property it owns,  payable under certain  conditions  upon the sale of an
investment in a Local  Partnership  or the property it owns.  The payment of the
fee is subject to certain  restrictions,  including the achievement of a certain
level of sales  proceeds and making  certain  minimum  distributions  to limited
partners.  No such  fees were  earned by the  Managing  General  Partner  or its
affiliates  for the nine month  periods  ended  September  30, 2001 or 2000.  In
January  2001,  the  Managing  General  partner  was paid a  disposition  fee of
$186,682 relating to the sale of Wollaston Manor in December 2000.




                                      # # #

                                      -18-

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


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

                                     General
                                     -------

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

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

     Mark-to-Market  implementation will reduce rental income at properties that
are currently subsidized at higher-than-market  rental rates, and will therefore
lower cash flow available to meet mortgage payments and operating expenses. Each
affected property may undergo debt  restructuring  according to terms determined
by an individual property and operations  evaluation.  This may involve reducing
the first mortgage loan balance to an amount supportable by the property, taking
into account the property's  operating  expenses and reduced income. The balance
of the amount  written down from the first  mortgage loan will be converted to a
non-performing but accruing (soft) second mortgage loan.

     Crescent  Gardens  Associates  Limited   Partnership   (Crescent  Gardens),
Glenridge   Development  Company  (Glenridge   Gardens),   Pilgrim  Tower  North
Associates  Limited  Partnership  (Pilgrim Tower North) and Tradewinds West LDHA
Limited Partnership (Tradewinds Terrace) in which the Partnership is invested as
of September 30, 2001 have Section 8 HAP contracts  which, as extended,  will or
were to expire in 2001.  The Section 8 HAP contract  covers all of the apartment
units in  Crescent  Gardens,  and  20%,  79% and 36% of the  apartment  units in
Glenridge  Gardens,  Pilgrim Tower North and Tradewinds  Terrace,  respectively.
Crescent Gardens recently entered the Mark-to-Market  program. The Section 8 HAP
contract for Glenridge  Gardens was extended to May 2002.  Pilgrim  Towers North
was extended to February 2004 and Tradewinds Terrace was extended to April 2004.
Three of the properties have related purchase money notes which have matured, as
discussed in Note 2.a.

                                      -19-

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


     With the  uncertainty  of continued  project-based  Section 8 subsidies for
properties  with expiring  Section 8 HAP  contracts,  there is no assurance that
rental  properties  with Section 8 HAP  contract  rents in excess of fair market
rents will be able to maintain the rental income and occupancy  levels necessary
to pay  operating  costs and debt  service.  As a result,  it is not possible to
predict  the  impact on the Local  Partnerships'  operations  and the  resulting
impact on the Partnership's investments in and advances to Local Partnerships at
this time. As of September 30, 2001, the Partnership's  remaining  investment in
Local  Partnerships with Section 8 HAP contracts  expiring in the next 12 months
was $0.

     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 rents in line
with market rate rents.  For properties that enter the program and have interest
rate  subsidized  FHA loans,  the rents are  adjusted  to take into  account the
benefits the property is already  receiving from the below-market  interest rate
by means of a HUD-determined  Interest Subsidy Adjustment Factor. The purpose of
this program is to provide  incentives  to owners of  properties  with  expiring
Section 8 HAP contracts not to convert these properties to market rate housing.

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

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

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

     The Partnership's liquidity, with unrestricted cash resources of $5,164,808
as of September 30, 2001, along with anticipated  future cash distributions from
the Local  Partnerships,  is  expected  to be  adequate  to meet its current and
anticipated operating cash needs. On April 27, 2001, the Partnership made a cash
distribution of $733,670  ($10.00 per Unit) to Additional  Limited  Partners who
were holders of record as of April 1, 2001. The distribution was a result of the
sale of  Wollaston  Manor.  As of  November  9,  2001,  there  were no  material
commitments for capital expenditures.

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the form of purchase money notes having an aggregate principal
balance of  $28,140,081  plus  aggregate  accrued  interest of $93,782,342 as of
September  30,  2001,  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.

                                      -20-

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


     The maturity  dates of the purchase  money notes  related to the  following
properties were extended during 2001 and 2000.

                                               Original       Extended
         Property                 Principal    Maturity       Maturity
         --------                 ---------    --------       --------
         Harborview Apartments    $3,000,000   08/01/99       08/01/04
         Cedar Point               1,320,000   08/30/99       08/30/04
         Thornwood House           1,775,000   08/30/99       08/30/04
         Highland Village          1,100,000   10/31/99       10/31/04
         Jewish Federation         1,350,000   10/31/99       10/31/04
         Canonsburg House          1,440,000   12/01/99       01/04/03
         Char House                1,430,000   12/01/99       01/04/03
         Liberty Tower             1,340,000   12/01/99       01/04/03


     The purchase money notes related to the following  properties  have matured
and have not been paid or extended.

         Property                           Principal           Maturity
         --------                           ----------          --------
         De Angelis Manor                   $1,015,000          07/01/99
         Matthew XXV                         1,020,000          07/01/99
         Crescent Gardens                      434,000          07/31/99
         Pilgrim Tower East                  1,650,000          12/01/99
         Wellington Woods                      485,000          12/01/99
         Pilgrim Tower North                 2,165,000          04/30/00
         Valley View                           920,000          01/01/01 (1)
         Westport Village                      840,000          01/01/01 (1)
         Glenridge Gardens                     690,000          01/01/01 (2)

     (1)  Extended in accordance with the forbearance agreement.
     (2)  Original maturity was August 1, 1999.

     The purchase money notes related to the following  properties were paid off
at a discount,  or the  collateral  that  secured  them was  transferred  to the
noteholders, during 2000 or 2001.

         Property                 Principal       Date              Disposition
         --------                 ----------      ----              -----------
         Holiday Village          $1,370,000      July 2000         Paid Off
         Redden Gardens            1,330,000      September 2000    Transferred
         Wollaston Manor           2,125,000      December 2000     Paid Off
         Chippewa County             860,000      January 2001      Paid Off
         Hometown Village          1,495,000      January 2001      Transferred
         Scoville Center           1,400,000      January 2001      Transferred
         Cottonwood Park             975,000      May 2001          Paid Off
         Tradewinds Terrace          925,000      May 2001          Paid Off
         Riverview Manor             740,000      July 2001         Paid Off
         Canonsburg House            100,000      October 2001      Paid Off
         Char House                  100,000      October 2001      Paid Off
         Liberty Tower               100,000      October 2001      Paid Off


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

     The purchase money notes,  which are  nonrecourse to the  Partnership,  are
generally  secured  by  the  Partnership's  interest  in  the  respective  Local
Partnerships.  There is no assurance  that the underlying  properties  will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes' principal and accrued interest when due. If a purchase money

                                      -21-

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


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 noteholders may have the right to foreclose on
the Partnership's  interest in the related Local Partnership.  In the event of a
foreclosure, the excess of the nonrecourse indebtedness over the carrying amount
of the Partnership's investment in the related Local Partnership would be deemed
cancellation of indebtedness  income, which would be taxable to Limited Partners
at a  federal  tax  rate  of  up to  38.6%.  Additionally,  in  the  event  of a
foreclosure,  the Partnership would lose its investment in the Local Partnership
and,  likewise,  its  share of any  future  cash flow  distributed  by the Local
Partnership from rental operations,  mortgage debt refinancings,  or the sale of
the real estate.

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

     The following  chart presents  information  related to purchase money notes
which have  matured,  have been  extended to mature,  or are scheduled to mature
through September 30, 2002, and which remain unpaid or unextended as of November
9, 2001.  Excluded  from the  following  chart are  purchase  money  notes which
matured through September 30, 2001, and which have been paid off, cancelled,  or
extended on or before November 9, 2001.

<TABLE>
<CAPTION>
                                                                          Aggregate                 Carrying Amount
                                               Aggregate                   Accrued                  of Partnership's
                                               Principal                   Interest                 Investments in
                   Number of                    Balance                    Balance                  Underlying Local
   Purchase        Underlying                    as of                      as of                     Partnerships
  Money Note         Local       Percentage    September     Percentage   September    Percentage   as of September     Percentage
(PMN) Maturity    Partnerships    of Total      30, 2001      of Total     30, 2001     of Total        30, 2001         of Total
--------------    ------------   ----------    -----------   ---------    ----------   ----------   ----------------    ----------
<S>               <C>            <C>           <C>           <C>          <C>          <C>          <C>                 <C>
3rd Quarter 1999        5            17%       $ 4,229,000         15%    $12,080,450        13%       $ 7,933,746           29%
4th Quarter 1999        2             7%         2,135,000          8%      5,890,907         6%           837,661            3%
2nd Quarter 2000        1             3%         2,165,000          8%     15,356,487        16%         2,692,241           10%
1st Quarter 2001        1             3%           690,000          2%      2,476,372         3%                --           --
3rd Quarter 2002        1             3%         1,500,000          5%      2,487,637         3%                --           --
                     ----          ----        -----------      -----     -----------      ----        -----------         ----
Total through
 9/30/2002             10            33%       $10,719,000         38%    $38,291,853        41%       $11,463,648           42%
                     ====          ====        ===========      =====     ===========      ====        ===========         ====
Total, Local
  Partnerships         29 (1)       100%       $28,140,081        100%    $93,782,342       100%       $27,706,481          100%
                     ====          ====        ===========      =====     ===========      ====        ===========         ====
</TABLE>

(1)  Twenty  of the 29 Local  Partnerships  have  related  purchase  money  note
     obligations.

     The  Managing  General  Partner  is  continuing  to  investigate   possible
alternatives to reduce the Partnership's  debt obligations.  These  alternatives
include, among others, retaining the cash available for distribution to meet the
purchase money note  requirements,  paying off certain purchase money notes at a
discounted  price,  extending  the due dates of certain  purchase  money  notes,
refinancing  the  respective   properties'   underlying  debt,  or  selling  the
underlying real estate and using the Partnership's  share of the proceeds to pay
or buy down  certain  purchase  money note  obligations.  Although  the Managing
General Partner has had some success applying these

                                      -22-

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


strategies in the past,  the Managing  General  Partner cannot assure that these
strategies will be successful in the future.  If the Managing General Partner is
unable to negotiate an extension  or  discounted  payoff,  in the event that the
purchase money notes remain unpaid upon maturity,  the  noteholders may have the
right  to  foreclose  on  the  Partnership's   interest  in  the  related  Local
Partnerships.  In the event of a  foreclosure,  the  excess  of the  nonrecourse
indebtedness  over the carrying  amount of the  Partnership's  investment in the
related Local Partnership would be deemed  cancellation of indebtedness  income,
which would be taxable to Limited Partners at a federal tax rate of up to 38.6%.
Additionally,  in the event of a  foreclosure,  the  Partnership  would lose its
investment in the Local Partnership and, likewise,  its share of any future cash
flow distributed by the Local Partnership from rental operations,  mortgage debt
refinancings,  or the sale of the real estate.  Of the 29 Local  Partnerships in
which the  Partnership  is  invested  as of  September  30,  2001,  the 10 Local
Partnerships with associated purchase money notes which mature through September
30,  2002 and  which  remain  unpaid  or  unextended  as of  November  9,  2001,
represented the following  percentages of the Partnership's  total distributions
received from Local Partnerships and share of income from Local Partnerships for
the immediately preceding two calendar years.

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

     December 31, 2000               17%                     $581,397
     December 31, 1999               16%                     $338,907

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity of its debt  obligations  and to seek  strategies  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 periods ended  September 30, 2001 and 2000, net cash provided
by  investing   activities,   including  the  receipt  of   distributions   from
partnerships, was adequate to support operating cash requirements. Cash and cash
equivalents  decreased during the nine month period ended September 30, 2001, as
net cash used in  financing  activities  for the payoff of  purchase  money note
principal and related interest, and distribution to Additional Limited Partners,
plus net cash  used in  operating  activities  exceeded  net  cash  provided  by
investing activities.

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

2000 Versus 1999
----------------

     The Partnership's net income for the three month period ended September 30,
2001,  decreased  from  the  corresponding  period  in  2000  primarily  due  to
extraordinary  gain  from  extinguishment  of debt  and gain on  disposition  of
investment in  partnerships  related to the  Partnership's  sale and transfer of
investments in Local  Partnerships in 2000.  Contributing  to the  Partnership's
decrease in net income were a decrease in interest revenue due to lower cash and
cash  equivalent  balances  and lower  interest  rates in 2001,  an  increase in
general and  administrative  expenses due to higher reimbursed payroll costs and
higher professional fees due to legal fees. Partially offsetting the decrease in
net income were a decrease in interest  expense due to lower purchase money note
balances  and a  decrease  in  amortization  of  deferred  costs  related to the
disposition of investments in  partnerships.  Contributing  to net income was an
increase in share of income from  partnerships  generally  due to higher  rental
income  at one  property  and  lower  operating  expense  at  another  property,
partially  offset by the  cessation  of income from Local  Partnerships  sold or
transferred.

                                      -23-

<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,
2001,  increased  from  the  corresponding  period  in  2000  primarily  due  to
extraordinary gain from  extinguishment of debt related to the discounted payoff
of the  purchase  money  notes  related  to  Chippewa  County  Housing  Partners
(Chippewa County), Riverview Manor Company Limited Partnership (Riverview Manor)
and Tradewinds West LDHA Limited Partnership (Tradewinds Terrace), the transfers
of partnership  interests to the purchase money noteholders  related to Hometown
Villages  Limited  Partnership  (Hometown  Village) and Beloit Housing  Partners
(Scoville  Center),  and the sale of  Cottonwood  Park,  all as discussed in the
notes to consolidated  financial  statements.  Contributing to net income were a
decrease in interest  expense due to lower  purchase  money note  balances and a
decrease in  amortization  of deferred  costs related to the sale or transfer of
certain of the Partnership's investments.  Offsetting the Partnership's increase
in net income were a decrease in  interest  revenue,  an increase in general and
administrative  expenses,  an  increase in  professional  fees and a decrease in
share of income from partnerships, as discussed above.

     For financial reporting purposes, the Partnership,  as a limited partner in
the Local  Partnerships,  does not record losses from the Local  Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result,  the  Partnership's  share of income from partnerships for the three and
nine month periods ended  September 30, 2001 did not include  losses of $119,661
and  $469,451,  respectively,  compared  to  excluded  losses  of  $182,773  and
$541,682,  for the  three and nine  month  periods  ended  September  30,  2000,
respectively.

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


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.

                                  Tender offers
                                  -------------

     On December 5, 2000, Equity Resources Lexington Fund (Lexington)  initiated
an unregistered tender offer to purchase  approximately 1,200 of the outstanding
Units in the  Partnership at a price of $40 per Unit; the offer expired  January
3, 2001.  Lexington is unaffiliated with the Partnership or the Managing General
Partner.  The price offered was determined solely at the discretion of Lexington
and does not necessarily represent the fair market value of each Unit.

                                      -24-

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

     In December 2000, Sierra Capital initiated an unregistered  tender offer to
purchase an unspecified  number of the outstanding Units in the Partnership at a
price of $50 per Unit;  the offer  expired  January 3, 2001.  Sierra  Capital is
unaffiliated  with the Partnership or the Managing  General  Partner.  The price
offered was  determined  solely at the discretion of Sierra Capital and does not
necessarily represent the fair market value of each Unit.

     On March 15, 2001, Bond Purchase,  L.L.C.  (Bond) initiated an unregistered
tender offer to purchase  approximately  3,650 of the  outstanding  Units in the
Partnership at a price of $33 per Unit;  the offer expired April 30, 2001.  Bond
is unaffiliated with the Partnership or the Managing General Partner.  The price
offered was determined solely at the discretion of Bond 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 offers for the purchase of Units described above.

     During 2001, a number of investors  sold their Units in the  Partnership to
other investors,  as a result of the unregistered tender offers described above.
If more than five percent of the total  outstanding Units in the Partnership are
transferred  due to sale in any one calendar year (not counting  certain  exempt
transfers),  the Partnership could be taxed as a "publicly traded  partnership,"
with potentially  severe tax implications for the Partnership and its investors.
Specifically,  the Partnership  could be taxed as a corporation  and, if so, the
income and losses from the  Partnership  would no longer be considered a passive
activity.  From January 1, 2001, through July 16, 2001, the Partnership received
sale  transfer  requests  for  approximately  4.9%  of  the  outstanding  Units.
Accordingly,  to remain within the five percent safe harbor,  effective July 16,
2001,  the Managing  General  Partner  halted  recognition of any transfers that
would exceed the safe harbor  limit  through  December  31,  2001.  As a result,
transfers of Units due to sales  transactions  are not being  recognized  by the
Partnership between July 17, 2001 and December 31, 2001. The halt will be lifted
effective January 1, 2002.

                                Cash distribution
                                -----------------

     On April 27, 2001, the  Partnership  made a cash  distribution  of $733,670
($10.00 per Unit) to Additional Limited Partners,  who were holders of record as
of April 1, 2001. The distribution was a result of the sale of Wollaston Manor.


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

     a.   None

     b.   No  Reports  on Form 8-K were  filed  with the  Commission  during the
          quarter ended September 30, 2001.

     All other items are not applicable.

                                      -25-

<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 9, 2001                       by: /s/ Michael J. Tuszka
----------------                           -------------------------------------
DATE                                       Michael J. Tuszka
                                             Vice President
                                             and Chief Accounting Officer
                                             (Principal Financial Officer
                                             and Principal Accounting Officer)

                                      -26-

<PAGE>