<PAGE>

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


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


                  For the quarterly period ended June 30, 2000
                                  -------------


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


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




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



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



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


         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,  and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X]   No [ ]

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:


     Not applicable                                 Not applicable
--------------------------             ---------------------------------------
        (Class)                              (Outstanding at June 30, 2000)



<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                       FOR THE QUARTER ENDED JUNE 30, 2000



                                                                           Page
                                                                           ----

PART I.      Financial Information

Item 1.      Financial Statements

             Consolidated Balance Sheets - June 30, 2000 and
               December 31, 1999..........................................    1

             Consolidated Statements of Operations and Accumulated
               Losses - for the three and six months ended
               June 30, 2000 and 1999.....................................    2

             Consolidated Statements of Cash Flows - for the
               six months ended June 30, 2000 and 1999....................    3

             Notes to Consolidated Financial Statements -
               June 30, 2000 and 1999.....................................    4

Item 2.      Management's Discussion and Analysis of Financial
               Condition and Results of Operations........................   21


PART II.     Other Information

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

Item 5.      Other Information............................................   26

Item 6.      Exhibits and Reports on Form 8-K.............................   27

Signature    .............................................................   28

Exhibit Index.............................................................   29


<PAGE>
PART I.           FINANCIAL INFORMATION
                  ---------------------
ITEM 1.           FINANCIAL STATEMENTS
                  --------------------

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                June 30,      December 31,
                                                                 2000             1999
                                                             -------------    ------------
                                                               (Unaudited)
<S>                                                          <C>              <C>
Investments in and advances to partnerships ..............   $  30,100,533    $  29,175,280
Investment in partnerships held for sale .................       2,476,204        2,476,204
Partnership interest held in escrow ......................         928,160          928,160
Cash and cash equivalents ................................       7,775,802        7,607,687
Restricted cash equivalents ..............................          50,400           50,400
Acquisition fees, principally paid to related parties, net
  of accumulated amortization of $384,133 and $371,870,
  respectively ...........................................         596,921          609,184
Property purchase costs, net of accumulated amortization
  of $360,068 and $348,713, respectively .................         548,610          559,966
Other assets .............................................           1,369             --
                                                             -------------    -------------

      Total assets .......................................   $  42,477,999    $  41,406,881
                                                             =============    =============



                        LIABILITIES AND PARTNERS' DEFICIT


Due on investments in partnerships .......................   $  39,360,081    $  39,367,113
Accrued interest payable .................................     113,247,434      107,616,493
Accounts payable and accrued expenses ....................         117,579          175,592
                                                             -------------    -------------
      Total liabilities ..................................     152,725,094      147,159,198
                                                             -------------    -------------

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 ................      (8,388,540)      (8,388,540)
    Offering costs .......................................      (7,562,894)      (7,562,894)
    Accumulated losses ...................................    (167,799,161)    (163,304,383)
                                                             -------------    -------------
      Total partners' deficit ............................    (110,247,095)    (105,752,317)
                                                             -------------    -------------

      Total liabilities and partners' deficit ............   $  42,477,999    $  41,406,881
                                                             =============    =============

</TABLE>

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

                                       -1-

<PAGE>
PART I.           FINANCIAL INFORMATION
                  ---------------------
ITEM 1.           FINANCIAL STATEMENTS
                  --------------------

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             AND ACCUMULATED LOSSES

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                   For the three months ended         For the six months ended
                                                             June 30                          June 30,
                                                 -------------------------------   ------------------------------
                                                      2000             1999             2000             1999
                                                 -------------    --------------   -------------    -------------
<S>                                              <C>              <C>              <C>              <C>
Share of income from partnerships ............   $   1,580,011    $   1,611,077    $   2,017,314    $   2,141,634
                                                 -------------    -------------    -------------    -------------

Other revenue and  expenses:

  Revenue:
    Interest and other income ................         113,411          126,933          217,154          247,202
                                                 -------------    -------------    -------------    -------------
  Expenses:
    Interest .................................       3,116,849        4,746,745        6,275,630        9,443,027
    Management fee ...........................          93,750           93,750          187,500          187,500
    General and administrative ...............          89,122           71,694          156,223          135,143
    Professional fees ........................          56,609           26,534           86,270           53,131
    Amortization of deferred costs ...........          11,811           12,330           23,623           25,550
                                                 -------------    -------------    -------------    -------------
                                                     3,368,141        4,951,053        6,729,246        9,844,351
                                                 -------------    -------------    -------------    -------------
      Total other revenue and expenses .......      (3,254,730)      (4,824,120)      (6,512,092)      (9,597,149)
                                                 -------------    -------------    -------------    -------------

Net loss .....................................      (1,674,719)      (3,213,043)      (4,494,778)      (7,455,515)

Accumulated losses, beginning of period ......    (166,124,442)    (152,403,848)    (163,304,383)    (148,161,376)
                                                 -------------    -------------    -------------    -------------

Accumulated losses, end of period ............   $(167,799,161)   $(155,616,891)   $(167,799,161)   $(155,616,891)
                                                 =============    =============    =============    =============

Net loss allocated to General Partners (1.51%)   $     (25,288)   $     (48,517)   $     (67,871)   $    (112,578)
                                                 =============    =============    =============    =============

Net loss allocated to Initial and Special
  Limited Partners (1.49%) ...................   $     (24,953)   $     (47,874)   $     (66,972)   $    (111,087)
                                                 =============    =============    =============    =============

Net loss allocated to Additional Limited
  Partners (97%) .............................   $  (1,624,478)   $  (3,116,652)   $  (4,359,935)   $  (7,231,850)
                                                 =============    =============    =============    =============

Net loss per unit of Additional Limited
  Partner Interest based on 73,500 units
  outstanding ................................   $      (22.10)   $      (42.40)   $      (59.32)   $      (98.39)
                                                 =============    =============    =============    =============

</TABLE>

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

                                       -2-

<PAGE>
PART I.           FINANCIAL INFORMATION
                  ---------------------
ITEM 1.           FINANCIAL STATEMENTS
                  --------------------

                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                   For the six months ended
                                                                                           June 30,
                                                                                -----------------------------
                                                                                    2000            1999
                                                                                -------------   -------------
<S>                                                                             <C>             <C>
Cash flows from operating activities:
  Net loss ..................................................................   $ (4,494,778)   $ (7,455,515)

  Adjustments to reconcile net loss to net cash used in operating activities:
    Share of income from partnerships .......................................     (2,017,314)     (2,141,634)
    Amortization of discount on purchase money notes ........................         42,968       3,600,645
    Amortization of deferred costs ..........................................         23,623          25,550

    Changes in assets and liabilities:
      (Increase) decrease in other assets ...................................         (1,369)         58,378
      Increase in accrued interest payable ..................................      6,232,662       5,842,382
      Payment of purchase money note interest ...............................       (601,721)       (420,836)
      Decrease in accounts payable and accrued expenses .....................        (58,013)        (16,975)
                                                                                ------------    ------------
        Net cash used in operating activities ...............................       (873,942)       (508,005)
                                                                                ------------    ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships ................................      1,092,057         979,691
                                                                                ------------    ------------

Cash flows from financing activities:
  Payment of purchase money note principal ..................................        (50,000)           --
                                                                                ------------    ------------

Net increase in cash and cash equivalents ...................................        168,115         471,686

Cash and cash equivalents, beginning of period ..............................      7,607,687      10,765,753
                                                                                ------------    ------------

Cash and cash equivalents, end of period ....................................   $  7,775,802    $ 11,237,439
                                                                                ============    ============

</TABLE>

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

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)



1.       BASIS OF PRESENTATION

         In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited financial statements reflect all adjustments,  consisting
of normal recurring accruals, necessary for a fair presentation of the financial
position of Capital Realty Investors-IV Limited Partnership (the Partnership) as
of June 30, 2000, and the results of its operations for the three and six months
ended June 30, 2000 and 1999,  and its cash flows for the six months  ended June
30, 2000 and 1999. The results of operations for the interim  periods ended June
30, 2000, are not  necessarily  indicative of the results to be expected for the
full year.

         The accompanying  unaudited 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  financial  statements  should be read in conjunction  with the
financial  statements  and notes thereto  included in the  Partnership's  annual
report on Form 10-KSB at December 31, 1999.


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

a.       Due on investments in partnerships
         ----------------------------------

         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 $39,360,081  plus aggregate  accrued  interest of  $113,247,434 as of
June 30, 2000, are payable in full upon the earliest of: (1) sale or refinancing
of the respective Local  Partnership's  rental property;  (2) payment in full of
the respective Local Partnership's  permanent loan; or (3) maturity.  A purchase
money note in the principal  amount of  $1,370,000  matured on July 27, 1994 and
was paid  off,  at a  discount,  in July  2000.  A  purchase  money  note in the
principal  amount of  $1,330,000  matured on August 31, 1997 and was extended to
January 3, 2000, but has not been paid or further extended. Purchase money notes
in the aggregate principal amounts of $2,035,000 and $434,000 matured on July 1,
1999 and July 31,  1999,  respectively,  and have not been paid or  extended.  A
purchase  money note in the  principal  amount of  $434,000  matured on July 31,
1999,  and has been  extended  to July 31,  2004.  A purchase  money note in the
principal amount of $2,301,310 matured on July 31, 1999, and was paid in full on
July 30,  1999.  Purchase  money  notes in the  aggregate  principal  amount  of
$2,355,000  matured on August 1, 1999 and have been extended to January 4, 2001.
A purchase money note in the original  principal amount of $3,732,081 matured on
August 31, 1999,  was partially  paid down, and was extended to August 31, 2004.
Purchase money notes in

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

the  aggregate   principal  amount  of  $9,570,000  matured  during  August  and
September,  1999,  and have not been paid or extended.  A purchase money note in
the original  principal  amount of $740,000  matured on August 1, 1999,  and has
been extended to January 2001. A purchase money note in the principal  amount of
$1,400,000  matured on October 1, 1999 and has been extended to January 4, 2001.
Purchase money notes in the aggregate  principal  amount of $10,795,000  matured
during the fourth quarter of 1999, and have not been paid or extended.  Purchase
money notes in the principal  amounts of $1,500,000 and  $1,350,000  were due to
mature on  September  27,  1999 and  October 31,  1999,  respectively,  and were
extended to  September  27, 2002 and April 30,  2001,  respectively.  A purchase
money note in the principal amount of $2,165,000  matured on April 30, 2000, but
has  not  been  paid or  extended.  The  remaining  purchase  money  note in the
principal amount of $500,000 matures October 1, 2025.

         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.  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.
See further discussion of certain purchase money notes, below.

         The following  chart  presents  information  related to purchase  money
notes which have  matured,  have been  extended to mature,  or are  scheduled to
mature through June 30, 2001, and which remain unpaid or unextended as of August
11, 2000.  Excluded  from the  following  chart are  purchase  money notes which
matured  through  June 30,  2000,  and which have been paid off,  cancelled,  or
extended on or before August 11, 2000.

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)

2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>

                                                                                                 Carrying Amount
                                                                       Aggregate                 of Partnership's
                                             Aggregate                  Accrued                   Investments in
                   Number of                 Principal                  Interest                 and Advances to
    Purchase      Underlying                  Balance                   Balance                  Underlying Local
   Money Note        Local       Percentage  as of June   Percentage   as of June   Percentage   Partnerships as    Percentage
 (PMN) Maturity   Partnerships    of Total    30, 2000     of Total     30, 2000     of Total    of June 30, 2000    of Total
----------------  ------------   ----------  -----------  ----------  ------------  ----------   ----------------   ----------
<S>               <C>            <C>         <C>          <C>         <C>           <C>          <C>                <C>
3rd Quarter 1994        1              3%    $ 1,370,000         4%   $  6,859,328        6%        $ 1,303,318           4%
3rd Quarter 1999       10             28%     12,039,000        31%     28,169,380       25%         12,673,534          38%
4th Quarter 1999        8             23%     10,795,000        27%     29,190,715       26%          5,911,464          18%
1st Quarter 2000        1              3%      1,330,000         3%      3,790,132        3%            916,440           3%
2nd Quarter 2000        1              3%      2,165,000         6%     12,795,792       11%          2,704,694           8%
1st Quarter 2001        4             11%      4,445,000        11%     12,470,292       11%          4,587,931          14%
2nd Quarter 2001        1              3%      1,350,000         3%      5,867,212        5%            513,697           1%
                     ----          -----     -----------     -----    ------------    -----         -----------       -----
Total through
  6/30/2001            26             74%    $33,494,000        85%   $ 99,142,851       87%        $28,611,078 (1)      86%
                     ====          =====     ===========     =====    ============    =====         ===========       =====

Total, Local
  Partnerships         35            100%    $39,360,081       100%   $113,247,434      100%        $33,361,982 (1)     100%
                     ====          =====     ===========     =====    ============    =====         ===========       =====

</TABLE>

(1)      Includes  $2,381,700  for two  partnerships  reported as  investment in
         partnerships  held for sale on the  consolidated  balance sheet at June
         30,  2000,  and $879,749 for one  partnership  reported as  partnership
         interest held in escrow on the  consolidated  balance sheet at June 30,
         2000.

         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,  upon maturity of the purchase money notes,  in
the event that the purchase money notes remain unpaid,  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 39.6%.
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 35 Local  Partnerships in
which the Partnership is invested as of June 30, 2000, the 26 Local Partnerships
with associated purchase money notes which mature

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

through June 30, 2001 and which  remain  unpaid or  unextended  as of August 11,
2000,   represent  the  following   percentages  of  the   Partnership's   total
distributions  received from Local  Partnerships  and share of income from Local
Partnerships for the immediately immediately preceding two calendar years.

<TABLE>
<CAPTION>


                                            Percentage of Total         Partnership's Share of
                                           Distributions Received            Income from
             For the Year Ending           from Local Partnerships        Local Partnerships
             -------------------           -----------------------      ----------------------
             <S>                           <C>                          <C>
             December 31, 1999                      55%                       $  995,085
             December 31, 1998                      59%                       $1,130,370

</TABLE>

         Interest  expense on the  Partnership's  purchase  money  notes for the
three  and six  months  ended  June 30,  2000  was  $3,116,849  and  $6,275,630,
respectively,  and  $4,746,745 and $9,443,027 for the three and six months ended
June 30, 1999,  respectively.  Amortization  of discount on purchase money notes
increased  interest  expense during the three and six months ended June 30, 2000
by $0 and $42,968,  respectively, and by $1,800,322 and $3,600,645 for the three
and six months ended June 30, 1999,  respectively.  The accrued interest payable
on the purchase money notes of $113,247,434 and $107,616,493 as of June 30, 2000
and December 31, 1999, 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.

                Cannonsburg House, Char House, and Liberty Tower
                ------------------------------------------------

         The  Partnership  defaulted on its six purchase  money notes related to
Cannonsburg  Housing Associates Limited  Partnership  (Cannonsburg  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 August
11,  2000,   aggregate   principal  and  accrued   interest  of  $4,510,000  and
$14,150,827,  respectively,  were due. The Partnership continues to negotiate to
extend the maturity date of the purchase money notes for up to five years. There
is no assurance that an extension will be obtained.

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

         The  Partnership  defaulted  on its  purchase  money  note  related  to
Southwest  Development  Company  (Cedar  Point) on August 30, 1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest of  $1,320,000  and  $2,460,115,  respectively.  As of August 11, 2000,
principal and accrued interest of $1,320,000 and $2,631,890,  respectively, were
due. The Partnership is currently negotiating to extend the maturity date of the
purchase money note for five years. There is no assurance that an extension will
be obtained.

                                 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
non-refundable  deposit,  the  noteholders  agreed to continue  to forbear  from
exercising  their remedies until January 4, 2001. The noteholders have agreed to
accept a discounted payoff of the note provided that such payment is made during
the agreed period of  forbearance.  There is no assurance  that the  Partnership
will be able to timely pay the  agreed  upon  discounted  payoff on the note and
thus retain its interest in Chippewa County.

                                 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.  As of August 11,  2000,
principal and accrued  interest of $975,000 and $2,912,477,  respectively,  were
due. In May 2000, the noteholders  filed suit to foreclose on the  Partnership's
interest in Cottonwood Park. However, the parties are negotiating the terms of a
forbearance agreement, which allows the Partnership to pursue a possible sale of
the property  prior to January 31, 2001.  If the property is not sold, or if the
purchase money note is not otherwise  paid prior to that date,  the  noteholders
may file a  confessed  judgment  and  thereby  take  title to the  Partnership's
interest in Cottonwood Park. There is no assurance that a forbearance, extension
or sale will occur.

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)



2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                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 a payment to the noteholder to be
applied against accrued but unpaid interest.  The agreement extends the maturity
date to July 31, 2004,  requires  semi-annual  interest payments and reduces the
interest rate of the First Crescent Note. The Partnership has not been contacted
by the  holders of the other note (the  Second  Crescent  Note) and thus  cannot
predict  the course of action  with regard to the Second  Crescent  Note.  As of
August 11, 2000,  principal  and accrued  interest of $434,000  and  $1,948,396,
respectively, were due on the Second Crescent Note.

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

         The Partnership  defaulted on its purchase money note related to Natick
Associates  (De Angelis Manor) on July 1, 1999 when the note matured and was not
paid. The default amount included  principal and accrued  interest of $1,015,000
and  $2,670,689,  respectively.  As of August 11,  2000,  principal  and accrued
interest of $1,015,000 and $3,049,175,  respectively,  were due. The Partnership
is currently negotiating to extend the maturity date of the purchase money note,
or to  pay  it  off  at a  discount.  Currently,  a  local  limited  partner  (a
not-for-profit entity) is preparing an offer to purchase the property.  There is
no assurance that an extension or a discounted payoff of the purchase money note
will be obtained, or that a sale of the property 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 August 11,  2000,
principal and accrued  interest of $740,000 and $2,183,255,  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.

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

         The  Partnership  defaulted  on its  purchase  money  notes  related to
Harborview Apartments Associates Limited Partnership  (Harborview Apartments) on
August 1, 1999 when the notes  matured  and were not paid.  The  default  amount
included   principal  and  accrued   interest  of  $3,000,000  and   $5,342,321,
respectively.  As  of  August  11,  2000,  principal  and  accrued  interest  of
$3,000,000 and $5,764,714,  respectively, were due. The Partnership is currently
negotiating  an  extension of the  maturity  date or a discounted  payoff of the
purchase  money notes.  There is no assurance  that an extension or a discounted
payoff will occur.

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

         The  Partnership  defaulted  on its  purchase  money  notes  related to
Highland  Village  Associates  (Highland  Village)  on October 31, 1999 when the
notes  matured and were not paid.  The default  amount  included  principal  and
accrued  interest of $1,100,000 and $4,123,565,  respectively.  As of August 11,
2000, principal and accrued interest of $1,100,000 and $4,569,118, respectively,
were due. The  Partnership is currently  negotiating to extend the maturity date
of the  purchase  money notes for five years,  although  the  noteholders  would
retain the right to accelerate  the notes on six months'  notice.  In connection
with the proposed  extension of the maturity date,  the local  managing  general
partner and the noteholders are jointly  exploring  various options to refinance
with the  Massachusetts  Housing  Finance  Agency  (MHFA)  the HUD  Section  236
interest rate subsidized mortgage loan related to this property. The Partnership
and its  affiliated  general  partner will have no voting  rights to approve any
sale,  refinancing  or  other  restructuring.  There  is no  assurance  that  an
extension will be obtained, or 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.

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

The sale of Holiday  Village  resulted in gain on  disposition of investments in
partnerships of $3,464,340 and in extraordinary gain from extinguishment of debt
of $3,969,834  for  financial  statement  purposes in 2000,  and a total gain of
$8,677,698 for federal tax purposes in 2000.

         Due to the sale of the property related to the Partnership's investment
in Holiday Village, the Partnership's basis in the Local Partnership, along with
net unamortized  acquisition  fees and property  purchase  costs,  which totaled
$1,562,844  as of December 31, 1999,  has been  reclassified  to  investment  in
partnerships  held for sale in the accompanying  consolidated  balance sheets at
June 30, 2000 and December 31, 1999.

                                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
non-refundable  deposit,  the  noteholders  agreed to continue  to forbear  from
exercising  their remedies until January 4, 2001. The noteholders have agreed to
accept a discounted payoff of the note provided that such payment is made during
the agreed period of  forbearance.  There is no assurance  that the  Partnership
will be able to timely pay the  agreed  upon  discounted  payoff on the note and
thus retain its interest in Hometown Village.

                                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.  The Local  Partnership had entered
into an agreement to make such donation and transfer,  but the  transaction  was
denied by HUD in January 1998. In April 1998, the local managing general partner
indicated that it had received  verbal approval from HUD and intended to reapply
for  financing  with HUD.  There is no  assurance  that such  financing  will be
obtained.  On May 21, 1999,  the  noteholder  extended the maturity  date of the
purchase  money  note to April 30,  2000,  to allow  time for the  donation  and
transfer to occur.  On April 24,  2000,  the  noteholder  further  extended  the
maturity  date to April  30,  2001.  There  is no  assurance  that  any  further
extensions will be obtained.

                                      -11-


<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

         The  Partnership  defaulted  on its  purchase  money  note  related  to
Diakonia  Associates (Matthew XXV) on July 1, 1999 when the note matured and was
not paid.  The  default  amount  included  principal  and  accrued  interest  of
$1,020,000 and $2,695,752,  respectively.  As of August 11, 2000,  principal and
accrued  interest of  $1,020,000  and  $3,076,862,  respectively,  were due. The
Partnership  is currently  negotiating to extend the maturity date or to pay off
the purchase  money note at a discount.  Currently,  a local limited  partner (a
not-for-profit entity) is preparing an offer to purchase the property.  There is
no assurance that an extension or a discounted payoff of the purchase money note
will be obtained, or that a sale of the property 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
August 11, 2000,  principal and accrued  interest of $1,650,000 and  $2,871,616,
respectively,  were due.  The  Partnership  is  currently  negotiating  with the
noteholder to extend the maturity date of the purchase money note for five years
in exchange for a partial payment.  There is no assurance that an extension will
be obtained.

                               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  August  11,  2000,   principal  and  accrued   interest  of  $2,165,000  and
$13,012,831, respectively, were due. The Partnership is currently negotiating to
extend the maturity date of the purchase money note for five years,  in exchange
for a partial payment. There is no assurance that an extension will be obtained.

                                 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

                                      -12-


<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)

2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

January 3, 2000, at which time the  Partnership  again defaulted on the purchase
money note. As of August 11, 2000,  principal and accrued interest of $1,330,000
and $3,840,747,  respectively,  were due. In connection with the extension,  the
Partnership  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. As of August 11, 2000,
the  noteholders  had not exercised  their right to have the escrowed  documents
released  to  them.  The  uncertainty  about  the  continued  ownership  of  the
Partnership's  interest  in the related  Local  Partnership  does not  adversely
impact the Partnership's financial condition, as discussed above.

         Due to the possible transfer of the Partnership's interest in the Local
Partnership  to  the  noteholders,   the   Partnership's   basis  in  the  Local
Partnership,  along with net unamortized  acquisition fees and property purchase
costs,  which totaled $928,160 as of December 31, 1999, has been reclassified to
partnership  interest held in escrow in the  accompanying  consolidated  balance
sheets at June 30, 2000 and December 31, 1999.

                                 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
principal and accrued interest of $740,000 and $1,853,014,  respectively.  As of
August 11, 2000,  principal  and accrued  interest of $740,000  and  $1,973,837,
respectively,  were due.  The  Partnership  is  currently  negotiating  with the
noteholders  to extend the maturity  date of the purchase  money notes for up to
five  years,  in  conjunction  with  the  possible  sale or  refinancing  of the
underlying  property.  There is no assurance that an extension will be obtained,
or that a sale or refinancing will occur.

                                 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  non-refundable
deposit,  the noteholders  agreed to continue to forbear from  exercising  their
remedies  until  January  4,  2001.  The  noteholders  have  agreed  to accept a
discounted  payoff of the note  provided  that such  payment is made  during the
agreed period of forbearance. There is no assurance that the Partnership will be
able to timely pay the agreed upon discounted payoff on the note and thus retain
its interest in Scoville Center.

                                      -13-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)

2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

         The  Partnership  defaulted  on its  purchase  money  notes  related to
Thornwood House Associates  (Thornwood  House) on August 30, 1999 when the notes
matured and were not paid.  The default  amount  included  principal and accrued
interest of  $1,775,000  and  $3,218,691,  respectively.  As of August 11, 2000,
principal and accrued interest of $1,775,000 and $3,447,458,  respectively, were
due. The Partnership is currently negotiating to extend the maturity date of the
purchase  money notes for five years.  There is no  assurance  that an extension
will be obtained.

                               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.  As of
August 11, 2000,  principal  and accrued  interest of $925,000  and  $1,285,766,
respectively,  were due. The  Partnership is negotiating  with the noteholder to
extend the maturity date of the purchase money note, and has received a proposed
workout arrangement from the noteholder. There is no assurance that an extension
will be obtained.

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

         The Partnership defaulted on its purchase money notes related to Valley
View  Associates  (Valley  View) on September 1, 1999 when the notes matured and
were not paid. The default  amount  included  principal and accrued  interest of
$920,000 and  $1,788,829,  respectively.  As of August 11, 2000,  principal  and
accrued  interest  of  $920,000  and  $1,909,904,  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 August 11, 2000.  The  Partnership  and
the  noteholders  have agreed in  principle  that the  Partnership  will deposit
assignments  of its interests in Valley View in escrow,  together with an option
agreement  pursuant to which the  noteholders may purchase the interests for the
outstanding  debt if the property is not sold and/or the notes are not repaid by
January 2001. There is no assurance that any settlement will be finalized.

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

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

         The  Partnership  defaulted  on its  purchase  money  note  related  to
Clarkson Associates of Wellington Woods Limited  Partnership  (Wellington Woods)
on December 1, 1999,  when the note matured and was not paid. The default amount
included   principal   and  accrued   interest  of  $485,000   and   $2,169,679,
respectively.  As of August 11, 2000, principal and accrued interest of $485,000
and $2,392,753,  respectively, were due. The Partnership is negotiating with the
noteholder  to extend  the  maturity  date of the  purchase  money note for five
years,  in  exchange  for a  partial  payment.  There  is no  assurance  that an
extension will be obtained.

                                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 August 11,  2000,
principal and accrued  interest of $840,000 and $1,725,395,  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  August  11,  2000.  The
Partnership  and the  noteholders  have agreed in principle that the Partnership
will  deposit  assignments  of its  interests  in  Westport  Village  in escrow,
together with an option agreement pursuant to which the noteholders may purchase
the  interests for the  outstanding  debt if the property is not sold and/or the
notes are not  repaid by early  January  2001.  There is no  assurance  that any
settlement will be finalized.

                                 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.  As of August 11,
2000, principal and accrued interest of $2,125,000 and $4,291,475, respectively,
were due. The  Partnership is currently  negotiating a discounted  payoff of the
purchase  money notes in  conjunction  with a possible sale of the  property.  A
contract  for the sale of the property  was signed in January  2000,  contingent
upon,  among  other  things,  a  satisfactory  agreement  with  the  noteholders
regarding the purchase money

                                      -15-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

note and the approval of the Partnership.  There is no assurance that a
sale of the property and a settlement with the noteholders will occur.

         Due to the  impending  and likely sale of the  property  related to the
Partnership's  investment in Wollaston  Manor,  the  Partnership's  basis in the
Local  Partnership,  along with net  unamortized  acquisition  fees and property
purchase  costs,  which  totaled  $913,360 as of  December  31,  1999,  has been
reclassified  to investment in  partnerships  held for sale in the  accompanying
consolidated balance sheets at June 30, 2000 and December 31, 1999.

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

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

         To  cover  operating  deficits  incurred  in  prior  years  by Lakes of
Northdale,  the Partnership  advanced funds totaling $54,500 as of both June 30,
2000 and  December 31,  1999.  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
         ----------------
                                  Garden Court
                                  ------------

         On December  31, 1998,  the local  managing  general  partner of Garden
Court Associates Limited Partnership  (Garden Court) sold the property.  The net
proceeds to the Partnership of $50,000 were received on March 2, 1999.

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

         Combined  statements of  operations  for the 35 Local  Partnerships  in
which the  Partnership  was invested as of both June 30, 2000 and 1999,  follow.
The combined  statements  have been  compiled from  information  supplied by the
management agents of the projects and are unaudited.

                                      -16-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)

2.       INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>

                        COMBINED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                  For the three months ended  For the six months ended
                                           June 30,                   June 30,
                                  -------------------------- --------------------------
                                      2000          1999          2000         1999
                                  -----------   -----------  -----------   ------------
<S>                               <C>           <C>           <C>          <C>
Revenue:
  Rental revenue ..............   $ 8,656,906   $ 8,327,245   $17,355,882   $16,801,927
  Other, principally interest .       503,931       589,609     1,090,709     1,183,058
                                  -----------   -----------   -----------   -----------
     Total revenue ............     9,160,837     8,916,854    18,446,591    17,984,985
                                  -----------   -----------   -----------   -----------

Expenses:
  Operating and other .........     4,591,661     4,236,034    10,319,535     9,712,749
  Interest ....................     1,398,022     1,456,534     2,796,045     2,913,069
  Depreciation and amortization     1,847,340     1,816,622     3,694,678     3,633,247
                                  -----------   -----------   -----------   -----------
     Total expenses ...........     7,837,023     7,509,190    16,810,258    16,259,065
                                  -----------   -----------   -----------   -----------
Net income ....................   $ 1,323,814   $ 1,407,664   $ 1,636,333   $ 1,725,920
                                  ===========   ===========   ===========   ===========

</TABLE>

         As of June 30, 2000 and 1999,  the  Partnership's  share of  cumulative
losses of six and nine of the 35 Local  Partnerships  exceeded the amount of the
Partnership's  investments  in and  advances  to  those  Local  Partnerships  by
$12,662,790 and $12,593,564,  respectively. Since the Partnership has no further
obligation  to advance funds or provide  financing to these Local  Partnerships,
the excess  losses  have not been  reflected  in the  accompanying  consolidated
financial statements.


3.       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.


                                      -17-
<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (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.

         Seven  properties in which the  Partnership is invested may be affected
by the  Mark-to-Market  program,  since they have Section 8 HAP contracts  which
have already  expired or which will expire in 2000.  It is expected that five of
the  properties  will renew  their  Section 8 HAP  contracts  for one year.  One
property  renewed its Section 8 HAP contract in 2000 for a four-year  term.  One
property  did not renew its Section 8 HAP contract for six units when it expired
in June 1999. Properties with expiring Section 8 HAP contract rents greater than
100% of fair  market  rents in the area where each  property  is located  may be
affected  immediately  by the  legislation.  All seven  properties  have related
purchase money notes which have matured, as discussed in Note 2.a.

         The Section 8 HAP  contracts  for the  following  properties  initially
expired during the  government's  fiscal year 1998 or 1999 or will expire during
2000, and have been renewed as indicated.

<TABLE>
<CAPTION>

                                                             Units                    Original                  Renewed
                                                        Authorized for              Expiration of             Expiration of
                                Number of              Rental Assistance              Section 8                 Section 8
   Property                    Rental Units             Under Section 8             HAP Contract              HAP Contract
   --------                    ------------            -----------------            -------------             -------------
   <S>                         <C>                     <C>                          <C>
   Cottonwood Park                 126                         6                       06/30/98               06/30/99 (1)
   Glenridge Gardens               120                        24                       05/31/99               05/31/00 (2)
   Harborview                      300                       299                       06/01/00 (2)
   Pilgrim Tower North             258                       205                       10/31/98               02/28/04 (3)
   Redden Gardens                  150                        30                       09/30/98               09/01/00 (2)
   Tradewinds Terrace              122                        44                       09/30/98               09/30/00 (2)
   Wellington Woods                109                        73                       10/19/99               10/19/00 (2)
                                  ----                       ---
       Total                      1185                       681
                                  ====                       ===

</TABLE>

(1) The Section 8 HAP contract was not renewed at the election of the Managing
    General Partner.

(2) The Managing General Partner expects that these Section 8 HAP Contracts will
    be renewed for one year upon expiration.

(3) To be renewed annually beginning 2/28/00 through 2/28/04 subject to
    appropriations. (Renewed through 2/28/01.)


                                      -18-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)


3.       AFFORDABLE HOUSING LEGISLATION - Continued

         With the uncertainty of continued project-based Section 8 subsidies for
properties with expiring HAP contracts,  there is no assurance that these rental
properties  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 June 30,  2000,  the  carrying  amount of the
Partnership's  investments in and advances to Local  Partnerships with Section 8
HAP contracts expiring in 2000 was $6,427,731.

         There is a new HUD-sponsored  program  generally  referred to as "Mark-
up-to-Market." Under this program,  properties with expiring Section 8 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 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
incentivize  owners of  properties  with  expiring  Section 8  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 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 revenues.


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 managing the  Partnership.  The Partnership  paid $66,682 and
$137,224 for the three and six month periods ended June 30, 2000,  respectively,
and $53,006 and $91,375 for the three and six month periods ended June 30, 1999,
respectively,  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 (the  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 $187,500 for each of the three and six month  periods ended June 30,
2000 and 1999, respectively.


                                      -19-

<PAGE>
                 CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2000 and 1999

                                   (Unaudited)

4.       RELATED PARTY TRANSACTIONS - Continued

         The Managing General Partner and/or its affiliates may receive a fee of
not more than 2% 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 three and six month periods ended June 30, 2000 or 1999.

                                      -20-

<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 in  perpetuity,  or to
refinance a property, or to obtain supplemental financing.  The Managing General
Partner  continues to monitor  certain state  housing  agency  programs,  and/or
programs provided by certain lenders,  to ascertain whether the properties would
qualify  within the  parameters of a given  program and whether  these  programs
would provide an  appropriate  economic  benefit to the limited  partners of the
Partnership.

         Some of the  rental  properties  owned by the  Local  Partnerships  are
dependent on the receipt of  project-based  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.


                                      -21-

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

         Seven  properties in which the  Partnership is invested may be affected
by the  Mark-to-Market  program,  since they have Section 8 HAP contracts  which
have already  expired or which will expire in 2000.  It is expected that five of
the  properties  will renew  their  Section 8 HAP  contracts  for one year.  One
property  renewed its Section 8 HAP contract in 2000 for a four-year  term.  One
property  did not renew its Section 8 HAP contract for six units when it expired
in June 1999. Properties with expiring Section 8 HAP contract rents greater than
100% of fair  market  rents in the area where each  property  is located  may be
affected  immediately  by the  legislation.  All seven  properties  have related
purchase money notes which have matured, as discussed in Note 2.a.

         In many instances,  the  Mark-to-Market  rental rate  restructuring may
require the write down of an  FHA-insured  mortgage  loan,  which would  trigger
cancellation  of  indebtedness  income to the partners,  a taxable  event,  even
though no actual cash is received.  Additionally, if the existing first mortgage
loan is  bifurcated  into a first and second  mortgage  loan,  the newly created
second mortgage loan will accrue interest at a below-market rate;  however,  the
Internal  Revenue  Service  issued a ruling in July 1998 that concluded that the
below-market rate of interest will not generate additional ordinary income. Each
property subject to Mark-to-Market  will be affected in a different manner,  and
it is very  difficult to predict the exact form of  restructuring,  or potential
tax liabilities to the limited partners, at this time.

         There is a new HUD-sponsored  program  generally  referred to as "Mark-
up-to-Market." Under this program,  properties with expiring Section 8 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 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
incentivize  owners of  properties  with  expiring  Section 8  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 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 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 there are few lenders
that 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

                                      -22-

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

Partnerships  to develop  strategies  that make  economic  sense for all parties
involved.

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

         The  Partnership's  liquidity,  with  unrestricted  cash  resources  of
$7,775,802 as of June 30, 2000, along with anticipated future cash distributions
from the Local Partnerships,  is expected to be adequate to meet its current and
anticipated  operating  cash  needs.  As of August  11,  2000,  $50,400  of cash
resources were  restricted for future  interest  payments on one of the purchase
money  notes.  As of August 11,  2000,  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 $39,360,081  plus aggregate  accrued  interest of  $113,247,434 as of
June 30, 2000, are payable in full upon the earliest of: (1) sale or refinancing
of the respective Local  Partnership's  rental property;  (2) payment in full of
the respective Local Partnership's  permanent loan; or (3) maturity.  A purchase
money note in the principal  amount of  $1,370,000  matured on July 27, 1994 and
was paid  off,  at a  discount,  in July  2000.  A  purchase  money  note in the
principal  amount of  $1,330,000  matured on August 31, 1997 and was extended to
January 3, 2000, but has not been paid or further extended. Purchase money notes
in the aggregate principal amounts of $2,035,000 and $434,000 matured on July 1,
1999 and July 31,  1999,  respectively,  and have not been paid or  extended.  A
purchase  money note in the  principal  amount of  $434,000  matured on July 31,
1999,  and has been  extended  to July 31,  2004.  A purchase  money note in the
principal amount of $2,301,310 matured on July 31, 1999, and was paid in full on
July 30,  1999.  Purchase  money  notes in the  aggregate  principal  amount  of
$2,355,000  matured on August 1, 1999 and have been extended to January 4, 2001.
A purchase money note in the original  principal amount of $3,732,081 matured on
August 31, 1999,  was partially  paid down, and was extended to August 31, 2004.
Purchase  money notes in the aggregate  principal  amount of $9,570,000  matured
during  August  and  September,  1999,  and have not been  paid or  extended.  A
purchase  money note in the  original  principal  amount of $740,000  matured on
August 1, 1999,  and has been extended to January 2001. A purchase money note in
the  principal  amount of  $1,400,000  matured  on  October 1, 1999 and has been
extended to January 4, 2001.  Purchase  money notes in the  aggregate  principal
amount of  $10,795,000  matured  during the fourth quarter of 1999, and have not
been  paid or  extended.  Purchase  money  notes  in the  principal  amounts  of
$1,500,000 and  $1,350,000  were due to mature on September 27, 1999 and October
31, 1999,  respectively,  and were  extended to September 27, 2002 and April 30,
2001, respectively.  A purchase money note in the principal amount of $2,165,000
matured on April 30,  2000,  but has not been paid or  extended.  The  remaining
purchase money note in the principal amount of $500,000 matures October 1, 2025.
See  the  notes  to  the  consolidated   financial   statements  for  additional
information concerning these purchase money notes.


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

         The purchase money notes, which are nonrecourse to the Partnership, are
generally  secured  by  the  Partnership's  interest  in  the  respective  Local
Partnerships.  There is no assurance  that the underlying  properties  will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes'  principal and accrued  interest when due. If a purchase money note
is not paid in accordance with its terms,  the  Partnership  will either have to
renegotiate  the terms of repayment or risk losing its  partnership  interest in
the respective Local Partnership.  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.
See further  discussion  of certain  purchase  money notes,  below.  See further
discussion  of  certain  purchase  money  notes  in the  notes  to  consolidated
financial statements.

         The following  chart  presents  information  related to purchase  money
notes which have  matured,  have been  extended to mature,  or are  scheduled to
mature through June 30, 2001, and which remain unpaid or unextended as of August
11, 2000.  Excluded  from the  following  chart are  purchase  money notes which
matured  through  June 30,  2000,  and which have been paid off,  cancelled,  or
extended on or before August 11, 2000.

<TABLE>
<CAPTION>

                                                                                                 Carrying Amount
                                                                       Aggregate                 of Partnership's
                                             Aggregate                  Accrued                   Investments in
                   Number of                 Principal                  Interest                 and Advances to
    Purchase      Underlying                  Balance                   Balance                  Underlying Local
   Money Note        Local       Percentage  as of June   Percentage   as of June   Percentage   Partnerships as    Percentage
 (PMN) Maturity   Partnerships    of Total    30, 2000     of Total     30, 2000     of Total    of June 30, 2000    of Total
----------------  ------------   ----------  -----------  ----------  ------------  ----------   ----------------   ----------
<S>               <C>            <C>         <C>          <C>         <C>           <C>          <C>                <C>
3rd Quarter 1994        1              3%    $ 1,370,000         4%   $  6,859,328        6%        $ 1,303,318           4%
3rd Quarter 1999       10             28%     12,039,000        31%     28,169,380       25%         12,673,534          38%
4th Quarter 1999        8             23%     10,795,000        27%     29,190,715       26%          5,911,464          18%
1st Quarter 2000        1              3%      1,330,000         3%      3,790,132        3%            916,440           3%
2nd Quarter 2000        1              3%      2,165,000         6%     12,795,792       11%          2,704,694           8%
1st Quarter 2001        4             11%      4,445,000        11%     12,470,292       11%          4,587,931          14%
2nd Quarter 2001        1              3%      1,350,000         3%      5,867,212        5%            513,697           1%
                     ----          -----     -----------     -----    ------------    -----         -----------       -----
Total through
  6/30/2001            26             74%    $33,494,000        85%   $ 99,142,851       87%        $28,611,078 (1)      86%
                     ====          =====     ===========     =====    ============    =====         ===========       =====
Total, Local
  Partnerships         35            100%    $39,360,081       100%   $113,247,434      100%        $33,361,982 (1)     100%
                     ====          =====     ===========     =====    ============    =====         ===========       =====

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

</TABLE>

(1)      Includes  $2,381,700  for two  partnerships  reported as  investment in
         partnerships  held for sale on the  consolidated  balance sheet at June
         30,  2000,  and $879,749 for one  partnership  reported as  partnership
         interest held in escrow on the  consolidated  balance sheet at June 30,
         2000.

         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,  upon maturity of the purchase money notes,  in
the event that the purchase money notes remain unpaid,  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 39.6%.
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 35 Local  Partnerships in
which the Partnership is invested as of June 30, 2000, the 26 Local Partnerships
with  associated  purchase  money notes which  mature  through June 30, 2001 and
which remain unpaid or unextended as of August 11, 2000, represent the following
percentages  of  the  Partnership's  total  distributions  received  from  Local
Partnerships  and share of income from Local  Partnerships  for the  immediately
immediately preceding two calendar years.

<TABLE>
<CAPTION>

                                            Percentage of Total         Partnership's Share of
                                           Distributions Received            Income from
             For the Year Ending           from Local Partnerships        Local Partnerships
             -------------------           -----------------------      ----------------------
             <S>                           <C>                          <C>
             December 31, 1999                      55%                       $  995,085
             December 31, 1998                      59%                       $1.130,370

</TABLE>

         The Partnership  closely monitors its cash flow and liquidity  position
in an  effort  to  ensure  that  sufficient  cash  is  available  for  operating
requirements.  For the six month  periods  ended  June 30,  2000 and  1999,  the
receipt of  distributions  from Local  Partnerships  and existing cash resources
were adequate to support operating cash requirements. Cash and

                                      -25-
<PAGE>
PART II.          OTHER INFORMATION
                  -----------------
ITEM 5.           OTHER INFORMATION - Continued
                  -----------------


cash  equivalents  increased during the six month period ended June 30, 2000, as
the receipt of distributions from partnerships was in excess of net cash used in
operating and financing activities.

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

         The  Partnership's  net loss for the three and six month  periods ended
June 30, 2000 decreased from the corresponding  periods in 1999 primarily due to
decreases in interest  expense  related to decreases in amortization of discount
on purchase money notes.  Offsetting the decreases in the Partnership's net loss
were decreases in share of income from  partnerships  generally due to increased
operating expenses at six properties  partially offset by increases in operating
income at four  properties,  decreases in interest  income due to lower cash and
cash  equivalent  balances  in  the  2000  periods,  increases  in  general  and
administrative expenses related to higher reimbursed payroll costs and appraisal
fees, and higher professional fees related to litigation at three properties.

         For financial reporting purposes, the Partnership, as a limited partner
in the Local Partnerships, does not record losses from the Local Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result,  the  Partnership's  share of income from partnerships for the three and
six month  periods  ended June 30, 2000 did not include  losses of $181,168  and
$358,909, respectively, compared to excluded losses of $217,945 and $435,888 for
the three and six month periods ended June 30, 1999, 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 purchase money notes.


ITEM 5.           OTHER INFORMATION
                  -----------------

         The Managing  General Partner has reason to believe that in April 2000,
Peachtree  Partners  (Peachtree)  initiated  an  unregistered  tender  offer  to
purchase up to 4.9% of the outstanding units of additional  limited  partnership
interest  (Units) in the  Partnership  at a price of $40 per Unit.  Peachtree is
unaffiliated with the Managing General Partner. The price offered was determined
solely at the  discretion  of Peachtree and does not  necessarily  represent the
fair market value of each Unit. There

                                      -26-

<PAGE>
PART II.          OTHER INFORMATION
                  -----------------
ITEM 5.           OTHER INFORMATION - Continued
                  -----------------


is no established  market for the purchase and sale of Units in the Partnership,
although  various  informal  secondary  market services exist in addition to the
tender offer by Peachtree. Due to the limited markets, however, investors may be
unable to sell or otherwise dispose of their Units in the Partnership.


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 June 30, 2000.

         All other items are not applicable.

                                      -27-
<PAGE>
                                    SIGNATURE

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

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

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



August 11, 2000            by: /s/ Michael J. Tuszka
---------------                ---------------------------------------
DATE                           Michael J. Tuszka
                               Vice President
                                 and Chief Accounting Officer
                                 (Principal Financial Officer
                                 and Principal Accounting Officer)


                                      -28-
<PAGE>


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


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

27               Financial Data Schedule        Filed herewith electronically

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