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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended September 30, 2008

OR



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

Commission file number: 0-14207

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|California                                                     |  | 33-0016355                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|400 South El Camino Real, Suite 1100 San Mateo, California     |  | 94402-1708                          
|(Address of principal executive offices)                       |  | (Zip Code)                          

(650) 343-9300

(Registrants telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition
of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer   ̈            Accelerated Filer   ̈            Non-accelerated filer   ̈            Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ̈    No  x









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INDEX

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



|           |  |                                                                                                       |  |         
|---------- |  | ----------------------------------------------------------------------------------------------------- |  | --------
|           |  |                                                                                                       |  | Page No.
|PART I     |  | FINANCIAL INFORMATION                                                                                 |  |         
|           |  |                                                                                                      
|Item 1.    |  | Consolidated Financial Statements of Rancon Realty Fund IV (Unaudited):                               |  |         
|           |  |                                                                                                      
|           |  | Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007                            |  | 3       
|           |  |                                                                                                      
|           |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and
2007 |  | 4       
|           |  |                                                                                                      
|           |  | Consolidated Statement of Partners Equity for the nine months ended September 30, 2008               |  | 5       
|           |  |                                                                                                      
|           |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007           |  | 6       
|           |  |                                                                                                      
|           |  | Notes to Consolidated Financial Statements                                                            |  | 7-13    
|           |  |                                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 14-17   
|           |  |                                                                                                      
|Item 3.    |  | Qualitative and Quantitative Disclosures About Market Risk                                            |  | 18      
|           |  |                                                                                                      
|Item 4.    |  | Controls and Procedures                                                                               |  | 18      
|           |  |                                                                                                      
|PART II    |  | OTHER INFORMATION                                                                                     |  |         
|           |  |                                                                                                      
|Item 1.    |  | Legal Proceedings                                                                                     |  | 18      
|           |  |                                                                                                      
|Item 1A.   |  | Risk Factors                                                                                          |  | 18      
|           |  |                                                                                                      
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                           |  | 18      
|           |  |                                                                                                      
|Item 3.    |  | Defaults Upon Senior Securities                                                                       |  | 19      
|           |  |                                                                                                      
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                   |  | 19      
|           |  |                                                                                                      
|Item 5.    |  | Other Information                                                                                     |  | 19      
|           |  |                                                                                                      
|Item 6.    |  | Exhibits                                                                                              |  | 19      
|           | 
|SIGNATURES |  | 20                                                                                                   



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Balance Sheets

(in thousands,
except units outstanding)

(Unaudited)



|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                  |  | September 30,2008 |         |   | December 31,2007 |  
|Assets                                                                                                                            |  |                   |         |   |                  |   |         |  
|Investments in real estate:                                                                                                       |  |                   |         |   |                  |   |         |  
|Rental properties                                                                                                                 |  | $                 | 52,381  |   |                  | $ | 52,472  |  
|Accumulated depreciation                                                                                                          |  |                   | (16,781 | ) |                  |   | (15,493 | )
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Rental properties, net                                                                                                            |  |                   | 35,600  |   |                  |   | 36,979  |  
|Construction in progress                                                                                                          |  |                   | 11,287  |   |                  |   | 10,752  |  
|Land held for development                                                                                                         |  |                   | 267     |   |                  |   | 246     |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Total investments in real estate                                                                                                  |  |                   | 47,154  |   |                  |   | 47,977  |  
|Cash and cash equivalents                                                                                                         |  |                   | 4,147   |   |                  |   | 1,881   |  
|Accounts receivable, net                                                                                                          |  |                   | 40      |   |                  |   | 59      |  
|Deferred costs, net of accumulated amortization of $1,589 and $1,510 as of September 30, 2008 and December 31, 2007, respectively |  |                   | 1,840   |   |                  |   | 1,973   |  
|Prepaid expenses and other assets                                                                                                 |  |                   | 1,479   |   |                  |   | 1,505   |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Total assets                                                                                                                      |  | $                 | 54,660  |   |                  | $ | 53,395  |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Liabilities and Partners Equity (Deficit)                                                                                        |  |                   |         |   |                  |   |         |  
|Liabilities:                                                                                                                      |  |                   |         |   |                  |   |         |  
|Note payable and line of credit                                                                                                   |  | $                 | 28,601  |   |                  | $ | 26,028  |  
|Accounts payable and other liabilities                                                                                            |  |                   | 551     |   |                  |   | 258     |  
|Construction costs payable                                                                                                        |  |                   |        |   |                  |   | 981     |  
|Prepaid rent                                                                                                                      |  |                   | 348     |   |                  |   | 205     |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                                                 |  |                   | 29,500  |   |                  |   | 27,472  |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Commitments and contingent liabilities (Note 7)                                                                                   |  |                   |         |   |                  |   |         |  
|Partners Equity (Deficit):                                                                                                       |  |                   |         |   |                  |   |         |  
|General Partner                                                                                                                   |  |                   | (668    | ) |                  |   | (592    | )
|Limited partners, 65,819 limited partnership units outstanding as of September 30, 2008 and December 31, 2007                     |  |                   | 25,828  |   |                  |   | 26,515  |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Total partners equity                                                                                                            |  |                   | 25,160  |   |                  |   | 25,923  |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Total liabilities and partners equity                                                                                            |  | $                 | 54,660  |   |                  | $ | 53,395  |  
|                                                                                                                                  |  |                   |         |   |                  |   |         |  

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



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Operations

(in thousands, except per unit amounts and units outstanding)

(Unaudited)



|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                 |  | Three months endedSeptember 30, |        |   | Nine months endedSeptember 30, |  
|                                                                 |  | 2008                            |        |   | 2007                           |   |        | 2008 |  |   | 2007   |  
|Operating Revenue                                                |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Rental revenue                                                   |  | $                               | 2,110  |   |                                | $ | 2,101  |      |  | $ | 6,506  |   |  | $ | 6,554  |  
|Tenant reimbursements                                            |  |                                 | 300    |   |                                |   | 240    |      |  |   | 927    |   |  |   | 1,029  |  
|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total operating revenue                                          |  |                                 | 2,410  |   |                                |   | 2,341  |      |  |   | 7,433  |   |  |   | 7,583  |  
|Operating Expenses                                               |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Property operating                                               |  |                                 | 1,060  |   |                                |   | 1,034  |      |  |   | 2,876  |   |  |   | 2,770  |  
|Depreciation and amortization                                    |  |                                 | 754    |   |                                |   | 748    |      |  |   | 2,271  |   |  |   | 2,142  |  
|General and administrative                                       |  |                                 | 209    |   |                                |   | 206    |      |  |   | 734    |   |  |   | 723    |  
|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses                                         |  |                                 | 2,023  |   |                                |   | 1,988  |      |  |   | 5,881  |   |  |   | 5,635  |  
|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Operating income                                                 |  |                                 | 387    |   |                                |   | 353    |      |  |   | 1,552  |   |  |   | 1,948  |  
|Interest and other income                                        |  |                                 | 16     |   |                                |   | 1      |      |  |   | 19     |   |  |   | 21     |  
|Interest expense (including amortization of loan fees)           |  |                                 | (412   | ) |                                |   | (218   | )    |  |   | (1,173 | ) |  |   | (776   | )
|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)                                                |  | $                               | (9     | ) |                                | $ | 136    |      |  | $ | 398    |   |  | $ | 1,193  |  
|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted net income (loss) per limited partnership unit |  | $                               | (0.12  | ) |                                | $ | 1.85   |      |  | $ | 5.44   |   |  | $ | 16.32  |  
|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Weighted average number of limited partnership units outstanding |  |                                 | 65,819 |   |                                |   | 65,824 |      |  |   | 65,819 |   |  |   | 65,826 |  
|                                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

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



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statement of Partners Equity

For the nine months ended September 30, 2008

(in thousands)

(Unaudited)



|                                                    |  |                |      |   |                 |   |        |       |  |   |        |  
|--------------------------------------------------- |  | -------------- | ---- | - | --------------- | - | ------ | ----- |  | - | ------ | -
|                                                    |  | GeneralPartner |      |   | LimitedPartners |   |        | Total | 
|Balance (deficit) at December 31, 2007              |  | $              | (592 | ) |                 | $ | 26,515 |       |  | $ | 25,923 |  
|Net income                                          |  |                | 40   |   |                 |   | 358    |       |  |   | 398    |  
|Distributions ($15.87 per limited partnership unit) |  |                | (116 | ) |                 |   | (1,045 | )     |  |   | (1,161 | )
|                                                    |  |                |      |   |                 |   |        |       |  |   |        |  
|Balance (deficit) at September 30, 2008             |  | $              | (668 | ) |                 | $ | 25,828 |       |  | $ | 25,160 |  
|                                                    |  |                |      |   |                 |   |        |       |  |   |        |  

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



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)



|                                                                                                                 |  |                                |        |   |      |   |        |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------ | -
|                                                                                                                 |  | Nine months endedSeptember 30, |       
|                                                                                                                 |  | 2008                           |        |   | 2007 |  
|Cash flows from operating activities:                                                                            |  |                                |        |   |      |   |        |  
|Net income                                                                                                       |  | $                              | 398    |   |      | $ | 1,193  |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                |  |                                |        |   |      |   |        |  
|Depreciation and amortization                                                                                    |  |                                | 2,271  |   |      |   | 2,142  |  
|Amortization of loan fees, included in interest expense                                                          |  |                                | 53     |   |      |   | 69     |  
|Changes in certain assets and liabilities:                                                                       |  |                                |        |   |      |   |        |  
|Accounts receivable                                                                                              |  |                                | 19     |   |      |   | 257    |  
|Deferred costs                                                                                                   |  |                                | (235   | ) |      |   | (165   | )
|Prepaid expenses and other assets                                                                                |  |                                | 26     |   |      |   | (94    | )
|Accounts payable and other liabilities                                                                           |  |                                | 293    |   |      |   | 158    |  
|Prepaid rent                                                                                                     |  |                                | 143    |   |      |   | 178    |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Net cash provided by operating activities                                                                        |  |                                | 2,968  |   |      |   | 3,738  |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Cash flows from investing activities:                                                                            |  |                                |        |   |      |   |        |  
|Proceeds from maturity of short-term investment                                                                  |  |                                |       |   |      |   | 5,075  |  
|Advance to affiliate                                                                                             |  |                                |       |   |      |   | (550   | )
|Additions to real estate investments                                                                             |  |                                | (2,114 | ) |      |   | (8,932 | )
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Net cash used in investing activities                                                                            |  |                                | (2,114 | ) |      |   | (4,407 | )
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Cash flows from financing activities:                                                                            |  |                                |        |   |      |   |        |  
|Note payable principal payments                                                                                  |  |                                | (272   | ) |      |   | (257   | )
|Draws on line of credit                                                                                          |  |                                | 2,845  |   |      |   | 1,000  |  
|Loan fee for line of credit                                                                                      |  |                                |       |   |      |   | (68    | )
|Redemption of limited partnership units                                                                          |  |                                |       |   |      |   | (11    | )
|Distributions to limited partners                                                                                |  |                                | (1,045 | ) |      |   | (908   | )
|Distributions to General Partner                                                                                 |  |                                | (116   | ) |      |   | (101   | )
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Net cash provided by (used in) financing activities                                                              |  |                                | 1,412  |   |      |   | (345   | )
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Net increase (decrease) in cash and cash equivalents                                                             |  |                                | 2,266  |   |      |   | (1,014 | )
|Cash and cash equivalents at beginning of period                                                                 |  |                                | 1,881  |   |      |   | 1,584  |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                                                       |  | $                              | 4,147  |   |      | $ | 570    |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Supplemental disclosure of cash flow information:                                                                |  |                                |        |   |      |   |        |  
|Cash paid for interest (net of capitalized interest of $0 and $265 at September 30, 2008 and 2007, respectively) |  | $                              | 1,112  |   |      | $ | 707    |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Supplemental disclosure of non-cash operating activities:                                                        |  |                                |        |   |      |   |        |  
|Write-off of fully depreciated rental property assets                                                            |  | $                              | 668    |   |      | $ | 71     |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Write-off of fully amortized deferred costs                                                                      |  | $                              | 289    |   |      | $ | 199    |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Supplemental disclosure of non-cash investing activities:                                                        |  |                                |        |   |      |   |        |  
|Additions to real estate investments included in construction costs payable                                      |  | $                              |       |   |      | $ | 847    |  
|                                                                                                                 |  |                                |        |   |      |   |        |  
|Supplemental disclosure of non-cash financing activities:                                                        |  |                                |        |   |      |   |        |  
|Redemption of limited partnership units payable                                                                  |  | $                              |       |   |      | $ | 4      |  
|                                                                                                                 |  |                                |        |   |      |   |        |  

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



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RANCON REALTY FUND IV,

A California Limited Partnership

Notes
to Consolidated Financial Statements

(Unaudited)



|NOTE 1. | ORGANIZATION
|------- | ------------

Rancon Realty Fund IV, a California Limited
Partnership (the Partnership), was organized in accordance with the provisions of the California Uniform Limited Partnership Act for the purpose of acquiring, developing, operating and disposing of real property. The Partnership was
organized in 1984 and reached final funding in July 1987. The general partners of the Partnership are Daniel L. Stephenson and Rancon Financial Corporation (RFC), hereinafter collectively referred to as the General Partner. RFC is
wholly-owned by Daniel L. Stephenson. The Partnership has no employees.

As of September 30, 2008, there were 65,819 units (Units)
outstanding.

The Partnership commenced on April 3, 1984 and shall continue until December 31, 2015, unless previously terminated in accordance
with the provisions of the Partnership agreement.

Allocation of Net Income and Net Loss

Allocation of net income and net loss is made pursuant to the terms of the Partnership agreement. Generally, net income from operations is allocated 90% to the limited
partners and 10% to the General Partner. Net losses from operations are allocated 99% to the limited partners and 1% to the General Partner until such time as a partners capital account is reduced to zero. Additional losses will be allocated
entirely to those partners with positive capital account balances until such balances are reduced to zero.

Net income other than net income from
operations shall be allocated as follows: (i) first, to the partners who have a deficit balance in their capital account, provided that, in no event, shall the General Partner be allocated more than 5% of the net income other than net income
from operations until the earlier of sale or disposition of substantially all of the assets or the distribution of cash (other than cash from operations) equal to the Unit holders original invested capital; (ii) second, to the limited
partners in proportion to and to the extent of the amounts required to increase their capital accounts to an amount equal to the sum of the adjusted invested capital of their units plus an additional cumulative non-compounded 6% return per annum
(plus additional amounts depending on the date Units were purchased); (iii) third, to the partners in the minimum amount required to first equalize their capital accounts in proportion to the number of units owned, and then, to bring the sum of
the balances of the capital accounts of the limited partners and the General Partner into the ratio of 4 to 1; and (iv) the balance, if any, 80% to the limited partners and 20% to the General Partner. In no event shall the General Partner be
allocated less than 1% of the net income other than net income from operations for any period.

Net loss other than net loss from operations is allocated
99% to the limited partners and 1% to the General Partner. Such net losses will be allocated among limited partners as necessary to equalize their capital accounts in proportion to their Units, and thereafter will be allocated in proportion to their
Units.

The terms of the Partnership agreement call for the General Partner to restore any deficits that may exist in its capital account after allocation
of gains and losses from the sale of the final property owned by the Partnership, but prior to any liquidating distributions being made to the partners.

Distribution of Cash

The Partnership shall make annual or more frequent distributions of substantially all cash available to be
distributed to partners as determined by the General Partner, subject to the following: (i) distributions may be restricted or suspended for limited periods when the General Partner determines in its absolute discretion that it is in the best
interests of the Partnership; and (ii) all distributions are subject to the payment of Partnership expenses and maintenance of reasonable reserves for debt service, alterations and improvements, maintenance, replacement of furniture and
fixtures, working capital and contingent liabilities.

All excess cash from operations shall be distributed 90% to the limited partners and 10% to the
General Partner.

All cash from sales or refinancing and any other cash determined by the General Partner to be available for distribution other than cash
from operations shall be distributed in the following order of priority: (i) first, 1% to the General Partner and 99% to the limited partners in proportion to the outstanding positive amounts of Adjusted Invested Capital (as defined in the
Partnership agreement) for each of their Units until Adjusted Invested Capital (as defined in the Partnership agreement) for each Unit is reduced to zero; (ii) second, 1% to the General Partner and 99% to the limited partners until each of the
limited partners has received an amount which, including cash from operations previously distributed to the limited partners, equals a 12% annual cumulative non-compounded return on the Adjusted Invested Capital (as defined in the Partnership
agreement) of their Units plus such limited partners Limited Incremental Preferential Return (as defined in the Partnership agreement), if any, with respect to each such Unit, on the Adjusted Investment Capital (as defined in the Partnership
agreement) of such Units for the twelve month period following the date upon which such Unit was purchased from the Partnership and following the admission of such limited partner; (for limited partners admitted to the Partnership before
March 31, 1985, there are additional cumulative



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RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements

(Unaudited)



non-compounded returns of 9%, 6%, or 3% depending on purchase date, through October 31, 1985); (iii) third, 99% to the General Partner and 1% to
the limited partners, until the General Partner has received an amount equal to 20% of all distributions of cash from sales or refinancing; and (iv) the balance, 80% to the limited partners, pro rata in proportion to the number of Units held by
each, and 20% to the General Partner.



|NOTE 2. | SIGNIFICANT ACCOUNTING POLICIES
|------- | -------------------------------

Basis of Presentation

The accompanying financial statements present the consolidated financial position of the Partnership and its subsidiaries as of September 30,
2008 and December 31, 2007, the consolidated results of operations of the Partnership and its subsidiaries for the three and nine months ended September 30, 2008 and 2007, and cash flows of the Partnership for the nine months ended
September 30, 2008 and 2007. All significant intercompany transactions, receivables and payables have been eliminated in consolidation.

In the
opinion of the General Partner, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal accruals) necessary to present fairly the consolidated financial position of the Partnership as of
September 30, 2008 and December 31, 2007, and the related consolidated statements of operations for the three and nine months ended September 30, 2008 and 2007, the consolidated statement of partners equity for the nine months
ended September 30, 2008 and the consolidated statements of cash flows for the nine months ended September 30, 2008 and 2007.

Reclassification

Certain items in the consolidated financial statements for prior periods have been reclassified to conform to the
current periods presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results of operations during the reporting period. Actual results could differ from those estimates.

Rental Properties

Rental properties, including the related
land, are stated at depreciated cost unless events or circumstances indicate that such amounts cannot be recovered, in which case, the carrying value of the property is reduced to its estimated fair value. Estimated fair value: (i) is based
upon the Partnerships plans for the continued operations of each property; and (ii) is computed using estimated sales price, as determined by prevailing market values for comparable properties and/or the use of capitalization rates
applied to annualized net operating income based upon the age, construction and use of the building. The fulfillment of the Partnerships plans related to each of its properties is dependent upon, among other things, the presence of economic
conditions which will enable the Partnership to continue to hold and operate the properties prior to their eventual sale. Due to uncertainties inherent in the valuation process and in the economy, it is reasonably possible that the actual results of
operating and disposing of the Partnerships properties could be materially different than current expectations. Rental properties are reviewed for impairment whenever there is a triggering event and at least annually.

Depreciation is provided using the straight-line method over the useful lives of the respective assets. The useful lives are as follows:



|                          |  |                                                                                                  
|------------------------- |  | -------------------------------------------------------------------------------------------------
|Building and improvements |  | 5 to 40 years                                                                                    
|Tenant improvements       |  | Lesser of the initial term of the related lease, or the estimated useful life of the improvements
|Furniture and equipment   |  | 5 to 7 years                                                                                     

Construction In Progress and Land Held for Development

Construction in progress and land held for development are stated at cost unless events or circumstances indicate that cost cannot be recovered, in which case, the
carrying value is reduced to estimated fair value. Estimated fair value: (i) is based on the Partnerships plans for the development of each property; (ii) is computed using estimated sales price, based upon market values for
comparable properties; and (iii) considers the cost to complete and the estimated fair value of the completed project. The fulfillment of the Partnerships plans related to each of its properties is dependent upon, among other things, the
presence of economic conditions which will enable the Partnership to either hold the properties for eventual sale or obtain financing to further develop the properties. Construction in progress and land held for development are reviewed for
impairment whenever there is a triggering event and at least annually.



8



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##### Table of Contents

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements

(Unaudited)



The pre-development costs for a new project are capitalized and include survey fees and consulting fees. Interest,
property taxes and insurance related to the new project are capitalized during periods when activities necessary to get the project ready for its intended use are in progress. The capitalization ends when the construction is substantially completed
and the project is ready for its intended use.

Cash and Cash Equivalents

The Partnership considers money market funds and certificates of deposit with original maturities of less than ninety days when purchased to be cash and cash equivalents.

Deferred Costs

Deferred loan fees are capitalized and
amortized on a straight-line basis, which approximates the effective interest method, over the life of the related loan. Deferred lease commissions are capitalized and amortized on a straight-line basis over the initial fixed term of the related
lease agreements.

Revenues

The Partnership
recognizes rental revenue on a straight-line basis over the term of the leases. Actual amounts collected could be lower or higher than the amounts recognized on a straight-line basis if specific tenants are unable to pay rent that the Partnership
has previously recognized as revenue. For tenants with percentage rent, the Partnership recognizes revenue when the tenants specified sales targets have been met. The reimbursements from tenants for real estate taxes and other recoverable
operating expenses are recognized as revenue on an estimated basis, and the differences between estimated and actual amounts are recognized as revenue in the subsequent year when the amounts are collected. However, where actual expenses are
significantly different from estimates, the Partnership will accrue the differences in the same period. The Partnership periodically evaluates the collectability of amounts due from tenants and maintains an allowance for doubtful accounts for
estimated losses resulting from the inability of tenants to make required payments under the lease agreements.

Net Income (loss) Per Limited
Partnership Unit

Net income (loss) per Unit is calculated using the weighted average number of Units outstanding during the period and the limited
partners allocable share of the net income (loss).

Net income (loss) per Unit is as follows (in thousands, except for weighted average units and per
unit amounts):



|                                                                                    |  |                                              |    |   |                                              |   |                                             |                |                                             |                 |    |                |   |                 |  |                |    |                 |   |        |  |   |     |  |   |       
|----------------------------------------------------------------------------------- |  | -------------------------------------------- | -- | - | -------------------------------------------- | - | ------------------------------------------- | -------------- | ------------------------------------------- | --------------- | -- | -------------- | - | --------------- |  | -------------- | -- | --------------- | - | ------ |  | - | --- |  | - | ------
|                                                                                    |  | For the three months endedSeptember 30,
2008 |    |   | For the three months endedSeptember 30,
2007 |   | For the nine months endedSeptember 30,
2008 |                | For the nine months endedSeptember 30,
2007
|Income (loss) allocation:                                                           |  | GeneralPartner                               |    |   | LimitedPartners                              |   |                                             | GeneralPartner |                                             | LimitedPartners |    | GeneralPartner |   | LimitedPartners |  | GeneralPartner |    | LimitedPartners
|Net income (loss)                                                                   |  | $                                            | (1 | ) |                                              | $ | (8                                          | )              |                                             | $               | 14 |                | $ | 122             |  | $              | 40 |                 | $ | 358    |  | $ | 119 |  | $ | 1,074 
|Weighted average number of limited partnership units outstanding during each period |  |                                              |    |   |                                              |   | 65,819                                      |                |                                             |                 |    |                |   | 65,824          |  |                |    |                 |   | 65,819 |  |   |     |  |   | 65,826
|Basic and diluted income (loss) per limited partnership unit                        |  |                                              |    |   |                                              | $ | (0.12                                       | )              |                                             |                 |    |                | $ | 1.85            |  |                |    |                 | $ | 5.44   |  |   |     |  | $ | 16.32 



9



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##### Table of Contents

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements

(Unaudited)



Income Taxes

No provision for income taxes is included in the accompanying consolidated financial statements as the Partnerships results of operations are allocated to the partners for inclusion in their respective income tax returns. Net income
(loss) and partners equity (deficit) for financial reporting purposes will differ from the Partnerships income tax return because of different accounting methods used for certain items, including depreciation expense, provisions for
impairment of investments in real estate, capitalization of development period interest and rental income and loss recognition.

Concentration Risk

Two tenants (Inland Counties Regional Center and University of Phoenix) represented a combined 32% and one tenant (Inland Counties Regional Center)
represented 17% of operating revenue for the nine months ended September 30, 2008.

New Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 157, Fair Value Measurements (SFAS
No. 157),which defines fair value, establishes a framework for measuring fair value and enhances disclosure requirements for fair value measurements. SFAS No. 157 defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also
establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure
fair value. The Partnership adopted SFAS No. 157 with respect to its financial assets and liabilities but not with respect to its nonfinancial assets (such as real estate, which is not subject to annual fair value measurements) as those
provisions of SFAS No. 157 have been deferred. There was no material impact on the Partnerships financial position, results of operations or cash flows and no financial assets and liabilities requiring disclosure under SFAS No. 157.

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an
Amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial instruments and
certain other items at fair value. It also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This
Statement is effective for fiscal years beginning on or after November 15, 2007. The Partnership has adopted SFAS No. 159 with no material impact on its financial position, results of operations and cash flows.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)), which improves the relevance, representational
faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement is effective for fiscal years beginning after December 15, 2008. The
Partnership does not believe that the adoption of SFAS No. 141(R) will have a material impact on its financial position, results of operations and cash flows, except that transaction costs will be expensed as incurred.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements an Amendment of ARB No. 51 (SFAS
No. 160), which clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for
fiscal years beginning after December 15, 2008. The Partnership does not believe that the adoption of SFAS No. 160 will have a material impact on its financial position, results of operations and cash flows.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133(SFAS No. 161), which requires companies to provide additional disclosures about their objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and related interpretations, and how the derivative instruments and related hedged items affect the their financial statements. SFAS No. 161 also requires
companies to disclose information about credit risk-related contingent features in their hedged positions. SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. The Partnership does not believe
that the adoption of SFAS No. 161 will have a material impact on its financial condition or operating results.

In October 2008, the FASB issued FASB
Staff Position FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP 157-3). FSP 157-3 clarified the application of FAS 157. FSP 157-3 clarified how
the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The implementation of
this standard did not have an impact on the Partnerships financial position, results of operations and cash flows.



10



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##### Table of Contents

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements

(Unaudited)



Reference to 2007 audited consolidated financial statements

These unaudited consolidated financial statements should be read in conjunction with the notes to audited consolidated financial statements included in the
Partnerships December 31, 2007 audited consolidated financial statements on Form 10-K.



|NOTE 3. | INVESTMENTS IN REAL ESTATE
|------- | --------------------------

Rental properties consist of the
following (in thousands):



|                                 |  |                   |         |   |                  |   |         |  
|-------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                 |  | September 30,2008 |         |   | December 31,2007 |  
|Land                             |  | $                 | 4,471   |   |                  | $ | 4,471   |  
|Buildings                        |  |                   | 37,268  |   |                  |   | 37,268  |  
|Building and tenant improvements |  |                   | 10,642  |   |                  |   | 10,733  |  
|                                 |  |                   |         |   |                  |   |         |  
|                                 |  |                   | 52,381  |   |                  |   | 52,472  |  
|Less: accumulated depreciation   |  |                   | (16,781 | ) |                  |   | (15,493 | )
|                                 |  |                   |         |   |                  |   |         |  
|Total rental properties, net     |  | $                 | 35,600  |   |                  | $ | 36,979  |  
|                                 |  |                   |         |   |                  |   |         |  

As of September 30, 2008, the Partnerships rental properties included four office properties and seven
retail properties.



|NOTE 4. | CONSTRUCTION IN PROGRESS AND LAND HELD FOR DEVELOPMENT
|------- | ------------------------------------------------------

Construction in progress consists of the following (in thousands):



|                                                                                                                         |  |                   |        |                  |   |       
|------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------ | ---------------- | - | ------
|                                                                                                                         |  | September 30,2008 |        | December 31,2007
|Three-story multi-tenant 72,000 square-foot office building on approximately 1.6 acres of land with a cost basis of $219 |  | $                 | 11,287 |                  | $ | 10,752
|                                                                                                                         |  |                   |        |                  |   |       

During the third quarter of 2006, the Partnership began developing North River Place, a three-story multi-tenant
72,000 square-foot office building on an approximate 1.6 acre land parcel, plus completion of the balance of the 4.5 acre parking parcel. As a result, the land, pre-development costs and construction costs of North River Place were reclassified from
land held for development to construction in progress. The building shell was substantially completed in the first quarter of 2008, but the Partnership has remaining improvements to complete so the building has not been placed into service as of
September 30, 2008.

Land held for development consists of the following (in thousands):



|                                                                                                                        |  |                   |     |                  |   |    
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --- | ---------------- | - | ---
|                                                                                                                        |  | September 30,2008 |     | December 31,2007
|Tri-City Corporate Center, San Bernardino, CA (approximately 14.7 acres as of September 30, 2008 and December 31,
2007) |  | $                 | 267 |                  | $ | 246
|                                                                                                                        |  |                   |     |                  |   |    

This undeveloped land is part of a landfill-monitoring program managed by the City of San Bernardino (as discussed
in Note 7).



|NOTE 5. | NOTE PAYABLE AND LINE OF CREDIT
|------- | -------------------------------

Note payable and line of credit
consist of the following (in thousands):



|                                                                                                                                                                                                                                                                            |  |                   |        |                  |   |       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ | ---------------- | - | ------
|                                                                                                                                                                                                                                                                            |  | September 30,2008 |        | December 31,2007
|Note payable collateralized by first deeds of trust on eight properties (discussed below). The note has a fixed interest rate of 5.46%, a
maturity date of January 1, 2016, with a 30-year amortization requiring monthly payments of principal and interest totaling $136. |  | $                 | 23,156 |                  | $ | 23,428
|Line of credit                                                                                                                                                                                                                                                              |  |                   | 5,445  |                  |   | 2,600 
|                                                                                                                                                                                                                                                                            |  |                   |        |                  |   |       
|Total note payable and line of credit                                                                                                                                                                                                                                       |  | $                 | 28,601 |                  | $ | 26,028
|                                                                                                                                                                                                                                                                            |  |                   |        |                  |   |       

The note payable is collateralized by Circuit City, Mimis Cafe, Palm Court Retail #1 and #2, Promotional
Retail Center, Service Retail Center, TGI Fridays and One Vanderbilt. This note provides for a one-time loan assumption and release provisions for individual assets.



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##### Table of Contents

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements

(Unaudited)



The Partnership has a line of credit, which is collateralized by Inland Regional Center, that has a total
availability of $5,445,000, monthly interest-only payments, a maturity date of April 15, 2009, and bears variable interest at the Prime Rate (5.00% and 7.25% as of September 30, 2008 and December 31, 2007, respectively). As of
September 30, 2008, $5,445,000 was outstanding under the line of credit.

The required principal payments on the Partnerships debt for the next
five years and thereafter, as of September 30, 2008, are as follows (in thousands). Included in the year ending December 31, 2009, is the line of credit balance of $5,445,000 which has a maturity of April 15, 2009. The Partnership is
in the process of obtaining a new $10 million revolving line of credit which will be collateralized by Vanderbilt Plaza and Carnegie Business Center I. The line of credit will have a one year maturity date, with two one-year extension options, and
will bear interest at the floating rate of LIBOR plus 2.75%. The proceeds from the new line of credit will be used to pay off the existing line of credit balance and fund future working capital needs.



|                         |  |   |       
|------------------------ |  | - | ------
|Year Ending December 31, |  |  
|2008                     |  | $ | 93    
|2009                     |  |   | 5,830 
|2010                     |  |   | 407   
|2011                     |  |   | 429   
|2012                     |  |   | 454   
|Thereafter               |  |   | 21,388
|                         |  |   |       
|Total                    |  | $ | 28,601
|                         |  |   |       



|NOTE 6. | RELATED PARTY TRANSACTIONS
|------- | --------------------------

In May 2006, the Partnership extended
its then current Property Management and Services Agreement with Glenborough Properties L.P. (Glenborough) through December 31, 2008. As indicated in the Property Management and Services Agreement, the contract will be automatically
extended on December 31, 2008 for a one year period at the same terms and conditions. On November 29, 2006, due to the merger of Glenborough and a third party, a new entity, Glenborough LLC was formed and the Partnerships Property
Management and Service Agreement was transferred from Glenborough to Glenborough LLC. All other terms and conditions remained unchanged. The Partnership engaged Glenborough LLC to perform services for the following fees:



|                                                                                                                                                                                                                                                                                                                                                                                               |  |                   |         |                   |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ----------------- | - | -------
|                                                                                                                                                                                                                                                                                                                                                                                               |  | Nine Months Ended
|                                                                                                                                                                                                                                                                                                                                                                                               |  | September 30,2008 |         | September 30,2007
|(i)     property management fees of 3% of gross rental revenue which were included in property operating expenses in
the accompanying consolidated statements of operations                                                                                                                                                                                                                    |  | $                 | 235,000 |                   | $ | 239,000
|(ii)    construction services fees which were capitalized and included in rental properties on the accompanying
consolidated balance sheets                                                                                                                                                                                                                                                    |  |                   | 13,000  |                   |   | 23,000 
|(iii)  an asset and partnership management fee which was included in general and administrative expenses in the accompanying
consolidated statements of operations                                                                                                                                                                                                                             |  |                   | 225,000 |                   |   | 225,000
|(iv)   leasing services fees which were included in deferred costs on the accompanying consolidated balance
sheets                                                                                                                                                                                                                                                                             |  |                   | 137,000 |                   |   | 35,000 
|(v)    a financing services fee of 1% of the gross loan amount which was included in the deferred costs on the
accompanying consolidated balance sheets                                                                                                                                                                                                                                        |  |                   |        |                   |   | 54,000 
|(vi)   a development fee equal to 5% of the hard costs of the development project which was included in the construction in
progress and/or rental properties on the accompanying consolidated balance sheets; excluding the cost of the land, the development fee and the general contractors fee shall not exceed 11.5%, in the aggregate, of the hard costs of the
development fee project |  |                   |        |                   |   | 240,000
|(vii)  data processing fees based on square footage which were included in property operating expenses in the accompanying
consolidated statements of operations                                                                                                                                                                                                                               |  |                   | 50,000  |                   |   | 40,000 
|(viii)  engineering fees based on square footage which were included in property operating expenses in the accompanying consolidated
statements of operations                                                                                                                                                                                                                                  |  |                   | 11,000  |                   |   | 12,000 

As of September 30, 2008, Glenborough Fund XV LLC, an affiliate of Glenborough LLC, held 7,364 or 11.19% of
the limited partnership units which were purchased from unaffiliated third parties.



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##### Table of Contents

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements

(Unaudited)



NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters

The Partnership follows a policy of monitoring its properties for the presence of
hazardous or toxic substances. The Partnership is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Partnerships business, assets or results of operations. There can be no
assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Partnerships consolidated results of operations and cash flows.

Approximately 14.7 acres of the Tri-City land owned by the Partnership was part of a 27-acre landfill operated by the City of San Bernardino (the City)
from approximately 1950 to 1960. This landfill incorporates two land parcels and part of a third parcel. In 1996, the Santa Ana Regional Water Quality Control Board (SARWQCB), with regulatory jurisdiction over the closure and monitoring
of landfills, determined that the City was primarily responsible for the landfill. Therefore, the City and the Partnership entered into a Limited Access Easement Agreement, giving the City access to the site for development, implementation and
financial responsibility for a plan for the remediation of the landfill. It was determined that the City was to improve the landfill cover system (The Waterman Landfill Cover Improvement Plans, April 2002), perform groundwater monitoring and install
a permanent gas extraction system (Landfill Gas Collection System). Under the Limited Access Easement Agreement with the Partnership, methane monitoring is handled directly by the City. The Citys installation of the cover improvement system
was completed in the first quarter of 2007 along with the gas extraction system. The system is now operational but continues to be further enhanced. Future development of this site remains uncertain. No assurance can be made that circumstances will
not arise which could impact the Partnerships responsibility related to the land.

General Uninsured Losses

The Partnership carries property and liability insurance with respect to the properties. This coverage has policy specification and insured limits customarily carried for
similar properties. However, certain types of losses (such as from earthquakes and floods) may be either uninsurable or not economically insurable. Should the properties sustain damage as a result of an earthquake or flood, the Partnership may incur
losses due to insurance deductibles, co-payments on insured losses or uninsured losses. Additionally, the Partnership has elected to obtain insurance coverage for certified acts of terrorism as defined in the Terrorism Risk Insurance Act
of 2002, as amended and reauthorized to date; however, our policies of insurance may not provide coverage for other acts of terrorism. Any losses from such other acts of terrorism might be uninsured. Should an uninsured loss occur, the Partnership
could lose some or all of its capital investment, cash flow and anticipated profits related to the properties.

Other Matters

The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the aggregate amount of $643,000 at September 30,
2008 for sales that were completed in previous years. The subordinated real estate commissions are payable only after the limited partners have received distributions equal to their original invested capital plus a cumulative non-compounded return
of 12% per annum on their adjusted invested capital. Since the circumstances under which these commissions would be payable are not met currently, the liability has not been recognized in the accompanying consolidated financial statements;
however, the amount will be recorded when and if it becomes payable.



13



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with our December 31, 2007 audited consolidated financial statements and the notes thereto included in our latest Annual Report on Form 10-K.

Background

During 1984 and 1985, our initial acquisition of
property consisted of approximately 76.56 acres of partially developed and unimproved land located in San Bernardino, California. The property is part of a master-planned development of 153 acres known as Tri-City Corporate Centre
(Tri-City) and is zoned for mixed commercial, office, hotel, transportation-related, and light industrial uses and all of the parcels thereof are separately owned by us and Rancon Realty Fund V (Fund V), a partnership
sponsored by the General Partner.

Overview

Tri-City Properties

As of September 30, 2008, our rental properties consist of four office and seven retail properties,
aggregating approximately 487,000 rentable square feet, of which 333,000 square feet are office space, and 154,000 square feet are retail space.



|                           |  |                            |  |               
|-------------------------- |  | -------------------------- |  | --------------
|Property                   |  | Type                       |  | Square Footage
|One Vanderbilt             |  | Four-story office building |  | 73,729        
|Carnegie Business Center I |  | Two office buildings       |  | 62,540        
|Service Retail Center      |  | Two retail buildings       |  | 20,780        
|Promotional Retail Center  |  | Four retail buildings      |  | 66,244        
|Inland Regional Center     |  | Two-story office building  |  | 81,079        
|TGI Fridays               |  | Restaurant                 |  | 9,956         
|Circuit City               |  | Retail building            |  | 39,123        
|Mimis Café                |  | Restaurant                 |  | 6,455         
|Palm Court Retail #1       |  | Retail building            |  | 5,022         
|Palm Court Retail #2       |  | Retail building            |  | 7,433         
|Vanderbilt Plaza           |  | Four-story office building |  | 114,291       

As of September 30, 2008, the weighted average occupancy of the eleven properties was 88%.

Land

As of September 30, 2008, we owned approximately 1.6 acres
of land under construction and approximately 14.7 acres of unimproved land.

During the third quarter of 2006, we began developing North River Place, a
three-story multi-tenant 72,000 square-foot office building on an approximate 1.6 acre land parcel, plus completion of the balance of the 4.5 acre parking parcel. As a result, the land, pre-development costs and construction costs of North River
Place were reclassified from land held for development to construction in progress. The building shell was substantially completed in the first quarter of 2008 with a total cost of $11,204,000, but we have remaining tenant improvement work so the
building has not been placed into service as of September 30, 2008.

Approximately 14.7 acres of the Tri-City land owned by us was part of a 27-acre
landfill operated by the City of San Bernardino (the City) from approximately 1950 to 1960. This landfill incorporates two land parcels and part of a third parcel. In 1996, the Santa Ana Regional Water Quality Control Board
(SARWQCB), with regulatory jurisdiction over the closure and monitoring of landfills, determined that the City was primarily responsible for the landfill. Therefore, we entered into a Limited Access Easement Agreement with the City,
giving the City access to the site for development, implementation and financial responsibility for a plan for the remediation of the landfill. It was determined that the City was to improve the landfill cover system (The Waterman Landfill Cover
Improvement Plans, April 2002), perform groundwater monitoring and install a permanent gas extraction system (Landfill Gas Collection System). Under the Limited Access Easement Agreement, methane monitoring is handled directly by the City. The
Citys installation of the cover improvement system was completed in the first quarter of 2007 along with the gas extraction system. The system is now operational but continues to be further enhanced. Future development of this site remains
uncertain. No assurance can be made that circumstances will not arise which could impact our responsibility related to the land.



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##### Table of Contents

Results of Operations

Comparison of the three and nine months ended September 30, 2008 to the three and nine months ended September 30, 2007.

Revenue

Rental revenue remained relatively flat with an increase of $9,000, or 0%, for the three months ended September 30, 2008
compared to the three months ended September 30, 2007. Rental revenue decreased $48,000, or 1%, for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007, primarily due to a slight decrease in
occupancy.

Tenant reimbursements increased $60,000, or 25%, for the three months ended September 30, 2008 compared to the three months ended
September 30, 2007, respectively, primarily due to an increase in operating expenses including utility costs at properties. Tenant reimbursements decreased $102,000, or 10%, for the nine months ended September 30, 2008 compared to the nine
months ended September 30, 2007, respectively, primarily due to a decrease in recoveries related to 2007 recovery reconciliations completed in the second quarter of 2008, partially offset by an increase in 2008 recovery estimates for Inland
& Vanderbilt Plaza.

Expenses

Operating expenses
did not change significantly with only a slight increase of $26,000, or 3%, and $106,000, or 4%, for the three and nine months ended September 30, 2008, compared to the three and nine months ended September 30, 2007, respectively,
primarily due to increases in utilities and administrative costs.

Depreciation and amortization increased $6,000, or 1%, and $129,000, or 6%, for the
three and nine months ended September 30, 2008, compared to the three and nine months ended September 30, 2007, respectively, primarily due to the depreciation of capital improvements placed into service in the second quarter of 2007.

General and administrative expenses increased $3,000, or 1%, and $11,000, or 2%, for the three and nine months ended September 30, 2008 compared to
the three and nine months ended September 30, 2007, respectively, primarily due to an increase in investor service fees.

Non-operating income /
expenses

Interest and other income increased $15,000, or 1500%, for the three months ended September 30, 2008 compared to the three months ended
September 30, 2007 primarily due to investment of daily available funds beginning in the third quarter of 2008. Interest and other income decreased $2,000, or 10%, for the nine months ended September 30, 2008 compared to the nine months
ended September 30, 2007 primarily due to the liquidation of short-term investments in April 2007 offset by the aforementioned investment of daily available funds.

Interest expense increased $194,000, or 89%, and $397,000, or 51%, for the three and nine months ended September 30, 2008 compared to the three and nine months ended September 30, 2007, respectively, due to
the cessation of interest capitalization on the North River Place development project as well as an increase in the outstanding balance on the line of credit.

Liquidity and Capital Resources

As of September 30, 2008, we have cash and cash equivalents of $4,147,000.

As of September 30, 2008, our primary liability is a note payable of approximately $23,156,000, collateralized by properties with an aggregate net carrying value of
approximately $15,077,000. The note has a 10-year term with a 30-year amortization requiring monthly principal and interest payments of approximately $136,000, bears a fixed interest rate of 5.46%, and has a maturity date of January 1, 2016.
The note is collateralized by Circuit City, Mimis Cafe, Palm Court Retail #1 and #2, Promotional Retail Center, Service Retail Center, TGI Fridays and One Vanderbilt. This note also provides for a one-time loan assumption and release
provisions for individual assets.

We have a line of credit, which is collateralized by Inland Regional Center, that has a total availability of
$5,445,000, monthly interest-only payments, a maturity date of April 15, 2009, and bears variable interest at the Prime Rate (5.00% and 7.25% as of September 30, 2008 and December 31, 2007, respectively). As of September 30,
2008, $5,445,000 was outstanding under the line of credit. We are in the process of obtaining a new $10 million revolving line of credit which will be collateralized by Vanderbilt Plaza and Carnegie Business Center I. The line of credit will have a
one year maturity date, with two one-year extension options, and will bear interest at the floating rate of LIBOR plus 2.75%. The proceeds from the new line of credit will be used to pay off the existing line of credit balance and fund future
working capital needs.



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##### Table of Contents

We are contingently liable for subordinated real estate commissions payable to the General Partner in the aggregate
amount of $643,000 at September 30, 2008, for sales that transpired in previous years. The subordinated real estate commissions are payable only after the limited partners have received distributions equal to their original invested capital
plus a cumulative non-compounded return of 12% per annum on their adjusted invested capital. Since the conditions under which these commissions would be payable are not currently met, the liability has not been recognized in the accompanying
consolidated financial statements; however, the amount will be recorded when and if it becomes payable.

Cash Flows

For the nine months ended September 30, 2008, cash provided by operating activities was $2,968,000, as compared to cash provided by operating activities of
$3,738,000 for the same period in 2007. The change was primarily due to an increase in deferred costs and a decrease in accounts receivable. For the nine months ended September 30, 2008, cash used in investing activities was $2,114,000, as
compared to cash used in investing activities of $4,407,000 for the same period in 2007. The change was primarily due to a decrease in construction spending at North River Place and the maturity of a short-term investment in 2007. For the nine
months ended September 30, 2008, cash provided by financing activities was $1,412,000, as compared to cash used in financing activities of $345,000 for the same period in 2007. The change was primarily due to draws on the line of credit.

Our expectation is that cash and cash equivalents as of September 30, 2008, together with cash from operations, sales and financing, will be adequate
to meet our operating requirements and development plans on a short-term basis and for the reasonably foreseeable future. There can be no assurance that our results of operations will not fluctuate in the future and at times affect our ability to
meet operating requirements.

Operationally, our primary source of funds consists of cash provided by rental activities. Other sources of funds may include
permanent financing, draws on the line of credit, property sales and interest income on money market funds. Cash generated from property sales is generally added to our cash reserves, pending use in the development of properties or distribution to
the partners.

Contractual Obligations

As of
September 30, 2008, our contractual obligations consist of the following (in thousands):



|                             |  |                 |       |             |   |             |  |                  |       |       |   |        |  |   |       
|---------------------------- |  | --------------- | ----- | ----------- | - | ----------- |  | ---------------- | ----- | ----- | - | ------ |  | - | ------
|                             |  | Less than 1year |       | 1 to 3years |   | 3 to 5years |  | More than 5years |       | Total
|Collateralized mortgage loan |  | $               | 93    |             | $ | 792         |  | $                | 883   |       | $ | 21,388 |  | $ | 23,156
|Interest on indebtedness     |  |                 | 315   |             |   | 2,478       |  |                  | 2,387 |       |   | 3,386  |  |   | 8,566 
|Line of credit               |  |                 | 5,445 |             |   |            |  |                  |      |       |   |       |  |   | 5,445 
|                             |  |                 |       |             |   |             |  |                  |       |       |   |        |  |   |       
|Total                        |  | $               | 5,853 |             | $ | 3,270       |  | $                | 3,270 |       | $ | 24,774 |  | $ | 37,167
|                             |  |                 |       |             |   |             |  |                  |       |       |   |        |  |   |       

We are unaware of any demands, commitments, events or uncertainties, which might affect capital resources in any
material respect. In addition, we are not subject to any covenants pursuant to our collateralized debt that would constrain our ability to obtain additional capital.

Critical Accounting Policies

In the preparation of financial statements, we utilize certain critical
accounting policies. There has been no change to our significant accounting policies included in the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2007.

Inflation

Leases at the office properties typically provide
for rent adjustment and pass-through of certain operating expenses during the term of the lease. Substantially all of the leases at the office and retail properties provide for pass-through to tenants of certain operating costs, including real
estate taxes, common area maintenance expenses, and insurance. We anticipate that these provisions may permit us to increase rental rates or other charges to tenants in response to rising prices and, therefore, serve to reduce our exposure to the
adverse effects of inflation.

Forward Looking Statements; Factors That May Affect Operating Results

This Report on Form 10-Q contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements regarding our expectations, hopes, intentions, beliefs and strategies regarding the future. These forward looking statements include statements relating to:



| |  |  | Our expectation of making distributions to our partners;
| | - |  | --------------------------------------------------------



| |  |  | Our belief that cash and cash generated by operations, sales and financing will be sufficient to meet our operating requirements in both the short and the
long-term;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Our expectation that a replacement line of credit in the amount of $10 million will be completed and used to repay the existing line of credit;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our expectation that changes in market interest rates will not have a material impact on the performance or the fair value of our portfolio;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our belief that certain claims and lawsuits which have arisen against us in the normal course of business will not have a material adverse effect on our financial
position, cash flow or results of operations;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our belief that properties are competitive within our market;
| | - |  | -------------------------------------------------------------



| |  |  | Our expectation to achieve certain occupancy levels;
| | - |  | ----------------------------------------------------



| |  |  | Our estimation of market strength;
| | - |  | ----------------------------------



| |  |  | Our knowledge of any material environmental matters or issues relating to the landfill property; and
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Our expectation that lease provisions may permit us to increase rental rates or other charges to tenants in response to rising prices, and therefore serve to reduce
exposure to the adverse effects of inflation.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All forward-looking statements included in this document are based on information
available to us on the date hereof. Because these forward looking statements involve risk and uncertainty, there are important factors that could cause our actual results to differ materially from those stated or implied in the forward-looking
statements. Those important factors include:



| |  |  | prolonged unfavorable general economic conditions and significant volatility in the credit and financial markets could have a negative effect on our financial
condition, results of operations and liquidity;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | market fluctuations in rental rates and occupancy;
| | - |  | --------------------------------------------------



| |  |  | reduced demand for rental space;
| | - |  | --------------------------------



| |  |  | availability and creditworthiness of prospective tenants;
| | - |  | ---------------------------------------------------------



| |  |  | defaults or non-renewal of leases by customers;
| | - |  | -----------------------------------------------



| |  |  | differing interpretations of lease provisions regarding recovery of expenses;
| | - |  | -----------------------------------------------------------------------------



| |  |  | increased operating costs;
| | - |  | --------------------------



| |  |  | changes in interest rates and availability of financing that may render the sale or financing of a property difficult or unattractive;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | failure to obtain necessary outside financing, including, without limitation, the replacement $10 million line of credit financing;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | risks and uncertainties affecting property development and construction (including construction delays, cost overruns, our inability to obtain necessary permits and
public opposition to these activities);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the unpredictability of both the frequency and final outcome of litigation; and
| | - |  | -------------------------------------------------------------------------------



| |  |  | the inability to develop all or any portion of the former landfill site, due to environmental, legal or economic impediments.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------

The forward-looking statements in this Quarterly Report on Form 10-Q are subject to additional risks and uncertainties further discussed under Item 1A. Risk
Factors of our Annual Report on Form 10-K for the year ended December 31, 2007. We assume no obligation to update or supplement any forward looking-statement.

Risks of Litigation

Certain claims and lawsuits have arisen against us in our normal course of business. We believe
that such claims and lawsuits will not have a material adverse effect on our financial position, cash flow or results of operations.



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##### Table of Contents

|Item 3. | Qualitative and Quantitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Interest Rates

We are exposed to changes in interest rates obtainable on our borrowings. Our expectation is that changes in market interest
rates will not have a material impact on the performance or fair value of our portfolio.

For debt obligations, the table below presents principal cash
flows by expected maturity dates of a note payable with a fixed interest rate of 5.46% and the line of credit with a maturity date of April 15, 2009 and variable interest rate of 5.0% as of September 30, 2008.



|                               |  |                        |    |      |   |       |  |      |     |      |   |            |  |       |     |  |   |        |  |   |       
|------------------------------ |  | ---------------------- | -- | ---- | - | ----- |  | ---- | --- | ---- | - | ---------- |  | ----- | --- |  | - | ------ |  | - | ------
|                               |  | Expected Maturity Date |    |     
|                               |  | 2008                   |    | 2009 |   | 2010  |  | 2011 |     | 2012 |   | Thereafter |  | Total
|                               |  | (in thousands)        
|Collateralized fixed rate debt |  | $                      | 93 |      | $ | 385   |  | $    | 407 |      | $ | 429        |  | $     | 454 |  | $ | 21,388 |  | $ | 23,156
|Line of credit                 |  | $                      |   |      | $ | 5,445 |  | $    |    |      | $ |           |  | $     |    |  | $ |       |  | $ | 5,445 



|Item 4. | Controls and Procedures
|------- | -----------------------

The principal executive officer and
principal financial officer of the General Partner have evaluated the disclosure controls and procedures of the Partnership as of the end of the period covered by this quarterly report. As used herein, the term disclosure controls and
procedures has the meaning given to the term by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (Exchange Act), and includes the controls and other procedures of the Partnership that are designed to ensure that
information required to be disclosed by the Partnership in the reports that it files with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. Based upon
his evaluation, the principal executive officer and principal financial officer of the General Partner has concluded that the Partnerships disclosure controls and procedures were effective such that the information required to be disclosed by
the Partnership in this quarterly report is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms applicable to the preparation of this report and is accumulated and communicated to the
General Partners management, including the General Partners principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

There have not been any changes in the Partnerships internal control over financial reporting that occurred during the Partnerships fiscal quarter ended
September 30, 2008 that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting.

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Certain claims and lawsuits have
arisen against the Partnership in its normal course of business. The Partnership believes that such claims and lawsuits will not have a material adverse effect on the Partnerships financial position, cash flow or results of operations.



|Item 1A. | Risk Factors
|-------- | ------------

The risk factors discussed under the
heading Risk Factors and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2007, and any amendments thereto continue to apply to our business. If the current economic crisis intensifies or continues
indefinitely, the disruption to the capital and credit markets may adversely affect our business, results of operations, cash flows and financial condition in a number of ways. These economic conditions could impact:



| |  |  | our access to financing, including our ability to refinance notes payable or lines of credit and the related interest cost on our debt
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to dispose of our assets at favorable prices or at an optimal time as any purchasers of our properties may have difficulty in obtaining attractive
financing at reasonable rates of interest
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to retain tenants and to increase rents
| | - |  | ---------------------------------------------------



| |  |  | our ability to continue to collect rent and reimbursable expenses from our tenants
| | - |  | ----------------------------------------------------------------------------------



| |  |  | the availability and creditworthiness of prospective tenants
| | - |  | ------------------------------------------------------------



| |  |  | our ability to maintain occupancy
| | - |  | ---------------------------------



| |  |  | the amount of time required to release vacant space
| | - |  | ---------------------------------------------------



| |  |  | any decisions to construct additional assets on our remaining land and the timing of that potential construction; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | the ability to maintain current dividend levels to our limited partners.
| | - |  | ------------------------------------------------------------------------



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None.



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##### Table of Contents

|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None.



|Item 5. | Other information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------

(a) Exhibits:



|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31 |  | Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership Pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | 
|32 |  | Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed
filed with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



|                        |  |  |  |                                                         |  |                                                                           
|----------------------- |  |  |  | ------------------------------------------------------- |  | --------------------------------------------------------------------------
|                        |  |  |  | RANCON REALTY FUND IV, a California limited
partnership
|                        |  |  | 
|                        |  |  |  | By:                                                     |  | Rancon Financial Corporation a California corporation, its General Partner
|                        |  |  | 
|Date: November 12, 2008 |  |  |  | By:                                                     |  | /s/ Daniel L. Stephenson                                                  
|                        |  |  |  |                                                         |  | Daniel L. Stephenson, President                                           
|                        |  |  | 
|Date: November 12, 2008 |  |  |  | By:                                                     |  | /s/ Daniel L. Stephenson                                                  
|                        |  |  |  |                                                         |  | Daniel L. Stephenson, General Partner                                     



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##### Table of Contents

EXHIBIT INDEX

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



|           |  |                                                                                                                      
|---------- |  | ---------------------------------------------------------------------------------------------------------------------
|Exhibit 31 |  | Certification of Chief Executive Officer and Chief Financial Officer                                                 
|           | 
|Exhibit 32 |  | Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



21