FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        QUARTERLY OR TRANSITIONAL REPORT
                   (As last amended by 34-32231, eff. 6/3/93.)

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

                                  FORM 10-QSB/A

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


                  For the quarterly period ended March 31, 1996

                                       or
                                        
[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
      EXCHANGE ACT OF 1934


               For the transition period from.........to.........

                         Commission file number 0-14530


                    DAVIDSON INCOME REAL ESTATE, L.P.
       (Exact name of small business issuer as specified in its charter)


         Delaware                                       62-1242144 
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

One Insignia Financial Plaza, P.O. Box 1089
      Greenville, South Carolina                            29602
(Address of principal executive offices)                  (Zip Code)


                    Issuer's telephone number (864) 239-1000


Check whether the issuer (1) 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      .


                       PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS


a)                      DAVIDSON INCOME REAL ESTATE, L.P.

                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                        (in thousands, except unit data)

                                 March 31, 1996


 Assets                                                                   
    Cash and cash equivalents:                                            
       Unrestricted                                               $    701
       Restricted--tenant security deposits                            110

    Accounts receivable                                                 12
    Escrows for taxes                                                  125
    Restricted escrows                                                 253
    Other assets                                                       303
    Investment properties:                                                
      Land                                         $  4,120               
      Buildings and related personal property        19,448               
                                                     23,568               
      Less accumulated depreciation                  (8,611)        14,957
                                                                          
    Investment in Joint Venture                                        333
                                                                          
                                                                  $ 16,794

                                                                         
 Liabilities and Partners' Capital (Deficit)                              
 Liabilities                                                              
    Accounts payable                                              $     83
    Tenant security deposits                                           110
    Accrued taxes                                                      157
    Other liabilities                                                  101
    Mortgage notes payable                                          11,901
                                                                          
 Partners' Capital (Deficit)                                              
    General partners                               $   (636)              
    Limited partners (26,776 units                                        
       issued and outstanding)                        5,078          4,442
                                                                          
                                                                  $ 16,794

           See Accompanying Notes to Consolidated Financial Statements

b)                      DAVIDSON INCOME REAL ESTATE, L.P. 

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                        (in thousands, except unit data)

                                                                            
                                                        Three Months Ended     
                                                             March 31,         
                                                        1996            1995   
 Revenues:                                                                    
     Rental income                                     $ 1,127         $ 1,040
     Other income                                           60              55
       Total revenues                                    1,187           1,095
                                                                              
 Expenses:                                                                    
     Operating                                             323             286
     General and administrative                             57              49
     Property management fees                               58              55
     Maintenance                                           127             113
     Depreciation                                          206             191
     Interest                                              285             287
     Property taxes                                        112             106
       Total expenses                                    1,168           1,087
                                                                              
 Loss on disposal of property                               --              (6)
 Equity in income of joint venture                          14              18
                                                                              
       Net income                                      $    33         $    20

 Net income allocated to general partners (3%)         $     1         $     1
 Net income allocated to limited partners (97%)             32              19
                                                                              
                                                       $    33         $    20
                                                                
 Net income per limited partnership unit               $  1.19         $   .72 

           See Accompanying Notes to Consolidated Financial Statements

c)                      DAVIDSON INCOME REAL ESTATE, L.P.

        CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) 
                                  (Unaudited) 
                        (in thousands, except unit data)
<TABLE>
<CAPTION>                                                                               
                                    Limited                 
                                  Partnership    General      Limited
                                     Units       Partners     Partners         Total  
<S>                                <C>          <C>          <C>             <C>                     
 Original capital contributions     26,776       $     1      $ 26,776        $ 26,777
                                                                                      
 Partners' capital (deficit)                                                          
    at December 31, 1995            26,776       $  (633)        5,182           4,549
                                                                                      
 Distributions paid to partners         --            (4)         (136)           (140)
                                                                                      
 Net income for the three                                                             
    ended March 31, 1996                --             1            32              33
                                                                                      
 Partners' capital (deficit)                                                          
    at March 31, 1996               26,776       $  (636)     $  5,078        $  4,442
<FN>
           See Accompanying Notes to Consolidated Financial Statements
</TABLE>

d)                      DAVIDSON INCOME REAL ESTATE, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>                                        
<CAPTION>                                                                              
                                                              Three Months Ended
                                                                   March 31,        
                                                             1996           1995    
<S>                                                        <C>            <C>
 Cash flows from operating activities:                                            
    Net income                                              $    33        $    20
    Adjustments to reconcile net income to net                                    
     cash provided by operating activities:                                       
       Depreciation                                             206            191
       Amortization of discounts and loan costs                  21             20
       Loss on disposal of property                              --              6
       Equity in income of joint venture                        (14)           (18)
       Change in accounts:                                                        
        Restricted cash                                          (7)            (4)
        Accounts receivable                                      (2)             4
        Escrows for taxes                                       156            242
        Other assets                                             (3)            --
        Accounts payable                                       (120)           (55)
        Tenant security deposit liabilities                       7              3
        Accrued taxes                                          (138)          (197)
        Other liabilities                                       (37)            22
                                                                                  
            Net cash provided by operating activities           102            234
                                                                                  
 Cash flows from investing activities:                                            
    Property improvements and replacements                     (112)           (61)
    Deposits to restricted escrows                               (3)            (3)
    Receipts from restricted escrows                              8             16
    Distributions from joint venture                              7             --
                                                                                  
            Net cash used in investing activities              (100)           (48)
                                                                                  
 Cash flows from financing activities:                                            
    Payments on mortgage notes payable                          (37)           (34)
    Distributions paid to partners                             (140)          (100)
                                                                                  
            Net cash used in financing activities              (177)          (134)
                                                                                  
 Net (decrease) increase in cash and cash equivalents          (175)            52
                                                                                  
 Cash and cash equivalents at beginning of period               876          1,148
 Cash and cash equivalents at end of period                 $   701        $ 1,200
                                                                                  
 Supplemental disclosure of cash flow information:                                
    Cash paid for interest                                  $   264        $   267
<FN>
           See Accompanying Notes to Consolidated Financial Statements
</TABLE>

e)                      DAVIDSON INCOME REAL ESTATE, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE A - BASIS OF PRESENTATION

   The accompanying unaudited financial statements of Davidson Income Real
Estate, L.P. (the "Partnership") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B.  Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.  In the
opinion of the Managing General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included.  Operating results for the three month period ended March 31, 1996,
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1996.  For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-KSB for the year ended December 31, 1995.

   Certain reclassifications have been made to the 1995 information to conform
to the 1996 presentation.


NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES

   The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities.  The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.  Balances and other transactions with
Insignia Financial Group, Inc. and affiliates in 1996 and 1995 are as follows:

                                                                              
                                                      Three Months Ended    
                                                           March 31,        
                                                      1996          1995    
                                                        (in thousands)      
                                                                          
 Property management fees                             $ 58          $ 55  
 Reimbursement for services of affiliates               33            37  


   The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the Managing General Partner.  An affiliate
of the Managing General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy.  The current agent
assumed the financial obligations to the affiliate of the Managing General
Partner, who receives payments on these obligations from the agent.  The amount
of the partnership's insurance premiums accruing to the benefit of the affiliate
of the Managing General Partner by virtue of the agent's obligations is not
significant.

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

    The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
quarters ended March 31, 1996 and 1995:
                                                                              
                                                       Average
                                                      Occupancy
 Property                                         1996         1995
 Northsprings Apartments                                            
     Atlanta, Georgia                               97%          97%
                                                                    
 Lakeside Apartments                                                
     Charlotte, North Carolina                      98%          97%
                                                                   
 Bexley House Apartments                                            
     Columbus, Ohio                                 96%          89%
                                                                    
 Covington Pointe Apartments                                        
     Dallas, Texas                                  96%          88%


    The increase in occupancy at Bexley House is attributed to property
improvements and an increase in services provided to the tenants which has
increased the appeal of the property.  The increase in occupancy at Covington
Pointe is attributed to an increase in services provided to the tenants and a
change in property management personnel.                      

    The Partnership's net income for the three months ended March 31, 1996, was
$33,000 compared to net income of $20,000 for the corresponding period of 1995. 
The increase in net income is primarily attributable to increased apartment
revenues as a result of monthly rental rate increases at all properties and
increases in  occupancy at Bexley House of 7% and Covington Pointe Apartments of
8% and an increase in other income.  Other income has increased as a result of
increased utility collections at Bexley House and legal and lease cancellation
fees at Covington Pointe Apartments due to an increase in tenant turnover. 
Lakeside Apartments also incurred a $6,000 loss on disposal of property due to a
loss on roof replacement in 1995.  There was no corresponding loss on the
disposition of property in 1996.  

    Partially offsetting the increase in net income was an increase in operating
expense of approximately $37,000, maintenance expense of approximately $15,000,
and general and administrative expense of approximately $8,000.  Operating
expense increased due to efforts at Covington Point and Bexley House to increase
occupancies which resulted in increased concessions and rental commissions. 
Increased salaries at Northsprings and Covington also contributed to the
increase in operating expense.  The increase in maintenance expense is
attributed to increased painting and repairs at Northsprings Apartments which
are necessary to complete the remaining renovations to improve the property's
market position.  General and administrative expense increased due to increased
insurance expense as a result of additional insurance coverage.   

    The Partnership owns 17.5% of Sterling Crest Joint Venture.  Equity in the
income of the joint venture decreased approximately $4,000 as a result of a
decrease in net income of Sterling Crest Joint Venture's investment property,
Brighton Crest.  Net income decreased due to an increase in utilities as a
result of the extreme winter and an increase in maintenance expense due to major
landscaping projects for tree removal, trimming and planting for the spring
season.

    As part of the ongoing business plan of the Partnership, the Managing
General Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense.  As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level.  However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.

    The Partnership had unrestricted cash of $701,000 at March 31, 1996, versus 
$1,200,000 at March 31, 1995.  Net cash provided by operating activities
decreased as a result of the increase in cash used for accounts payable due to
the timing of payments to vendors.  Other liabilities also decreased due to a
reduction in prepaid rental income from tenants.  Net cash used in investing
activities increased primarily as a result of an increase in property
improvements and replacements.  Receipts from restricted escrows decreased due
to the depletion of reserves during 1995.  Net cash used in financing activities
increased due to an increase in distributions during 1996. 

    The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership.  Such assets are currently thought
to be sufficient for any near-term needs of the Partnership.  The mortgage
indebtedness of $11,901,000 net of discount, is amortized over varying periods
with required balloon payments ranging from July 1996 to October 2003, at which
time the properties will either be refinanced or sold.  Future cash
distributions will depend on the levels of net cash generated from operations,
capital expenditure requirements, property sales and the availability of cash
reserves.  Distributions to partners during the three months ended March 31,
1996  and 1995, were $140,000 and $100,000, respectively.



                        PART II - OTHER INFORMATION


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           a)  Exhibits:

               Exhibit 27, Financial Data Schedule, is filed as an exhibit to
               this report.

           b)  Reports on Form 8-K:

               None filed during the quarter ended March 31, 1996.




                                   SIGNATURES


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



                                   DAVIDSON INCOME REAL ESTATE, L.P.
            
                                   By: DAVIDSON DIVERSIFIED PROPERTIES, INC.,
                                       as Managing General Partner


                                   By:/s/ Carroll D. Vinson     
                                      Carroll D. Vinson
                                      President


                                   By:/s/ Robert D. Long, Jr.    
                                      Robert D. Long, Jr.        
                                      Vice President/CAO


                                   Date: January 10, 1997