UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   Form 10-QSB

(Mark One)
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

              For the quarterly period ended September 30, 2005


[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT


             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.)

                          55 Beattie Place, PO Box 1089
                        Greenville, South Carolina 29602
                    (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)

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

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

<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS



                        DAVIDSON INCOME REAL ESTATE, L.P.

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

                               September 30, 2005

<TABLE>
<CAPTION>


Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $ 276
   Receivables and deposits                                                     187
   Restricted escrows                                                            75
   Other assets                                                                 288
   Investment properties:
       Land                                                  $ 3,523
       Buildings and related personal property                 21,341
                                                               24,864
       Less accumulated depreciation                          (14,193)       10,671
                                                                           $ 11,497
Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                          $ 60
   Tenant security deposit liabilities                                           70
   Accrued property taxes                                                       278
   Other liabilities                                                            191
   Due to affiliates (Note B)                                                 2,636
   Deficit in joint venture (Note C)                                            917
   Mortgage notes payable                                                    10,418

Partners' Deficit
   General partners                                           $ (864)
   Limited partners (26,776 units issued and
      outstanding)                                             (2,209)       (3,073)
                                                                           $ 11,497

         See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>




                        DAVIDSON INCOME REAL ESTATE, L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (in thousands, except per unit data)
<TABLE>
<CAPTION>

                                         Three Months Ended        Nine Months Ended
                                           September 30,             September 30,
                                         2005          2004         2005        2004

Revenues:
<S>                                      <C>          <C>         <C>         <C>
  Rental income                          $ 813        $ 745       $ 2,442     $ 2,175
  Other income                               74           74          204         205
  Casualty gain (Note D)                     --           --           --         390
     Total revenues                         887          819        2,646       2,770

Expenses:
  Operating                                 507          449        1,408       1,254
  General and administrative                 48           42          143         145
  Depreciation                              281          248          795         744
  Interest                                  178          138          490         422
  Property taxes                             52          112          242         305
     Total expenses                       1,066          989        3,078       2,870

Loss before equity in loss of
  joint venture                            (179)        (170)        (432)       (100)
Equity in loss of joint venture
  (Note C)                                  (26)         (10)         (51)        (26)
Net loss                                   (205)        (180)        (483)       (126)

Net loss allocated to general
  partners (3%)                          $ (6)         $ (6)       $ (14)       $ (4)
Net loss allocated to limited
  partners (97%)                           (199)        (174)        (469)       (122)
                                        $ (205)       $ (180)      $ (483)     $ (126)
Net loss per limited partnership
  unit                                  $ (7.43)     $ (6.50)     $(17.52)    $ (4.56)

         See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>

                        DAVIDSON INCOME REAL ESTATE, L.P.

            CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' 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' deficit at
  December 31, 2004                     26,776      $ (850)    $(1,740)      $(2,590)

Net loss for the nine months
  ended September 30, 2005                  --         (14)        (469)        (483)

Partners' deficit at
  September 30, 2005                    26,776      $ (864)    $(2,209)      $(3,073)

         See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>

                        DAVIDSON INCOME REAL ESTATE, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                 Nine Months Ended
                                                                   September 30,
                                                                   2005      2004
Cash flows from operating activities:
<S>                                                              <C>         <C>
  Net loss                                                       $ (483)     $ (126)
  Adjustments to reconcile net loss to net cash
     provided by operating activities:
     Casualty gain                                                   --         (390)
     Depreciation                                                   795          744
     Amortization of loan costs                                      27           27
     Equity in loss of joint venture                                 51           26
     Change in accounts:
      Receivables and deposits                                      (23)         261
      Other assets                                                  (21)         (74)
      Accounts payable                                              (66)           1
      Tenant security deposit liabilities                            (4)          --
      Accrued property taxes                                        (89)           8
      Other liabilities                                              24           31
      Due to affiliates                                             162            3
       Net cash provided by operating activities                    373          511

Cash flows from investing activities:
  Property improvements and replacements                         (1,222)        (663)
  Net withdrawals from (deposits to) restricted escrows              15          (30)
  Insurance proceeds from casualty                                   --          329
       Net cash used in investing activities                     (1,207)        (364)

Cash flows from financing activities:
  Payments on mortgage notes payable                               (270)        (252)
  Advances from affiliates                                        1,058           --
  Payment on advances from affiliates                                --          (83)
       Net cash provided by (used in) financing activities          788         (335)

Net decrease in cash and cash equivalents                           (46)        (188)
Cash and cash equivalents at beginning of period                    322          585

Cash and cash equivalents at end of period                       $ 276        $ 397

Supplemental disclosure of cash flow information:
  Cash paid for interest                                         $ 362        $ 358

Supplemental disclosure of non-cash flow activity:
  Property improvements and replacements in accounts
    payable                                                       $ 37        $ 110

At December  31, 2004 and 2003,  approximately  $49,000 and $405,000 of property
improvements and replacements were included in accounts payable and are included
in property  improvements  and  replacements for the nine months ended September
30, 2005 and 2004, respectively.

         See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>


                        DAVIDSON INCOME REAL ESTATE, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The accompanying  unaudited consolidated financial statements of Davidson Income
Real Estate,  L.P. (the  "Partnership"  or  "Registrant")  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 Davidson Diversified  Properties,  Inc.
(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 and nine month periods ended September
30, 2005, are not necessarily indicative of the results that may be expected for
the fiscal year ending December 31, 2005. For further information,  refer to the
consolidated   financial  statements  and  footnotes  thereto  included  in  the
Partnership's  Annual  Report on Form 10-KSB for the fiscal year ended  December
31, 2004. The Managing  General Partner is a subsidiary of Apartment  Investment
and  Management  Company  ("AIMCO"),  a publicly  traded real estate  investment
trust.

Note B - Transactions with Affiliated Parties

The Partnership has no employees and depends on the Managing General Partner and
its  affiliates  for  the  management  and  administration  of  all  Partnership
activities.  The Partnership  Agreement  provides for (i) payments to affiliates
for services and (ii)  reimbursement of certain expenses  incurred by affiliates
on behalf of the Partnership.

Affiliates of the Managing General Partner receive 5% of gross receipts from all
of  the  Partnership's   properties  as  compensation  for  providing   property
management  services.  The  Partnership  paid to such  affiliates  approximately
$130,000 and $115,000  for the nine months  ended  September  30, 2005 and 2004,
respectively, which are included in operating expenses.

An  affiliate  of  the  Managing   General   Partner   charged  the  Partnership
reimbursement of accountable  administrative expenses amounting to approximately
$227,000 and $147,000  for the nine months  ended  September  30, 2005 and 2004,
respectively,  which is  included  in general and  administrative  expenses  and
investment  properties.   The  portion  of  these  reimbursements   included  in
investment  properties for the nine months ended September 30, 2005 and 2004 are
fees related to construction management services provided by an affiliate of the
Managing  General Partner of approximately  $137,000 and $55,000,  respectively.
The construction management service fees are calculated based on a percentage of
additions to investment properties.  At September 30, 2005, the Partnership owed
approximately  $109,000  of  accrued  accountable  administrative  expenses  and
related  interest to an  affiliate  of the Managing  General  Partner,  which is
included in due to affiliates on the accompanying consolidated balance sheet.

During the nine months ended  September  30, 2005 the Managing  General  Partner
advanced approximately $1,058,000 to the Partnership for trade payables, capital
expenditures  and to pay real estate taxes at the investment  properties.  There
were no such advances  during the nine months ended  September 30, 2004.  During
the nine months  ended  September  30, 2004,  the  Partnership  repaid  previous
advances of approximately $105,000,  including accrued interest of approximately
$22,000.  There were no such  repayments  during the nine months ended September
30, 2005. At September 30, 2005,  the amount of  outstanding  loans and interest
was  approximately  $2,527,000,  which is included in due to  affiliates  on the
accompanying  consolidated balance sheet. Interest on the advances is charged at
prime plus 2%, or 8.75% at September 30, 2005.  Interest expense on the advances
was  approximately  $95,000 and $51,000 for the nine months ended  September 30,
2005 and 2004, respectively.

The  Partnership  insures its properties up to certain  limits through  coverage
provided by AIMCO which is  generally  self-insured  for a portion of losses and
liabilities  related to workers  compensation,  property  casualty  and  vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance  policies  obtained  by  AIMCO  from  insurers  unaffiliated  with the
Managing  General  Partner.  During the nine months ended September 30, 2005 and
2004,  the  Partnership  was charged by AIMCO and its  affiliates  approximately
$53,000 and $51,000  for  insurance  coverage  and fees  associated  with policy
claims administration.

Note C - Investment in Joint Venture

The  Partnership  owns a 17.5% interest in the Sterling Crest Joint Venture with
Davidson Growth Plus, L.P., an affiliate of the Managing General Partner,  which
owns the remaining 82.5% of the joint venture.

There were no  distributions  received  from the joint  venture  during the nine
months ended September 30, 2005 and 2004. During the nine months ended September
30, 2005 and 2004, the Partnership recognized approximately $51,000 and $26,000,
respectively, of equity in loss of the joint venture. At September 30, 2005, the
Partnership had received  distributions  and recognized  equity in losses of the
joint  venture  in  excess  of  its  general  partnership  interest  and  has an
investment deficit of approximately $917,000.

The following table  represents the net loss of the Sterling Crest Joint Venture
for the nine months ended September 30, 2005 and 2004 (in thousands):

                                                 Nine months Ended September 30,
                                                      2005                2004

     Total revenues                                 $ 1,735            $ 1,705
     Total expenses                                  (2,026)            (1,854)
     Net loss                                       $  (291)           $  (149)

Note D - Casualty Gain

In December 2002, Bexley House Apartments  experienced a fire, causing damage to
32 units.  Reconstruction of the units was completed during the first quarter of
2004.  During the nine months  ended  September  30,  2004,  a casualty  gain of
approximately $390,000 was recorded at Bexley House Apartments. The gain was the
result of the  recognition  of insurance  recoveries of  approximately  $393,000
partially offset by the write off of approximately $3,000 of undepreciated fixed
assets.

<PAGE>

Note E - Contingencies

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition,  during the third quarter of 2001, a complaint  captioned Heller v.
Insignia  Financial  Group (the  "Heller  action")  was filed  against  the same
defendants  that are named in the  Nuanes  action.  On or about  August 6, 2001,
plaintiffs filed a first amended  complaint.  The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial  dissolution.  On January 28, 2002, the trial court granted  defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes  action and the Heller  action.  On June 13, 2003,  the
court granted final approval of the settlement and entered  judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal")  seeking to vacate and/or reverse the order  approving the
settlement and entering judgment  thereto.  On May 4, 2004, the Objector filed a
second appeal  challenging  the court's use of a referee and its order requiring
Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated  the trial  court's  order and  remanded  to the trial court for further
findings  on the basis that the "state of the record is  insufficient  to permit
meaningful  appellate  review".  With regard to the second appeal,  the Court of
Appeals  reversed the order requiring the Objector to pay referee fees. On April
26, 2005,  the Court of Appeals  lifted the stay of a pending  appeal related to
the Heller action and the trial court's order striking the  complaint.  On April
28, 2005, the Objector  filed a Petition for Review with the California  Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings.  On June 10, 2005, the California  Supreme Court
denied  Objector's  Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21,  2005.  The parties  intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's  remand order.  With respect to the related Heller appeal,  on
July 28, 2005,  the Court of Appeals  reversed the trial court's order  striking
the first amended complaint.

On August 18, 2005,  Objector and his counsel filed a motion to  disqualify  the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector  filed a motion
to  intervene  and on or about  October  19,  2005  filed  both a motion to take
discovery  relating to the adequacy of plaintiffs as derivative  representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.

The  Managing  General  Partner  does  not  anticipate  that  any  costs  to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.

AIMCO  Properties  L.P.  and NHP  Management  Company,  both  affiliates  of the
Managing  General  Partner,  are  defendants  in a  lawsuit  alleging  that they
willfully  violated  the Fair Labor  Standards  Act  ("FLSA")  by failing to pay
maintenance  workers  overtime for all hours worked in excess of forty per week.
The  complaint,  filed in the United States  District  Court for the District of
Columbia,  attempts  to bring a  collective  action  under the FLSA and seeks to
certify state subclasses in California,  Maryland, and the District of Columbia.
Specifically,  the  plaintiffs  contend  that  AIMCO  Properties  L.P.  and  NHP
Management Company failed to compensate  maintenance  workers for time that they
were  required  to be  "on-call".  Additionally,  the  complaint  alleges  AIMCO
Properties  L.P. and NHP  Management  Company  failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. In June 2005 the Court conditionally  certified the collective action
on both the on-call and overtime issues,  which allows the plaintiffs to provide
notice of the  collective  action to all  non-exempt  maintenance  workers  from
August 7, 2000 through the present. Those employees will have the opportunity to
opt-in to the collective action,  and AIMCO Properties,  L.P. and NHP Management
Company will have the  opportunity to move to decertify the  collective  action.
Because the court denied  plaintiffs'  motion to certify  state  subclasses,  on
September  26,  2005,  the  plaintiffs  filed  a  class  action  with  the  same
allegations in the Superior Court of California (Contra Costa County).  Although
the outcome of any  litigation is  uncertain,  AIMCO  Properties,  L.P. does not
believe that the ultimate  outcome  will have a material  adverse  effect on its
consolidated  financial  condition  or results  of  operations.  Similarly,  the
Managing  General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.

The  Partnership  is unaware  of any other  pending  or  outstanding  litigation
matters  involving  it or its  investment  properties  that are not of a routine
nature arising in the ordinary course of business.

Environmental

Various  Federal,  state and local laws subject  property owners or operators to
liability for management,  and the costs of removal or  remediation,  of certain
hazardous  substances  present on a property.  Such laws often impose  liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the  hazardous  substances.  The  presence of, or the
failure to manage or remedy properly,  hazardous substances may adversely affect
occupancy at affected  apartment  communities and the ability to sell or finance
affected properties.  In addition to the costs associated with investigation and
remediation  actions  brought by government  agencies,  and  potential  fines or
penalties  imposed by such  agencies in  connection  therewith,  the presence of
hazardous  substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose  liability for the cost of removal,  remediation or disposal of hazardous
substances  through a  licensed  disposal  or  treatment  facility.  Anyone  who
arranges for the disposal or treatment of hazardous  substances  is  potentially
liable  under such laws.  These laws often impose  liability  whether or not the
person arranging for the disposal ever owned or operated the disposal  facility.
In connection  with the ownership,  operation and management of its  properties,
the Partnership  could  potentially be liable for  environmental  liabilities or
costs associated with its properties.

Mold

The Partnership is aware of lawsuits  against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial  monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims  arising from the  presence of mold and for  personal  injury
claims related to mold exposure. Affiliates of the Managing General Partner have
implemented a national  policy and  procedures to prevent or eliminate mold from
its properties  and the Managing  General  Partner  believes that these measures
will  minimize  the  effects  that mold could have on  residents.  To date,  the
Partnership  has not  incurred  any material  costs or  liabilities  relating to
claims of mold exposure or to abate mold  conditions.  Because the law regarding
mold is unsettled and subject to change the Managing General Partner can make no
assurance  that  liabilities  resulting from the presence of or exposure to mold
will  not have a  material  adverse  effect  on the  Partnership's  consolidated
financial condition or results of operations.

SEC Investigation

The  Central  Regional  Office of the  United  States  Securities  and  Exchange
Commission (the "SEC")  continues its formal  investigation  relating to certain
matters.  Although  the staff of the SEC is not limited in the areas that it may
investigate,  AIMCO believes the areas of  investigation  have included  AIMCO's
miscalculated   monthly  net  rental  income  figures  in  third  quarter  2003,
forecasted  guidance,  accounts  payable,  rent  concessions,   vendor  rebates,
capitalization  of payroll and certain other costs, tax credit  transactions and
tender offers for limited  partnership  interests.  AIMCO is cooperating  fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated  financial  condition  or results  of  operations.  Similarly,  the
Managing  General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.

<PAGE>

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

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Partnership's  financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Partnership  files  from  time to time with the  Securities  and
Exchange Commission.

The Partnership's  investment  properties consist of three apartment  complexes.
The following  table sets forth the average  occupancy of the properties for the
nine months ended September 30, 2005 and 2004:

                                                   Average Occupancy
      Property                                      2005       2004

      Lakeside Apartments                           93%        95%
         Charlotte, North Carolina
      Bexley House Apartments                       85%        68%
         Columbus, Ohio (1)
      Covington Pointe Apartments                   94%        84%
         Dallas, Texas (2)

(1)      The Managing  General  Partner  attributes the increase in occupancy at
         Bexley House  Apartments to the completion of 32 units during the first
         quarter of 2004 that were destroyed by a fire in December 2002.

   (2)   The Managing  General  Partner  attributes the increase in occupancy at
         Covington Pointe Apartments to a new pricing  structure,  which is more
         competitive in the local market.

The  Partnership's  financial  results depend upon a number of factors including
the  ability to attract  and  maintain  tenants  at the  investment  properties,
interest  rates on mortgage  loans,  costs  incurred  to operate the  investment
properties,  general  economic  conditions  and weather.  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 expenses. 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,  the Managing  General Partner may use
rental  concessions  and  rental  rate  reductions  to offset  softening  market
conditions, accordingly, there is no guarantee that the Managing General Partner
will be able to  sustain  such a plan.  Further,  a number of  factors  that are
outside the control of the  Partnership  such as the local economic  climate and
weather can adversely or positively affect the Partnership's financial results.

<PAGE>
Results of Operations

For the three and nine months ended  September 30, 2005, the Partnership had net
loss of approximately $205,000 and $483,000, respectively,  compared to net loss
of  approximately  $180,000  and  $126,000  for the three and nine months  ended
September 30, 2004, respectively.  The increase in net loss for the three months
ended  September  30,  2005 is due to an increase  in total  expenses  partially
offset by an increase in total  revenues.  The increase in net loss for the nine
months ended  September  30, 2005 is due to a decrease in total  revenues and an
increase in total expenses.

The increase in total  revenues for the three month period is due to an increase
in rental  income.  The decrease in total  revenues for the nine month period is
due to a casualty gain  recognized in 2004,  partially  offset by an increase in
rental  income.  Rental  income for both periods  increased  due to increases in
occupancy at Covington  Pointe and Bexley House  Apartments,  an increase in the
average rental rates at Covington Pointe and Lakeside  Apartments and a decrease
in bad debt expense at all of the investment  properties  partially  offset by a
decrease  in  occupancy  at  Lakeside  Apartments  and a decrease in the average
rental rate at Bexley House Apartments. Other income remained comparable for the
three and nine month periods ended September 30, 2005.

In December 2002, Bexley House Apartments  experienced a fire, causing damage to
32 units.  Reconstruction of the units was completed during the first quarter of
2004.  During the nine months  ended  September  30,  2004,  a casualty  gain of
approximately $390,000 was recorded at Bexley House Apartments. The gain was the
result of the  recognition  of insurance  recoveries of  approximately  $393,000
partially offset by the write off of approximately $3,000 of undepreciated fixed
assets.

The  increase  in  total  expenses  for  both  periods  is due to  increases  in
operating,  depreciation and interest expenses partially offset by a decrease in
property  tax  expense.  Operating  expense  increased  due  to an  increase  in
advertising,  administrative,  and  maintenance  expenses.  Advertising  expense
increased  due  to  an  increase  in  periodical  advertising  at  Bexley  House
Apartments and an increase in web  advertising at Covington  Pointe  Apartments.
Administrative  expenses increased due to an increase in ad-valorem tax services
at Covington Pointe Apartments. Maintenance expense increased due to an increase
in contractor services at Lakeside and Covington Pointe Apartments. Depreciation
expense  increased  due to an increase in assets placed into service at Lakeside
and Covington  Pointe  Apartments.  Interest  expense  increased due to a higher
variable interest rate at Lakeside Apartments and due to an increase in interest
on advances  from an  affiliate of the Managing  General  Partner.  Property tax
expense  decreased  for both the three and nine months ended  September 30, 2005
primarily  due to the  successful  appeal  of the  assessed  value  of  Lakeside
Apartments for the 2003 and 2004 tax periods.  The Partnership received a refund
of approximately $41,000 for 2003 and 2004 and has based its 2005 accrual on the
adjusted  property  value.  At September  30, 2005,  the $41,000 was included in
receivables  and deposits on the  accompanying  balance sheet and  approximately
$38,000 of this amount was collected by the Partnership in October of 2005.

Included  in general  and  administrative  expense for the three and nine months
ended September 30, 2005 and 2004 are management  reimbursements to the Managing
General  Partner as allowed under the  Partnership  Agreement.  Also included in
general and administrative  expenses are costs associated with the quarterly and
annual  communications  with  investors and  regulatory  agencies and the annual
audit required by the Partnership Agreement.

The  Partnership  owns a 17.5%  interest in Sterling  Crest Joint  Venture  (the
"Joint Venture"). The Partnership recognized equity in loss of the joint venture
of  approximately  $51,000 and $26,000 for the nine months ended  September  30,
2005 and 2004, respectively.

<PAGE>

Liquidity and Capital Resources

At  September  30,  2005,  the  Partnership  had cash and  cash  equivalents  of
approximately $276,000 compared to approximately $397,000 at September 30, 2004.
Cash and cash  equivalents  decreased  approximately  $46,000 since December 31,
2004  due to  approximately  $1,207,000  of cash  used in  investing  activities
partially  offset  by  approximately  $373,000  of cash  provided  by  operating
activities and approximately  $788,000 of cash provided by financing activities.
Cash  used in  investing  activities  consisted  of  property  improvements  and
replacements, partially offset by withdrawals from restricted escrows maintained
by the  mortgage  lender.  Cash  provided by financing  activities  consisted of
advances  received from an affiliate of the Managing  General Partner  partially
offset by payments of principal on the mortgages  encumbering the  Partnership's
investment  properties.  The Partnership invests its working capital reserves in
interest bearing accounts.

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 investment  properties to adequately  maintain the
physical  assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements. The Managing General
Partner  monitors  developments in the area of legal and regulatory  compliance.
For example,  the  Sarbanes-Oxley  Act of 2002  mandates or suggests  additional
compliance  measures  with  regard to  governance,  disclosure,  audit and other
areas.  In light of these changes,  the  Partnership  expects that it will incur
higher expenses related to compliance.  The Partnership  regularly evaluates the
capital improvement needs of the properties.  Capital  improvements  planned for
each of the Partnership's properties are detailed below.

Lakeside Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately   $957,000  of  capital   improvements  at  Lakeside   Apartments,
consisting  primarily of structural  improvements  and upgrades,  floor covering
replacements and plumbing fixture upgrades.  These improvements were funded from
operating  cash flow and advances  from an  affiliate  of the  Managing  General
Partner.  The Partnership  regularly  evaluates the capital improvement needs of
the property.  While the  Partnership  has no material  commitments for property
improvements  and  replacements,   certain  routine  capital   expenditures  are
anticipated  during 2005. Such capital  expenditures will depend on the physical
condition  of the  property as well as  anticipated  cash flow  generated by the
property.

Bexley House Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately  $121,000  of capital  improvements  at Bexley  House  Apartments,
consisting  primarily of structural  upgrades and  appliance and floor  covering
replacements.  These  improvements  were funded from  operating  cash flow.  The
Partnership  regularly  evaluates the capital improvement needs of the property.
While the Partnership has no material commitments for property  improvements and
replacements,  certain routine capital expenditures are anticipated during 2005.
Such capital  expenditures will depend on the physical condition of the property
as well as anticipated cash flow generated by the property.

Covington Pointe Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately  $132,000 of capital  improvements at Covington Pointe Apartments,
consisting  primarily  of parking  lot  resurfacing,  structural  upgrades,  and
appliance and floor covering  replacements.  These improvements were funded from
operating cash flow. The Partnership regularly evaluates the capital improvement
needs of the property.  While the  Partnership  has no material  commitments for
property improvements and replacements, certain routine capital expenditures are
anticipated  during 2005. Such capital  expenditures will depend on the physical
condition  of the  property as well as  anticipated  cash flow  generated by the
property.

Capital expenditures will be incurred only if cash is available from operations,
Partnership  reserves  or  advances  from  affiliates  of the  Managing  General
Partner.   To  the  extent  that  capital   improvements   are  completed,   the
Partnership's  distributable  cash flow,  if any, may be  adversely  affected at
least in the short term.

The  Partnership's  assets are thought to be sufficient for any near-term  needs
(exclusive  of  capital   improvements)   of  the   Partnership.   The  mortgage
indebtedness    encumbering   the   Partnership's   investment   properties   of
approximately  $10,418,000  is  amortized  over  varying  periods,  with balloon
payments  of  approximately  $4,416,000  due in July 2010 for  Covington  Pointe
Apartments  and   approximately   $2,599,000  in  September  2007  for  Lakeside
Apartments.  The Managing  General Partner has the option to extend the maturity
of the mortgage  encumbering  Lakeside  Apartments for an additional five years.
The  Managing  General  Partner  will  attempt  to  refinance  and/or  sell  the
properties prior to such maturity dates. If the properties  cannot be refinanced
or sold for a sufficient amount, the Partnership may risk losing such properties
through foreclosure.

No cash  distributions were made during the nine months ended September 30, 2005
and 2004.  Future  cash  distributions  will  depend  on the  levels of net cash
generated from  operations,  and the timing of debt  maturities,  property sales
and/or  refinancings.  The  Partnership's  cash  available for  distribution  is
reviewed  on a monthly  basis.  In light of the  significant  amounts due to the
Managing  General Partner at September 30, 2005, it is not anticipated  that the
Partnership will make any distributions in the foreseeable future.

Other

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates owned 13,131.50 limited partnership units
(the "Units") in the Partnership representing 49.04% of the outstanding Units at
September  30,  2005. A number of these Units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will acquire  additional  Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private  purchases or tender offers.  Pursuant to the Partnership
Agreement,  unitholders  holding a majority  of the Units are  entitled  to take
action with  respect to a variety of matters that  include,  but are not limited
to,  voting on certain  amendments  to the  Partnership  Agreement and voting to
remove the Managing General  Partner.  As a result of its ownership of 49.04% of
the outstanding  Units,  AIMCO and its affiliates are in a position to influence
all voting  decisions  with  respect to the  Partnership.  Although the Managing
General  Partner  owes  fiduciary   duties  to  the  limited   partners  of  the
Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as
its sole stockholder.  As a result,  the duties of the Managing General Partner,
as managing  general  partner,  to the Partnership and its limited  partners may
come into conflict with the duties of the Managing  General  Partner to AIMCO as
it sole stockholder.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting
principles   generally  accepted  in  the  United  States,   which  require  the
Partnership to make estimates and assumptions.  The Partnership believes that of
its significant  accounting policies,  the following may involve a higher degree
of judgment and complexity.

<PAGE>

Impairment of Long-Lived Assets

Investment  properties  are  recorded at cost,  less  accumulated  depreciation,
unless  considered  impaired.  If  events  or  circumstances  indicate  that the
carrying  amount of a property may be  impaired,  the  Partnership  will make an
assessment of its  recoverability  by estimating  the  undiscounted  future cash
flows,  excluding  interest  charges,  of the property.  If the carrying  amount
exceeds the aggregate  future cash flows,  the  Partnership  would  recognize an
impairment  loss to the extent the carrying amount exceeds the fair value of the
property.

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's investment properties.  These factors include, but are not limited
to,  changes  in the  national,  regional  and  local  economic  climate;  local
conditions,  such as an oversupply of multifamily  properties;  competition from
other available  multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership will offer rental concessions during particularly slow months or
in response  to heavy  competition  from other  similar  complexes  in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line  basis over the term of the lease.  The Partnership  evaluates all
accounts  receivable  from  residents and  establishes  an allowance,  after the
application of security deposits,  for accounts greater than 30 days past due on
current tenants and all receivables due from former tenants.

ITEM 3.     CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the Managing  General  Partner,  who are the equivalent of the  Partnership's
principal executive officer and principal financial officer,  respectively,  has
evaluated  the  effectiveness  of  the  Partnership's  disclosure  controls  and
procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report.  Based on such  evaluation,  the principal
executive  officer  and  principal  financial  officer of the  Managing  General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal  financial officer,  respectively,  have concluded that, as of the
end of such period,  the  Partnership's  disclosure  controls and procedures are
effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fiscal quarter to which this report relates that have  materially  affected,  or
are reasonably likely to materially affect,  the Partnership's  internal control
over financial reporting.

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition,  during the third quarter of 2001, a complaint  captioned Heller v.
Insignia  Financial  Group (the  "Heller  action")  was filed  against  the same
defendants  that are named in the  Nuanes  action.  On or about  August 6, 2001,
plaintiffs filed a first amended  complaint.  The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial  dissolution.  On January 28, 2002, the trial court granted  defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes  action and the Heller  action.  On June 13, 2003,  the
court granted final approval of the settlement and entered  judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal")  seeking to vacate and/or reverse the order  approving the
settlement and entering judgment  thereto.  On May 4, 2004, the Objector filed a
second appeal  challenging  the court's use of a referee and its order requiring
Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated  the trial  court's  order and  remanded  to the trial court for further
findings  on the basis that the "state of the record is  insufficient  to permit
meaningful  appellate  review".  With regard to the second appeal,  the Court of
Appeals  reversed the order requiring the Objector to pay referee fees. On April
26, 2005,  the Court of Appeals  lifted the stay of a pending  appeal related to
the Heller action and the trial court's order striking the  complaint.  On April
28, 2005, the Objector  filed a Petition for Review with the California  Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings.  On June 10, 2005, the California  Supreme Court
denied  Objector's  Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21,  2005.  The parties  intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's  remand order.  With respect to the related Heller appeal,  on
July 28, 2005, the Court of Appeal reversed the trial court's order striking the
first amended complaint.

On August 18, 2005,  Objector and his counsel filed a motion to  disqualify  the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector  filed a motion
to  intervene  and on or about  October  19,  2005  filed  both a motion to take
discovery  relating to the adequacy of plaintiffs as derivative  representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.

The  Managing  General  Partner  does  not  anticipate  that  any  costs  to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.

AIMCO  Properties  L.P.  and NHP  Management  Company,  both  affiliates  of the
Managing  General  Partner,  are  defendants  in a  lawsuit  alleging  that they
willfully  violated  the Fair Labor  Standards  Act  ("FLSA")  by failing to pay
maintenance  workers  overtime for all hours worked in excess of forty per week.
The  complaint,  filed in the United States  District  Court for the District of
Columbia,  attempts  to bring a  collective  action  under the FLSA and seeks to
certify state subclasses in California,  Maryland, and the District of Columbia.
Specifically,  the  plaintiffs  contend  that  AIMCO  Properties  L.P.  and  NHP
Management Company failed to compensate  maintenance  workers for time that they
were  required  to be  "on-call".  Additionally,  the  complaint  alleges  AIMCO
Properties  L.P. and NHP  Management  Company  failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. In June 2005 the Court conditionally  certified the collective action
on both the on-call and overtime issues,  which allows the plaintiffs to provide
notice of the  collective  action to all  non-exempt  maintenance  workers  from
August 7, 2000 through the present. Those employees will have the opportunity to
opt-in to the collective action,  and AIMCO Properties,  L.P. and NHP Management
Company will have the  opportunity to move to decertify the  collective  action.
Because the court denied  plaintiffs'  motion to certify  state  subclasses,  on
September  26,  2005,  the  plaintiffs  filed  a  class  action  with  the  same
allegations in the Superior Court of California (Contra Costa County).  Although
the outcome of any  litigation is  uncertain,  AIMCO  Properties,  L.P. does not
believe that the ultimate  outcome  will have a material  adverse  effect on its
consolidated  financial  condition  or results  of  operations.  Similarly,  the
Managing  General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.

ITEM 5.     OTHER INFORMATION

            None.

ITEM 6.     EXHIBITS

            See Exhibit Index.


<PAGE>



                                   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.
                                          Managing General Partner


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President


                                    By:   /s/Stephen B. Waters
                                           Stephen B. Waters
                                           Vice President


                                    Date: November 14, 2005


<PAGE>


                        DAVIDSON INCOME REAL ESTATE, L.P.
                                  EXHIBIT INDEX


Exhibit

3                 Agreement of Limited  Partnership is incorporated by reference
                  to Exhibit A to the  Prospectus of the  Registrant  dated July
                  26, 1985 as filed with the Commission  pursuant to Rule 424(b)
                  under the Act.

3A                Amendment to  Partnership  Agreement  dated October 1, 1985 is
                  incorporated  by reference  to Exhibit 3A to the  Registrant's
                  Annual Report on Form 10-K for the fiscal year ended  December
                  31, 1987.

4                 Certificate  of Limited  Partnership  dated  April 29, 1985 is
                  incorporated  by  reference  to Exhibit 4 to the  Registrant's
                  Registration Statement on Form S-11 dated May 7, 1985.

4A                Certificate   of   Amendment  to   Certificate   of  Limited
                  Partnership   dated  July  16,  1985  is   incorporated   by
                  reference to Exhibit 4B in Amendment  No. 1 to  Registration
                  Statement No. 2-97539, dated July 24, 1985.

10C               Acquisition  and Disposition  Services  Agreement dated July
                  1, 1985 between the Registrant and Criswell  Freeman Company
                  is  incorporated  by  reference  to Exhibit 10D in Amendment
                  No. 1 to  Registration  Statement No. 2-97539 dated July 24,
                  1985.

10H               Purchase Agreement for Lakeside Apartments dated April 4, 1986
                  between Lakeside  Apartments Venture, a North Carolina general
                  partnership   and  Tennessee   Trust   Company,   a  Tennessee
                  corporation,  is incorporated by reference to Exhibit 10(a) to
                  the  Registrant's  Current  Report  on Form 8-K  dated May 20,
                  1986.

10L               Contract  for Sale of Real  Estate for The Bexley  House dated
                  July 16, 1986 between Bexley House,  Limited,  an Ohio limited
                  partnership  and Tennessee  Trust Company is  incorporated  by
                  reference to Exhibit 10(a) to the Registrant's  Current Report
                  on Form 8-K dated September 30, 1986.

10M               Reinstatement  and  Amendment  of Contract  for Sale of Real
                  Estate for The Bexley House dated  September 4, 1986 between
                  Bexley  House,  Limited,  an Ohio  limited  partnership  and
                  Tennessee  Trust  Company,  a  Tennessee   corporation,   is
                  incorporated   by   reference   to  Exhibit   10(b)  to  the
                  Registrant's  Current Report on Form 8-K dated September 30,
                  1986.

10N               Amendment to Reinstated  and Amended for Sale of Real Estate
                  for The  Bexley  House  dated  September  19,  1986  between
                  Bexley  House,  Limited,  an Ohio  limited  partnership  and
                  Tennessee  Trust  Company,  a  Tennessee   corporation,   is
                  incorporated   by   reference   to  Exhibit   10(c)  to  the
                  Registrant's  Current Report on Form 8-K dated September 30,
                  1986.

10O               Assignment  of Contract for Sale of Real Estate for The Bexley
                  House dated September 30, 1986 between Tennessee Trust Company
                  and the  Registrant  is  incorporated  by reference to Exhibit
                  10(d) to the  Registrant's  Current  Report  on Form 8-K dated
                  September 30, 1986.

10P               Limited  Warranty Deed dated September 28, 1986 between Bexley
                  House, Ltd., an Ohio limited partnership and the Registrant is
                  incorporated by reference to Exhibit 10(e) to the Registrant's
                  Current Report on Form 8-K dated September 30, 1986.

10Q               Contract  for  Sale  of  Real  Estate  for  Covington   Pointe
                  Apartments dated January 20, 1987 between F.G.M.C.  Investment
                  Corp.,  a  Texas  corporation   Tennessee  Trust  Company,   a
                  Tennessee corporation, is incorporated by reference to Exhibit
                  10(a) to the  Registrant's  Current  Report  on Form 8-K dated
                  March 10, 1987.

10R               Amendment   to  Contract  for  Purchase  of  Real  Estate  for
                  Covington  Pointe  Apartments  dated  January 23, 1987 between
                  F.G.M.C. Investment Corp., a Texas corporation Tennessee Trust
                  Company, a Tennessee corporation, is incorporated by reference
                  to Exhibit 10(b) to the  Registrant's  Current  Report on Form
                  8-K dated March 10, 1987.

10S               Assignment  of  Contract  for  Purchase  of  Real  Estate  for
                  Covington  Pointe  Apartments  dated  March  2,  1987  between
                  Tennessee  Trust Company and the Registrant is incorporated by
                  reference to Exhibit 10(c) to the Registrant's  Current Report
                  on Form 8-K dated March 10, 1987.

10T               Contract  for  Purchase  of  Real  Estate  for  Phase  I  of
                  Sterling  Crest  Apartments  dated  March 10,  1987  between
                  Sterling  Crest  Development   Partners,   Ltd.,  a  Georgia
                  limited   partnership,   and  Tennessee  Trust  Company,   a
                  Tennessee  corporation,  is  incorporated  by  reference  to
                  Exhibit  10(d) to the  Registrant's  Current  Report on Form
                  8-K dated March 10, 1987.

10Y               Sterling  Crest Joint  Venture  Agreement  dated June 29, 1987
                  between the Registrant and Freeman Georgia  Ventures,  Inc. is
                  incorporated by reference to Exhibit 10(b) to the Registrant's
                  Current Report on Form 8-K dated June 30, 1987.

10Z               Assignment of Contract for Purchase of Real Estate for Phase I
                  of  Sterling   Crest   Apartments   dated  June  29,  1987  is
                  incorporated by reference to Exhibit 10(c) to the Registrant's
                  Current Report on Form 8-K dated June 30, 1987.

10AA              Warranty  Deed  dated June 30,  1987  between  Sterling  Crest
                  Development  Partners,  Ltd. and Sterling Crest Joint Venture,
                  is   incorporated   by  reference  to  Exhibit  10(d)  to  the
                  Registrant's Current Report on Form 8-K dated June 30, 1987.


10DD              Contract  for Purchase of Real Estate for Phase II of Sterling
                  Crest  Apartments  dated March 10, 1987 between Sterling Crest
                  Development  Partners,  Ltd. and  Tennessee  Trust  Company is
                  incorporated by reference to Exhibit 10(a) to the Registrant's
                  Report on Form 8-K dated December 29, 1987.

10FF              Assignment  of  Contract  for  Purchase  of  Real  Estate  and
                  Tri-Party  Agreement dated November 4, 1987 between  Tennessee
                  Trust  Company and Sterling  Crest Joint  Venture  relating to
                  Sterling Crest  Apartments,  is  incorporated  by reference to
                  Exhibit  10(c) to the  Registrant's  Report  on Form 8-K dated
                  December 29, 1987.

10GG              Amended and  Restated  Sterling  Crest Joint  Venture  Joint
                  Venture  Agreement dated June 29, 1987 among the Registrant,
                  Freeman  Georgia  Ventures,  Inc.,  and Freeman Growth Plus,
                  L.P., is  incorporated  by reference to Exhibit 10(d) to the
                  Registrant's Report on Form 8-K dated December 29, 1987.


10RR              Multifamily  Note dated December 15, 2000,  between Davidson
                  Income Real  Estate,  L.P., a Delaware  limited  partnership
                  and Reilly  Mortgage  Group,  Inc.,  a District  of Columbia
                  corporation,    related   to   Bexley   House    Apartments,
                  incorporated  by  reference  to Form  10-KSB  for the fiscal
                  year ended December 31, 2000.

10TT              Contracts  related to refinancing of debt of Covington  Pointe
                  Apartments:

                  (a)   Multifamily  Note  dated  June 26,  2003  between  AIMCO
                        Covington Pointe,  L.P., a Delaware limited partnership,
                        and Keycorp Real Estate Capital  Markets,  Inc., an Ohio
                        corporation, incorporated by reference to Form 8-K dated
                        June 26, 2003.

                  (b)   Multifamily Deed of Trust, Assignment of Rents, Security
                        Agreement and Fixture Filing dated June 26, 2003 between
                        AIMCO  Covington   Pointe,   L.P.,  a  Delaware  limited
                        partnership,  and Keycorp Real Estate  Capital  Markets,
                        Inc., an Ohio corporation,  incorporated by reference to
                        Form 8-K dated June 26, 2003.

                  (c)   Replacement  Reserve and Security  Agreement  dated June
                        26,  2003  between  AIMCO  Covington  Pointe,   L.P.,  a
                        Delaware  limited  partnership,  and Keycorp Real Estate
                        Capital Markets, Inc., an Ohio corporation, incorporated
                        by reference to Form 8-K dated June 26, 2003.

10UU              Contracts   related  to   refinancing   of  debt  of  Lakeside
                  Apartments:

                  (a)   Multifamily Note dated November 3, 2003 between Davidson
                        Income   Real   Estate,   L.P.,   a   Delaware   limited
                        partnership, and GMAC Commercial Mortgage Corporation, a
                        California  corporation,  incorporated  by  reference to
                        Form 10 QSB for the quarter ended September 30, 2003.

                  (b)   Guaranty  dated  November  3, 2003 by AIMCO  Properties,
                        L.P., a Delaware limited partnership, for the benefit of
                        GMAC  Commercial  Mortgage  Corporation,   a  California
                        corporation,  incorporated  by  reference to Form 10 QSB
                        for the quarter ended September 30, 2003.

                  (c)   Multifamily  Deed of  Trust,  Assignment  of  Rents  and
                        Security   Agreement  dated  November  3,  2003  between
                        Davidson Income Real Estates,  L.P., a Delaware  limited
                        partnership, and GMAC Commercial Mortgage Corporation, a
                        California  corporation,  incorporated  by  reference to
                        Form 10 QSB for the quarter ended September 30, 2003.

                  (d)   Replacement   Reserve  and  Security   Agreement   dated
                        November 3, 2003 between  Davidson  Income Real Estates,
                        L.P.,   a  Delaware   limited   partnership,   and  GMAC
                        Commercial    Mortgage    Corporation,    a   California
                        corporation,  incorporated  by  reference to Form 10-QSB
                        for the quarter ended September 30, 2003.

31.1              Certification  of  equivalent  of  Chief  Executive  Officer
                  pursuant     to     Securities     Exchange     Act    Rules
                  13a-14(a)/15d-14(a),  as Adopted  Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.

31.2              Certification  of  equivalent  of  Chief  Financial  Officer
                  pursuant     to     Securities     Exchange     Act    Rules
                  13a-14(a)/15d-14(a),  as Adopted  Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.

32.1              Certification  of  equivalent of Chief  Executive  Officer and
                  Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
                  Adopted Pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                  2002.

99A               Agreement  of  Limited   Partnership  for  Davidson  IRE  GP
                  Limited    Partnership    between    Davidson    Diversified
                  Properties,  Inc.  and  Davidson  Income Real  Estate,  L.P.
                  entered  into  on  September  15,  1993 is  incorporated  by
                  reference  to  Exhibit  99A  to the  Registrant's  Quarterly
                  Report on Form 10-QSB for the quarter  ended  September  30,
                  1993.

99B               Agreement of Limited  Partnership for Davidson IRE Associates,
                  L.P. between Davidson IRE GP Limited  Partnership and Davidson
                  Income Real  Estate,  L.P. is  incorporated  by  reference  to
                  Exhibit  99B to the  Registrant's  Quarterly  Report  on  Form
                  10-QSB for the quarter ended September 30, 1993.

99C               Agreement  of  Limited  Partnership  for  Bexley  House L.P.
                  between Davidson Income GP Limited  Partnership and Davidson
                  Income Real  Estate,  L.P.  entered into on October 13, 1993
                  is   incorporated   by  reference  to  Exhibit  99C  to  the
                  Registrant's  Annual  Report on Form  10-KSB  for the fiscal
                  year ended December 31, 1992.



<PAGE>


Exhibit 31.1

                                  CERTIFICATION


I, Martha L. Long, certify that:


1.    I have reviewed this  quarterly  report on Form 10-QSB of Davidson  Income
      Real Estate, L.P.;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;

4.    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            small business issuer, including its consolidated  subsidiaries,  is
            made  known to us by  others  within  those  entities,  particularly
            during the period in which this report is being prepared;

      (b)   Evaluated  the   effectiveness   of  the  small  business   issuer's
            disclosure  controls and procedures and presented in this report our
            conclusions about the  effectiveness of the disclosure  controls and
            procedures, as of the end of the period covered by this report based
            on such evaluation; and

      (c)   Disclosed in this report any change in the small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely  affect the small business  issuer's
            ability  to  record,   process,   summarize  and  report   financial
            information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees who have a significant  role in the small  business
            issuer's internal control over financial reporting.

Date: November 14, 2005
                                    /s/Martha L. Long
                                    Martha L. Long
                                    Senior Vice President of Davidson
                                    Diversified Properties, Inc., equivalent
                                    of the chief executive officer of the
                                   Partnership


<PAGE>


Exhibit 31.2

                                  CERTIFICATION


I, Stephen B. Waters, certify that:


1.    I have reviewed this  quarterly  report on Form 10-QSB of Davidson  Income
      Real Estate, L.P.;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;

4.    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            small business issuer, including its consolidated  subsidiaries,  is
            made  known to us by  others  within  those  entities,  particularly
            during the period in which this report is being prepared;

      (b)   Evaluated  the   effectiveness   of  the  small  business   issuer's
            disclosure  controls and procedures and presented in this report our
            conclusions about the  effectiveness of the disclosure  controls and
            procedures, as of the end of the period covered by this report based
            on such evaluation; and

      (c)   Disclosed in this report any change in the small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely  affect the small business  issuer's
            ability  to  record,   process,   summarize  and  report   financial
            information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees who have a significant  role in the small  business
            issuer's internal control over financial reporting.

Date: November 14, 2005
                                    /s/Stephen B. Waters
                                    Stephen B. Waters
                                    Vice President of Davidson Diversified
                                    Properties, Inc., equivalent of the chief
                                    financial officer of the Partnership


<PAGE>



Exhibit 32.1


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002



In connection  with the Quarterly  Report on Form 10-QSB of Davidson Income Real
Estate, L.P. (the  "Partnership"),  for the quarterly period ended September 30,
2005 as filed with the  Securities  and Exchange  Commission  on the date hereof
(the "Report"), Martha L. Long, as the equivalent of the chief executive officer
of the  Partnership,  and  Stephen B.  Waters,  as the  equivalent  of the chief
financial  officer of the  Partnership,  each hereby  certifies,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/Martha L. Long
                                    Name:  Martha L. Long
                                    Date:  November 14, 2005


                                           /s/Stephen B. Waters
                                    Name:  Stephen B. Waters
                                    Date:  November 14, 2005


This  certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.