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 June 30, 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)

                                  June 30, 1996

 Assets                                                                    
    Cash and cash equivalents:                                             
       Unrestricted                                                 $   620
       Restricted--tenant security deposits                             115
    Accounts receivable                                                  10
    Escrows for taxes                                                   183
    Restricted escrows                                                  217
    Other assets                                                        342
    Investment properties:                                                 
       Land                                          $ 4,120               
       Buildings and related personal property        19,583               
                                                      23,703               
       Less accumulated depreciation                  (8,822)        14,881
                                                                         
    Investment in Joint Venture                                         352
                                                                           
                                                                    $16,720

 Liabilities and Partners' Capital (Deficit)                               
 Liabilities                                                               
    Accounts payable                                                $    46
    Tenant security deposits                                            114
    Accrued taxes                                                       226
    Other liabilities                                                   145
    Mortgage notes payable                                           11,871
                                                                           
 Partners' Capital (Deficit)                                               
    General partners                                 $  (640)              
    Limited partners (26,776 units                                         
       issued and outstanding)                         4,958          4,318
                                                                           
                                                                    $16,720

           See Accompanying Notes to Consolidated Financial Statements

b)                     DAVIDSON INCOME REAL ESTATE, L.P. 

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (in thousands, except per unit data)
<TABLE>                                                                              
<CAPTION>                              
                                     Three Months Ended            Six Months Ended     
                                          June 30,                     June 30,
                                      1996         1995           1996          1995    
<S>                                 <C>          <C>            <C>           <C>
 Revenues:                                                                            
    Rental income                    $ 1,114      $ 1,053        $ 2,241       $ 2,093
    Other income                          62           55            122           110
       Total revenues                  1,176        1,108          2,363         2,203
 Expenses:                                                                            
    Operating                            380          372            761           712
    General and administrative            55           66            112           115
    Maintenance                          137          117            264           236
    Depreciation                         211          193            417           384
    Interest                             284          286            569           573
    Property taxes                       113          106            225           213
       Total expenses                  1,180        1,140          2,348         2,233

 Equity in income of                                                                  
    joint venture                         20           14             34            32
                                                                                    
    Net income (loss)                $    16      $   (18)       $    49       $     2
                                                                                      
 Net income (loss) allocated                                                          
    to general partners (3%)         $    --      $    (1)       $     1       $    --
 Net income (loss) allocated                                                          
    to limited partners (97%)             16          (17)            48             2
                                     $    16      $   (18)       $    49       $     2
                                                                          
 Net income (loss) per limited                                            
    partnership unit                 $   .59      $  (.65)       $  1.78       $   .07  
<FN>
           See Accompanying Notes to Consolidated Financial Statements
</TABLE>

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                       (8)         (272)           (280)
                                                                                      
 Net income for the six months                                                        
    ended June 30, 1996                                1            48              49
                                                                                      
 Partners' capital (deficit)                                                          
    at June 30, 1996                 26,776      $  (640)     $  4,958        $  4,318
<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>
                                                                   Six Months Ended
                                                                       June 30,      
                                                                   1996         1995    
<S>                                                             <C>          <C>
 Cash flows from operating activities:                                               
    Net income                                                   $    49      $     2
    Adjustments to reconcile net income to net                                       
     cash provided by operating activities:                                          
      Depreciation                                                   417          384
      Amortization of discounts and loan costs                        41           39
      Equity in income of joint venture                              (34)         (32)
    Change in accounts:                                                              
      Restricted cash                                                (12)          (9)
      Accounts receivable                                             --            1
      Escrows for taxes                                               98          174
      Other assets                                                   (44)           6
      Accounts payable                                              (157)         (62)
      Tenant security deposit liabilities                             11         (134)
      Accrued taxes                                                  (68)           7
      Other liabilities                                                8          (61)
                                                                                     
          Net cash provided by operating activities                  309          315
                                                                                     
 Cash flows from investing activities:                                               
    Property improvements and replacements                          (246)        (107)
    Deposits to restricted escrows                                    (5)          (7)
    Receipts from restricted escrows                                  47           27
    Distributions from joint venture                                   7          158
                                                                                     
          Net cash used in (provided by) investing activities       (197)          71
                                                                                     
 Cash flows from financing activities:                                               
    Payments on mortgage notes payable                               (72)         (69)
    Distributions paid to partners                                  (280)        (200)
    Additional loan costs                                            (16)          --
                                                                                     
          Net cash used in financing activities                     (368)        (269)
                                                                                     
 Net (decrease) increase in cash and cash equivalents               (256)         117
                                                                                     
 Cash and cash equivalents at beginning of period                    876        1,147
 Cash and cash equivalents at end of period                      $   620      $ 1,264
                                                                                     
 Supplemental disclosure of cash flow information:                                   
    Cash paid for interest                                       $   494      $   534
<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
accepted accounting principles for interim financial information and with the
included.  Operating results for the six month period ended June 30, 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:

                                                                              
                                                         Six Months Ended   
                                                              June 30,      
                                                       1996           1995  
                                                           (in thousands)      
                                                                          
 Property management fees                              $116           $109
 Reimbursement for services of affiliates                67             81


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.


NOTE C - SUBSEQUENT EVENT

Lakeside Apartments' mortgage indebtedness of approximately $3,812,000 matured
July 1, 1996.  The principal and accrued interest of approximately $3,846,000
was refinanced through a temporary bridge loan on July 1, 1996.  The Partnership
negotiated the temporary bridge loan in the amount of approximately $4,100,000
with Lehman Brothers Holding Inc., which matures on September 1, 1996, with a
possible extension to October 1, 1996.  The loan has a floating interest rate
with a rate of 8% at July 1, 1996.  The first interest only payment is due
August 1, 1996.


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
six months ended June 30, 1996 and 1995:
                                                                              
                                                       Average
                                                      Occupancy     
 Property                                         1996         1995

 Northsprings Apartments                            
     Atlanta, Georgia                              97%         96%
                                                    
 Lakeside Apartments                                
     Charlotte, North Carolina                     97%         97%
                                                    
 Bexley House Apartments                            
     Columbus, Ohio                                96%         90%
                                                    
 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.  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 six months ended June 30, 1996, was
approximately $49,000, with the second quarter having income of approximately
$16,000.  The Partnership reported net income of approximately $2,000 and a loss
of approximately $18,000 for the corresponding periods in 1995.  The increase in
net income is primarily attributable to increased rental income as a result of
monthly rental rate increases at all properties and increases in occupancy at
Bexley House of 6%, Covington Pointe of 8% and North Springs Apartments of 1% as
discussed in the previous paragraph.  Other income has also increased as a
result of increased utility collections at Bexley House and increased legal and
lease cancellation fees at Covington Pointe Apartments due to an increase in
tenant turnover.  Partially offsetting the increase in net income was an
increase in maintenance expense of approximately $20,000 and $28,000 for the
three and six months ended June 30, 1996, which was performed to increase
occupancy at the Partnership's investment properties.

The Partnership owns 17.5% of Sterling Crest Joint Venture.  Equity in the
income of the joint venture increased approximately $6,000 and $2,000 for the
three and six months ended June 30, 1996, as a result of an increase in the net
income of Sterling Crest Joint Venture's investment property, Brighton Crest. 
The increase in net income was due to an increase in rental rates which was
partially offset by an increase in operating expense.  Operating expense
increased due to advertising costs associated with the efforts to increase
occupancy.  

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 $620,000 at June 30, 1996, versus
$1,264,000 at June 30, 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.  Also, other liabilities increased due to an
increase in prepaid rents which resulted in a source of cash in 1996.  Net cash
used in investing activities increased primarily as a result of an increase in
property improvements and replacements and a decrease in distributions from the
joint venture.  Offsetting these changes, net receipts from restricted escrows
increased in 1996 due to property improvements and replacements at North
Springs.  Net cash used in financing activities increased due to an increase in
distributions during 1996.  The Partnership also incurred loan costs due to the
refinancing of Lakeside Apartment's mortgage in July. 

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 $11,871,000, 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.  Lakeside Apartments'
mortgage indebtedness of approximately $3,812,000 matured July 1, 1996.  The
principal and accrued interest of approximately $3,846,000 was refinanced
through a temporary bridge loan on July 1, 1996.  The Partnership negotiated the
temporary bridge loan in the amount of approximately $4,100,000 with Lehman
Brothers Holding Inc., which matures on September 1, 1996, with a possible
extension to October 1, 1996.  The loan has a floating interest rate with a rate
of 8% at July 1, 1996.  The first interest only payment is due August 1, 1996. 
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 1996 and 1995
were $280,000 and $200,000, 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 June 30, 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