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


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


For the quarterly period ended     March 31, 2000
                                   --------------

Commission file number                0-23766
                                   --------------


                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP
   --------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)



             Maryland                                    52-1388957
------------------------------------              ------------------------
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                    Identification No.)



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



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


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

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


     Not applicable                            Not applicable
--------------------------         ---------------------------------------
        (Class)                       (Outstanding at March 31, 2000)
<PAGE>
                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 2000



                                                                 Page
                                                                 ----

PART I.   Financial Information

Item 1.   Financial Statements

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

          Consolidated Statements of Operations and Accumulated
            Losses - for the three months ended March 31, 2000
            and 1999  . . . . . . . . . . . . . . . . . . . .         2

          Consolidated Statements of Cash Flows - for the
            three months ended March 31, 2000 and 1999  . . .         3

          Notes to Consolidated Financial Statements -
            March 31, 2000 and 1999 . . . . . . . . . . . . .         4

Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations . . . . . . .         10

PART II.  Other Information

Item 3.   Defaults Upon Senior Securities . . . . . . . . . .         12

Item 5.   Other Information . . . . . . . . . . . . . . . . .         12

Item 6.   Exhibits and Reports on Form 8-K  . . . . . . . . .         13

Signature   . . . . . . . . . . . . . . . . . . . . . . . . .         14

Exhibit Index   . . . . . . . . . . . . . . . . . . . . . . .         15
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 1.   FINANCIAL STATEMENTS
          --------------------

                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS

                                      ASSETS

<TABLE>
<CAPTION>
                                                                                               March 31,     December 31,
                                                                                                 2000           1999
                                                                                             ------------    ------------
                                                                                              (Unaudited)
<S>                                                                                          <C>             <C>
Investments in and advances to partnerships                                                  $    617,968    $    585,343
Cash and cash equivalents                                                                       8,047,053       8,086,701
Acquisition fees, principally paid to related parties, net of
  accumulated amortization of $108,534 and $106,606, respectively                                 122,821         124,749
Property purchase costs, net of accumulated amortization of
  $99,161 and $97,422, respectively                                                               109,600         111,339
Other assets                                                                                        1,285              --
                                                                                             ------------    ------------

      Total assets                                                                           $  8,898,727    $  8,908,132
                                                                                             ============    =============

                       LIABILITIES AND PARTNERS' DEFICIT

Due on investments in partnerships                                                           $  2,522,600    $  2,522,600
Accrued interest payable                                                                        7,967,776       7,643,493
Accounts payable and accrued expenses                                                              54,663         127,126
                                                                                             ------------    ------------
      Total liabilities                                                                        10,545,039      10,293,219
                                                                                             ------------    ------------

Commitments and contingencies

Partners' capital (deficit):

  Capital paid in:
    General Partners                                                                                2,000           2,000
    Limited Partners                                                                           21,202,500      21,202,500
                                                                                             ------------    ------------
                                                                                               21,204,500      21,204,500

  Less:
    Accumulated distributions to partners                                                      (4,908,656)     (4,908,656)
    Offering costs                                                                             (2,570,535)     (2,570,535)
    Accumulated losses                                                                        (15,371,621)    (15,110,396)
                                                                                             ------------    ------------
      Total partners' deficit                                                                  (1,646,312)     (1,385,087)
                                                                                             ------------    ------------

      Total liabilities and partners' deficit                                                $  8,898,727    $  8,908,132
                                                                                             ============    ============
</TABLE>

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

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

                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                              AND ACCUMULATED LOSSES

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                              For the three months ended
                                                                                                       March 31,
                                                                                             ----------------------------
                                                                                                 2000            1999
                                                                                             ------------    ------------
<S>                                                                                          <C>             <C>
Share of income from partnerships                                                            $     26,543    $    105,712
                                                                                             ------------    ------------

Other revenue and expenses:

  Revenue:
    Interest income                                                                               116,035          69,260
                                                                                             ------------    ------------

  Expenses:
    Interest                                                                                      324,283         286,445
    General and administrative                                                                     35,805          40,495
    Management fee                                                                                 24,482          24,482
    Professional fees                                                                              15,566          16,597
    Amortization of deferred costs                                                                  3,667           4,154
                                                                                             ------------    ------------
                                                                                                  403,803         372,173
                                                                                             ------------    ------------
      Total other revenue and expenses                                                           (287,768)       (302,913)
                                                                                             ------------    ------------

Loss before gain on disposition
  of investment in partnership                                                                   (261,225)       (197,201)

Gain on disposition of investment in partnership                                                       --       6,123,739
                                                                                             ------------    ------------

Net (loss) income                                                                                (261,225)      5,926,538

Accumulated losses, beginning of period                                                       (15,110,396)    (24,449,832)
                                                                                             ------------    ------------

Accumulated losses, end of period                                                            $(15,371,621)   $(18,523,294)
                                                                                             ============    ============

</TABLE>

                                   (Continued)


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

                                      - 2 -
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 1.   FINANCIAL STATEMENTS
          --------------------

                  CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                       CONSOLIDATED STATEMENTS OF OPERATIONS

                         AND ACCUMULATED LOSSES - Continued

                                    (Unaudited)
<TABLE>
<CAPTION>

                                                                                              For the three months ended
                                                                                                       March 31,
                                                                                             ----------------------------
                                                                                                 2000            1999
                                                                                             ------------    ------------
<S>                                                                                          <C>             <C>
Net (loss) income allocated to General Partners (1.51%)                                      $     (3,944)   $     89,491
                                                                                             ============    ============

Net (loss) income allocated to Initial and Special
  Limited Partners (2.49%)                                                                   $     (6,505)   $    147,571
                                                                                             ============    ============

Net (loss) income allocated to BAC Holders (96%)                                             $   (250,776)   $  5,689,476
                                                                                             ============    ============

Net income (loss) per BAC based on 21,158 BACs outstanding
  at March 31, 2000 and 1999, respectively                                                   $     (11.85)   $     268.90
                                                                                             ============    ============

</TABLE>

























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

                                       - 3 -
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 1.   FINANCIAL STATEMENTS
          --------------------

                  CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                    (Unaudited)

<TABLE>
<CAPTION>

                                                                                             For the three months ended
                                                                                                      March 31,
                                                                                             ---------------------------
                                                                                                 2000            1999
                                                                                             -----------     -----------
<S>                                                                                          <C>             <C>
Cash flows from operating activities:
  Net (loss) income                                                                          $  (261,225)    $ 5,926,538

  Adjustments to reconcile net (loss) income to net cash
    (used in) provided by operating activities:
    Share of income from partnerships                                                            (26,543)       (105,712)
    Amortization of deferred costs                                                                  3,667          4,154
    Gain on disposition of investment in partnership                                                   --     (6,123,739)

    Changes in assets and liabilities:
      Increase in accrued interest receivable on advances to
        partnerships                                                                              (6,082)         (5,907)
      (Increase) decrease in other assets                                                         (1,285)         15,064
      Increase in accrued interest payable                                                       324,283         286,445
      (Decrease) increase in accounts payable and accrued expenses                               (72,463)         42,114
                                                                                             -----------     -----------
         Net cash (used in) provided operating activities                                        (39,648)         38,957
                                                                                             -----------     -----------

Cash flows from investing activities:
  Receipt of distributions from partnerships                                                          --         266,888
  Proceeds from disposition of investment in partnership                                              --       6,331,838
                                                                                             -----------     -----------
         Net cash provided by investing activities                                                    --       6,598,726
                                                                                             -----------     -----------

Net (decrease) increase in cash and cash equivalents                                             (39,648)      6,637,683

Cash and cash equivalents, beginning of period                                                 8,086,701       2,154,057
                                                                                             -----------     -----------

Cash and cash equivalents, end of period                                                     $ 8,047,053     $ 8,791,740
                                                                                             ===========     ===========



</TABLE>




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

                                     - 4 -
<PAGE>
                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2000 and 1999

                                   (Unaudited)

1.   BASIS OF PRESENTATION

     In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited financial statements reflect all adjustments, consisting
of normal recurring accruals, necessary for a fair presentation of the financial
position of Capital Realty Investors-85 Limited Partnership (the Partnership) as
of March 31, 2000, and the results of its operations and its cash flows for the
three months ended March 31, 2000 and 1999.  The results of operations for the
interim period ended March 31, 2000, are not necessarily indicative of the
results to be expected for the full year.

     The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and with the instructions to Form 10-QSB.  Certain information and accounting
policies and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such instructions.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto included in the Partnership's annual
report on Form 10-KSB at December 31, 1999.


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

a.   Due on investments in partnerships and accrued interest payable
     ---------------------------------------------------------------

                              Purchase money notes
                              --------------------

     The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of purchase money notes having an aggregate principal
balance of $2,348,000 plus aggregate accrued interest of $7,892,376 as of March
31, 2000, are payable in full upon the earliest of:  (1) sale or refinancing of
the respective Local Partnership's rental property; (2) payment in full of the
respective Local Partnership's permanent loan; or (3) maturity.  A purchase
money note in the  principal amount of $230,000 matured on January 30, 1996 but
has not been paid or extended, as discussed below.  The remaining purchase money
notes mature in 2001 and 2003.

     Interest expense on the Partnership's purchase money notes for the three
months ended March 31, 2000 and 1999 was $324,283 and $286,445, respectively.
The accrued interest payable on the purchase money notes of $7,892,376 and
$7,568,093 as of March 31, 2000 and December 31, 1999, respectively, is due on
the respective maturity dates of the purchase money notes or earlier, in some
instances, if (and to the extent of a portion thereof) the related Local
Partnership has distributable net cash flow, as defined in the relevant Local
Partnership agreement.

     The purchase money notes, which are nonrecourse to the Partnership, are
generally secured by the Partnership's interest in the respective Local
Partnerships.  There is no assurance that the underlying properties will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes' principal and accrued interest when due.  If a purchase money note
is not paid in accordance with its terms, the Partnership will either have to

                                       -5-
<PAGE>
                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2000 and 1999

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

renegotiate the terms of repayment or risk losing its partnership interest in
the Local Partnership.  The Partnership's inability to pay certain of the
purchase money note principal and accrued interest balances when due, and the
resulting uncertainty regarding the Partnership's continued ownership interest
in the related Local Partnerships, does not adversely impact the Partnership's
financial condition because the purchase money notes are nonrecourse and secured
solely by the Partnership's interest in the related Local Partnerships.
Therefore, should the investment in any of the Local Partnerships with maturing
purchase money notes not produce sufficient value to satisfy the related
purchase money notes, the Partnership's exposure to loss is limited because the
amount of the nonrecourse indebtedness of each of the maturing purchase money
notes exceeds the carrying amount of the investment in, and advances to, each of
the related Local Partnerships.  Thus, even a complete loss of the Partnership's
interest in one of these Local Partnerships would not have a material adverse
impact on the financial condition of the Partnership.  See further discussion of
certain purchase money notes below.

                          Due to local general partner
                          ----------------------------

     The amount due to a local general partner of $174,600, plus accrued
interest of $75,400 at March 31, 2000, will be paid upon the occurrence of
specified events, as outlined in the respective Local Partnership's partnership
agreement.

                               Paradise Foothills
                               ------------------

     The Partnership defaulted on its purchase money note relating to Paradise
Associates, L.P. (Paradise Foothills) when the note matured on January 30, 1996
and was not paid.  The default amount included principal and accrued interest of
$230,000 and $371,464, respectively.  As of May 4, 2000, principal and accrued
interest totaling $230,000 and $673,254, respectively, were due.  The Managing
General Partner proposed an extension of the purchase money note maturity date
until May 31, 2003, coterminous with the expiration of the related Local
Partnership's provisional workout agreement related to its mortgage loan.  As of
May 4, 2000, the Managing General Partner is awaiting a response from the
purchase money noteholder.  There is no assurance that the Managing General
Partner will reach an agreement of any kind with the noteholder.  Should the
noteholder begin foreclosure proceedings on the Partnership's interest in the
Local Partnership, the Managing General Partner intends to vigorously contest
such action.  Due to a possible foreclosure by the noteholder, there can be no
assurance that the Partnership will be able to retain its interest in the Local
Partnership.  The uncertainty regarding the continued ownership of the
Partnership's interest in the related Local Partnership does not adversely
impact the Partnership's financial condition, as discussed above.  In the event
of a foreclosure, the excess of the nonrecourse indebtedness over the carrying
amount of the Partnership's investment in the related Local Partnership would be
deemed cancellation of indebtedness income, which would be taxable to Limited
Partners at a federal tax rate of up to 39.6%.  Additionally, in the event of a
foreclosure, the Partnership would lose its investment in the Local Partnership
and, likewise, its share of any future cash flow distributed by the Local

                                       -6-
<PAGE>
                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2000 and 1999

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

Partnership from rental operations, mortgage debt refinancings, or the sale of
the real estate.  The Partnership did not receive any distributions from
Paradise Foothills during the three months ended March 31, 2000 and 1999, and
its aggregate share of income from this Local Partnership was $0 for the three
months ended March 31, 2000 and 1999.

b.   Advances to Local Partnership
     -----------------------------

                                   The Pointe
                                   ----------

     Mesa Partners Limited Partnership (The Pointe), located in El Paso, Texas,
modified its mortgage loan in 1987.  In connection with the loan modification,
the Partnership loaned $262,500 to the Local Partnership in 1987.  Repayment of
this loan, with simple interest at 9% per annum, is expected to occur upon sale
or refinancing of the property.  As of March 31, 2000 and December 31, 1999,
accrued interest was $298,970 and $293,063, respectively.

c.   Property matters
     ----------------

                           Devonshire and Springfield
                           --------------------------

     In June 1998, the local managing general partners of Devonshire Development
Limited Partnership (Devonshire) and Springfield Properties Limited Partnership
(Springfield) received offers from third parties to purchase the respective
properties.  The local managing general partners of Devonshire and Springfield
entered into contracts to sell the respective properties to a real estate
investment trust (REIT) (in the case of Springfield) and the REIT's affiliate
(in the case of Devonshire) on or before January 15, 1999.  In September 1998,
prior to the expiration of the due diligence period, the purchaser, in
accordance with its rights under the sale contract, terminated the sale contract
for Devonshire.

     On January 22, 1999, pursuant to the Springfield sale contract, the Local
Partnership sold Springfield Apartments, located in Redmond, Washington, to ASN-
Washington Holdings (1) Incorporated, an affiliate of the REIT.  The sale
resulted in a financial statement gain of approximately $6.3 million, an
estimated federal tax gain of approximately $10.2 million, and net cash proceeds
of approximately $6.4 million to the Partnership.  As a result of the sale,
CRICO of Springfield, Inc., the managing general partner of the Local
Partnership and a wholly-owned affiliate of the Managing General Partner,
received an additional management fee of $636,789, pursuant to the Local
Partnership Agreement, all of which was paid in 1999.

     Following the termination of the sales contract for Devonshire, on June 28,
1999, the Local Partnership entered into a contract with a different unrelated
third party to sell the property.  On September 30, 1999, pursuant to the
Devonshire sale contract, the Local Partnership sold Devonshire Apartments,
located in Kirkland, Washington, to Kirkland Rrestoration LLC.  The sale

                                       -7-
<PAGE>
                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2000 and 1999

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

resulted in a financial statement gain of approximately $3.5 million, an
estimated federal tax gain of approximately $6 million, and net cash proceeds of
approximately $3.5 million to the Partnership, which net cash proceeds were
received by the Partnership on October 1, 1999.  As a result of the sale, CRICO
of Devonshire, Inc., the managing general partner of the Local Partnership and a
wholly-owned affiliate of the Managing General Partner, received an additional
management fee of $300,086, of which $269,485 was paid in 1999 and $30,601 was
paid in January 2000, pursuant to the Local Partnership Agreement.

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

     Combined statements of operations for the Local Partnerships in which the
Partnership has invested as of March 31, 2000 and 1999, follow.  The combined
statements have been compiled from information supplied by the management agents
of the projects and are unaudited.  The statement of operations for the three
months ended March 31, 1999, includes information for Springfield through the
date of sale on January 22, 1999.

                        COMBINED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                For the three months ended
                                                         March 31,
                                               -----------------------------
                                                   2000             1999
                                               ------------     ------------
     <S>                                       <C>              <C>
     Revenue:
       Rental                                  $  1,451,878     $  1,815,075
       Other                                        100,929           98,700
                                               ------------     ------------
         Total revenue                            1,552,807        1,913,775
                                               ------------     ------------

     Expenses:
       Operating                                    751,599          946,015
       Interest                                     513,074          679,493
       Depreciation and amortization                271,231          282,187
                                               ------------     ------------
         Total expenses                           1,535,904        1,907,695
                                               ------------     ------------
     Net income                                $     16,903     $      6,080
                                               ============     ============

</TABLE>

     As of March 31, 2000 and 1999, the Partnership's share of cumulative losses
to date for two and four, respectively, of the Local Partnerships exceeded the

                                       -8-
<PAGE>
                 CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2000 and 1999

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

amount of the Partnership's investments in and advances to those Local
Partnerships by $6,748,717 and $7,084,260, respectively.  As the Partnership has
no further obligation to advance funds or provide financing to these Local
Partnerships, the excess losses have not been reflected in the accompanying
consolidated financial statements.


3.   RELATED-PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to reimburse the Managing General Partner for its direct expenses
in managing the Partnership.  For the three months ended March 31, 2000 and
1999, the Partnership paid $24,571 and $29,544, respectively, as direct
reimbursement of expenses incurred on behalf of the Partnership.  Such expenses
are included in the accompanying consolidated statements of operations as
general and administrative expenses.

     In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to pay the Managing General Partner an annual incentive management
fee (the Management Fee) after all other expenses of the Partnership are paid.
For each of the three months ended March 31, 2000 and 1999, the Partnership paid
the Managing General Partner a Management Fee of $24,482.

     On January 22, 1999, Springfield Properties Limited Partnership, one of the
Local Partnerships in which the Partnership has invested, sold Springfield
Apartments.  As a result of the successful sale, CRICO of Springfield, Inc., the
local managing general partner of the Local Partnership and a wholly-owned
affiliate of the Managing General Partner, earned an additional management fee
of $636,789, pursuant to the Local Partnership Agreement, all of which was paid
in 1999.

     On September 30, 1999, Devonshire Development Limited Partnership, one of
the Local Partnerships in which the Partnership has invested, sold Devonshire
Apartments.  As a result of the successful sale, CRICO of Devonshire, Inc., the
local managing general partner of the Local Partnership and a wholly-owned
affiliate of the Managing General Partner, earned an additional management fee
of $300,086, pursuant to the Local Partnership Agreement; $269,485 was paid
during 1999; the remainder was paid in 2000.















                                       -9-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS
               -----------------------------------


     Capital Realty Investors-85 Limited Partnership's (the Partnership)
Management's Discussion and Analysis of Financial Condition and Results of
Operations section contains information that may be considered forward looking,
including statements regarding the effect of governmental regulations.  Actual
results may differ materially from those described in the forward looking
statements and will be affected by a variety of factors including national and
local economic conditions, the general level of interest rates, terms of
governmental regulations that affect the Partnership and interpretations of
those regulations, the competitive environment in which the Partnership
operates, and the availability of working capital.

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

     The Partnership's liquidity, with unrestricted cash resources of $8,047,053
as of March 31, 2000, along with future cash distributions from Local
Partnerships, is expected to be adequate to meet its current and anticipated
operating cash needs.  As of May 4, 2000, there are no material commitments for
capital expenditures.

     The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of purchase money notes having an aggregate principal
balance of $2,348,000 plus aggregate accrued interest of $7,892,376 as of March
31, 2000, are payable in full upon the earliest of: (1) sale or refinancing of
the respective Local Partnership's rental property; (2) payment in full of the
respective Local Partnership's permanent loan; or (3) maturity.  A purchase
money note in the principal amount of $230,000 matured on January 30, 1996 and
has not been paid or extended.  The remaining purchase money notes mature in
2001 and 2003.  See the notes to the consolidated financial statements for
additional information concerning these purchase money notes.

     The purchase money notes, which are nonrecourse to the Partnership, are
generally secured by the Partnership's interest in the respective Local
Partnerships.  There is no assurance that the underlying properties will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes' principal and accrued interest when due.  If a purchase money note
is not paid in accordance with its terms, the Partnership will either have to
renegotiate the terms of repayment or risk losing its partnership interest in
the Local Partnership.  The Partnership's inability to pay certain of the
purchase money note principal and accrued interest balances when due, and the
resulting uncertainty regarding the Partnership's continued ownership interest
in the related Local Partnerships, does not adversely impact the Partnership's
financial condition because the purchase money notes are nonrecourse and secured
solely by the Partnership's interest in the related Local Partnerships.
Therefore, should the investment in any of the Local Partnerships with maturing
purchase money notes not produce sufficient value to satisfy the related
purchase money notes, the Partnership's exposure to loss is limited because the
amount of the nonrecourse indebtedness of each of the maturing purchase money
notes exceeds the carrying amount of the investment in, and advances to, each of
the related Local Partnerships.  Thus, even a complete loss of the Partnership's
interest in one of these Local Partnerships would not have a material adverse
impact on the financial condition of the Partnership.

     The Managing General Partner is continuing to investigate possible
alternatives to reduce the Partnership's debt obligations.  These alternatives

                                      -10-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

include, among others, retaining the cash available for distribution to meet the
purchase money note requirements, paying off certain purchase money notes at a
discounted price, extending the due dates of certain purchase money notes, or
refinancing the respective properties' underlying debt and using the
Partnership's share of the proceeds to pay off or pay down certain purchase
money note obligations.

     Included in due on investments in partnerships is $174,600 due to a local
general partner (related to Paradise Foothills) at both March 31, 2000 and 1999;
accrued interest payable thereon was $75,400 at both December 31, 2000 and 1999.
These amounts will be paid upon the occurrence of certain specified events, as
outlined in the respective Local Partnership's partnership agreement.

     The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient cash is available for operating requirements.
For the three months ended March 31, 2000 and 1999, cash  provided by operations
and existing cash resources were adequate to support operating cash
requirements.  Cash and cash equivalents decreased during the three months ended
March 31, 2000, as the Partnership had not yet begun to receive cash flow
distributions from partnerships.

     On May 3, 1999, the Managing General Partner distributed $2,496,644 (or
$118 per Beneficial Assignee Certificate (BAC)) to holders of BACs from the
proceeds generated from the sale of Springfield Apartments, to the holders of
record as of January 22, 1999.  The Managing General Partner currently intends
to retain all of the Partnership's remaining undistributed cash for the possible
repayment, prepayment or retirement of the Partnership's outstanding purchase
money notes related to the Local Partnerships.

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

     The Partnership recognized net loss for the three months ended March 31,
2000 as opposed to net income during the corresponding period in 1999 primarily
due to gain on disposition of investment in partnership related to the sale of
the Partnership's interest in Springfield Properties Limited Partnership
(Springfield) in January 1999.  Contributing to the net loss was an increase in
interest expense on purchase money notes due to the compounding of interest and
a decrease in share of income from partnerships as a result of the sales of
Springfield and Devonshire Development Limited Partnership (Devonshire) in
January and September 1999, respectively.

     Offsetting the net loss was an increase in interest income due to higher
cash and cash equivalent balances during 2000 as a result of the receipt of
proceeds from the sales of Springfield and Devonshire and a decrease in general
and administrative expenses, primarily due to lower reimbursed payroll costs.

     For financial reporting purposes, the Partnership, as a limited partner in
the Local Partnerships, does not record losses from the Local Partnerships in
excess of its investment to the extent that the Partnership has no further
obligation to advance funds or provide financing to the Local Partnerships.  As
a result, the Partnership's share of income from partnerships for the three
months ended March 31, 2000 did not include losses of $80,796, compared to
excluded losses of $99,896 for the three months ended March 31, 1999.



                                      -11-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

     No other significant changes in the Partnership's operations have taken
place during this period.


PART II.  OTHER INFORMATION
          -----------------
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
          -------------------------------

     See Note 2.a. of the notes to consolidated financial statements contained
in Part I, Item 1, hereof, for information concerning the Partnership's default
on a purchase money note.


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

     On April 5, 2000, Peachtree Partners (Peachtree) mailed an offer letter to
Beneficial Assignee Certificate (BAC) holders of the Partnership.  The offer
letter indicated that Peachtree was willing to offer to purchase outstanding BAC
units at a price of $90 per unit.  Peachtree is unaffiliated with the Managing
General Partner.  The price offered was determined solely at the discretion of
Peachtree and does not necessarily represent the fair market value of each BAC.
Other than the Peachtree offer, or any others of the same type, it is not
anticipated that there will be any formal market for resale of BACs.  As a
result, investors may be unable to sell or otherwise dispose of their BACs.

     If more than 5% of the total outstanding BAC units are transferred in any
one calendar year (not counting certain exempt transfers), the Partnership could
be taxed as a "publicly traded partnership," with potentially severe tax
implications for the Partnership and its investors.  Specifically, the
Partnership would be taxed as a corporation and the income and losses from the
Partnership would no longer be considered a passive activity.  From January 1,
2000 through April 28, 2000, approximately 4.9% of outstanding BAC units were
sold.  Accordingly, to remain within the 5% safe harbor, effective May 5, 2000,
the General Partner of the Partnership will halt recognition of any transfers
that would exceed the safe harbor limit through December 31, 2000.  As a result,
transfers of BAC units due to sales transactions will not be recognized by the
Partnership between May 5 and December 31, 2000.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------

     a.   None

     b.   No reports on Form 8-K were filed with the Commission during the
          quarter ended March 31, 2000.

     All other items are not applicable.







                                      -12-
<PAGE>
                                    SIGNATURE



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


                         CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP
                         -----------------------------------------------
                         (Registrant)

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



May 4, 2000                  by: /s/ Michael J. Tuszka
-----------------                ---------------------------------------
DATE                             Michael J. Tuszka
                                   Vice President
                                   and Chief Accounting Officer
                                   (Principal Financial Officer
                                   and Principal Accounting Officer)






































                                      -13-
<PAGE>


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


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

27        Financial Data Schedule         Filed herewith electronically






















































                                      -14-