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

                                Form 10-Q


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

For the quarterly period ended      September 30, 1996               

                                   OR

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

For the transition period from                   to                      


Commission file number                      33-17577                     


U.S. Realty Income Partners L.P.                                         
      (Exact name of small business issuer as specified in its charter)

            DELAWARE                                         62-1331754  

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

  P.O. Box 50507, Nashville, TN                                      37205 

(Address of principal executive offices)                     (Zip Code)

                                  (615) 298-5700                         

          (Registrant's telephone number, including area code)
  
                                                                         

(Former name, former address and former fiscal year,  
if changed since last report)

      Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

                     YES    X          NO          

                    U.S. REALTY INCOME PARTNERS L.P.

                                  INDEX



PART I      Financial Information


Item l.    Financial Statements                                         3

           Compilation Report                                           4
           
           Balance Sheets at September 30, 1996 & December                
           31, 1995                                                     5
                
           Statements of Partnership Equity for the period 
           January 1, 1995 through September 30, 1996                   6

           Statements of Operations for the three months         
           and nine months ended September 30, 1996 & 1995              7
                                                                       
           Statements of Cash Flows for the nine months ended      
           September 30, 1996 & 1995                                     8
   
           Notes to Financial Statements                           9 - 12
               

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                    13 - 15

PART II    Other Information

Item 1.    Legal Proceedings                                           16

Item 2.    Changes in Securities                                       16

Item 3.    Default Upon Senior Securities                              16
                      
Item 4.    Submissions of Matters to a Vote of Security Holders        16

Item 5.    Other Information                                           16 
   
Item 6.    Exhibits and Reports on Form 8-K                            16

SIGNATURES                                                             17







                     PART I - FINANCIAL INFORMATION


ITEM 1.  Financial Statements

          The following balance sheet at September 30, 1996 (unaudited) and 
statements of operations, partnership equity, and cash flows for the three
months and nine months ended September 30, 1996 (unaudited), for U.S. Realty
Income Partners L.P. (a Delaware limited partnership) (the "Partnership"), have
not been examined by independent public accountants but reflect, in the
opinion of management, all adjustments (consisting of normal recurring
accruals) necessary to present fairly the information required.

         These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Partnership's 1995
Annual Report, as reported on Form 10-K.




























<PAGE>



                           OSBORNE & CO., P.C.
                    761 OLD HICKORY BLVD., SUITE 201
                          BRENTWOOD, TN  37027





To the Partners
U.S. Realty Income Partners L.P.
P. O. Box 50507
Nashville, TN  37205

We have compiled the accompanying balance sheet of U.S. Realty Income Partners
L.P.(a limited partnership) as of September 30, 1996, and the related statements
of operations, partnership equity, and cash flows for the three months and nine
months then ended, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.

A compilation is limited to presenting in the form of financial statements
information that is the representation of management.  We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.

We are not considered to be independent with respect to U.S. Realty Income
Partners L.P. according to Securities and Exchange Commission regulations.

The financial statements for the year ended December 31, 1995, were audited by
other accountants, and they expressed an unqualified opinion on them in their
report dated February 6, 1996, but they have not performed any auditing
procedures since that date.

October 28, 1996

                              
                                    Osborne & Co., P.C 
                                    Certified Public Accountants




<PAGE>
                       U.S. REALTY INCOME PARTNERS L.P.

                            (A LIMITED PARTNERSHIP)

                                BALANCE SHEETS

                                          Unaudited            Audited
                                         September 30,       December 31, 
                                             1996               1995    

                  ASSETS

CASH                                      $  243,042        $  155,184

TENANT RECEIVABLES                             1,506             2,752

PROPERTY AND IMPROVEMENTS, net of
  accumulated depreciation of         
  $1,230,437 and $1,113,864                4,079,490         4,196,062

INVESTMENT IN LIMITED PARTNERSHIP        (    19,845)            1,000

OTHER ASSETS                                 291,477           332,909

     TOTAL ASSETS                         $4,595,670        $4,687,907


       LIABILITIES AND PARTNERSHIP EQUITY

ACCOUNTS PAYABLE                          $    3,874        $    2,705

ACCRUED EXPENSES                              66,482            81,867

NOTES PAYABLE                              3,611,135         3,642,603

     TOTAL LIABILITIES                     3,681,491         3,727,175


MINORITY PARTNER'S INTEREST IN JOINT
  VENTURE                                (   116,671)      (   133,390)

PARTNERSHIP EQUITY                         1,030,850         1,094,122

     TOTAL PARTNERSHIP EQUITY                914,179           960,732

  TOTAL LIABILITIES & PARTNERSHIP EQUITY  $4,595,670        $4,687,907<PAGE>
        
                     U.S. REALTY INCOME PARTNERS L.P.

                         (A LIMITED PARTNERSHIP)

                    STATEMENTS OF PARTNERSHIP EQUITY

              Period from January 1, 1995 to September 30, 1996               


                                      Limited     General
                                     Partners     Partner       Total

Distributive share of 
  net earnings                         95%           5%          100%    

Balance at January 1, 1995        $1,340,752    ($178,252)   $1,162,500

Net loss                         (    64,959)   (   3,419)  (    68,378)

Balance at December 31, 1995       1,275,793    ( 181,671)    1,094,122

Net loss                         (    60,108)   (   3,164)  (    63,272)

Balance at September 30, 1996     $1,215,685    ($184,835)  ($1,030,850)



<PAGE>
                       U.S. REALTY INCOME PARTNERS L.P.

                            (A LIMITED PARTNERSHIP)

                           STATEMENTS OF OPERATIONS

                  For the Three Months and Nine Months Ended
                         September 30, 1996 and 1995 

                      Unaudited    Unaudited    Unaudited     Unaudited
                      3 Months     3 Months     9 Months      9 Months
                        1996         1995         1996          1995   
                        
Revenues
  Rental income        $ 149,350    $ 140,465    $ 478,997    $ 468,268
  CAM reimbursements      22,574       19,910       88,870       62,391
  Miscellaneous              276           63          373          254
  Interest income            959        1,838        2,733        4,518

                         173,159      162,276      570,973      535,431
Expenses
  Interest                90,518       91,477      272,720      275,146
  Professional fees        9,220        6,053       20,568       23,769
  Depreciation            38,857       38,857      116,572      116,571
  Amortization             5,214        6,113       15,642       19,238
  Property taxes          17,012       17,012       51,035       51,035
  Leasing & admin.        28,365       22,563       91,086       53,194
  Management fees          6,446        7,824       20,628       22,239
  Repairs                  9,203       10,019       23,740       26,153
  Insurance                    0        4,700        5,535        4,700

                         204,835      204,618      617,526      592,045
Net Loss Before 
Minority Partner's 
Share of Loss         (   31,676)  (   42,342)  (   46,553)  (   56,614)

Minority Partner's 
Interest in Share 
of Loss               (      658)       5,168   (   16,719)  (    3,171)

Loss From Operations  (   32,334)  (   37,174)  (   63,272)  (   59,785)

Provision for Loss in
Investment in JV               0   (    1,224)           0   (   10,116)

Net Loss              ($  32,334)  ($  38,398)  ($  63,272)  ($  69,901)

Net Loss per Unit     ($    6.32)  ($    7.51)  ($   12.37)  ($   13.67)

Weighted Average
Number of Units            4,858        4,858        4,858        4,858
                       U.S. REALTY INCOME PARTNERS L.P.

                         (A LIMITED PARTNERSHIP)

                        STATEMENTS OF CASH FLOWS
  
                                              Unaudited        Unaudited
                                             Nine Months      Nine Months 
                                                Ending           Ending
                                            Sept. 30, 1996   Sept. 30,. 1995

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                           ($ 63,272)     ($ 69,901)
  Adjustments to reconcile net income (loss)
    to net cash provided by (used in) 
    operating activities:                                 
    Minority partner's interest in net loss
        of consolidated partnership              16,719          3,171
      Depreciation                              116,572        116,571
      Amortization                               15,642         19,238
      Decrease (increase) in:
        Tenant receivables                        1,246          2,031 
        Other assets                             25,792            272 
      Increase (decrease) in:
        Accounts payable                          1,169          6,283 
        Professional Fees Payable                     0      (  30,921)
        Tenant Deposits                           1,625              0 
        Accrued expenses                      (  17,012)     (  17,012)
NET CASH PROVIDED (USED) BY OPERATING
    ACTIVITIES                                   98,481         29,732 

CASH FLOWS FROM INVESTING ACTIVITIES:
  Distribution from limited partnership          20,845              0

  NET CASH PROVIDED BY INVESTING ACTIVITIES      20,845              0

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on mortgage note                   (  31,468)     (  28,541)

  NET CASH PROVIDED BY FINANCING ACTIVITIES   (  31,468)     (  28,541)
                                    
NET INCREASE (DECREASE) IN CASH/EQUIVALENTS      87,858          1,191 
  
CASH & CASH EQUIVALENTS AT BEGINNING PERIOD     155,184        165,281

CASH & CASH EQUIVALENTS AT END OF PERIOD      $ 243,042      $ 166,472
 
SUPPLEMENTAL DISCLOSURES:

  INTEREST PAID                               $ 272,720      $ 275,146


                    U.S. REALTY INCOME PARTNERS L.P.

                         (A LIMITED PARTNERSHIP)

                      NOTES TO FINANCIAL STATEMENTS

                                Unaudited
                             September 30, 1996  

A.  ACCOUNTING POLICIES

    Refer to the Partnership's annual financial statements for the year
ended December 31, 1995 for a description of the accounting policies which
have been continued without change.  Also, refer to the footnotes of these
annual statements for additional details of the Partnership's financial
condition.  The details in those notes have not significantly changed
except as a result of normal transactions in the interim.  In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary have been included.  Operating results are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996.

B.  INVESTMENT IN JOINT VENTURES

    The Partnership had a 50% interest in DR/US West End General
Partnership, a joint venture formed to own and operate a commercial office
building in Nashville, Tennessee.  The Company's initial investment of
$900,000 in the general partner joint venture was made on November 1,
1988.  Effective December 31, 1991, the Partnership adopted the
liquidation method of accounting for its investment in the joint venture.
Accordingly, the basis has been held at $1,000 since December 31, 1991.

Effective July 28, 1995, the partnership exchanged its interest in the assets of
DR/US West End General Partnership (DR/US) for an indirect 4.17% equity interest
(held through a limited partnership interest in Daniel S. E. Office Limited
Partnership) in Prudential/Daniel Office Venture, LLC (the LLC).  The LLC owns
six office buildings (including the DR/US property) located in Nashville,
Tennessee and Raleigh, North Carolina.  Management believes the fair value ofthe
partnership's interest in the LLC approximates capital contributions recognized
by the LLC (for the 4.17% interest) amounting to $1,361,445.  Such capital
contributions were valued based on management's (unaudited) estimated values of
the contributed properties.  The LLC interest has been valued in these financial
statements as shown below:

            Basis at January 1, 1996                   $ 1,000
            Less:  Distributions                      ( 20,845)

            Basis at September 30, 1996               ($19,845)




                    U.S. REALTY INCOME PARTNERS L.P.

                         (A LIMITED PARTNERSHIP)

                      NOTES TO FINANCIAL STATEMENTS

                                Unaudited
                              September 30, 1996 




C.  TRANSACTIONS WITH AFFILIATES

    Fees and other costs and expense paid to the general partner or its
affiliates were as follows:
                                       
                                  Nine Months           Year Ended        
                              Ended September 30,      December 31,
                                     1996                  1995    
   
   Administrative expenses          $ 65,000            $ 36,000


      In 1996, the Partnership paid $29,000, in deferred payments in addition to
normal recurring charges.

      The Partnership believes the amounts paid to affiliates are
representative of amounts which would have been paid to independent
parties for similar services.



<PAGE>
                     PART I - FINANCIAL INFORMATION
                                continued



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


Liquidity and Capital Resources
         
         At December 31, 1995, the partnership had $155,194 in cash and
cash equivalents.  This represents 3.19% of capital raised.  At September 30,
1996, the Partnership had $243,042 in cash and cash equivalents.  This
represents 5.00% of capital raised.  The Partnership had established a
working capital reserve of 5% of the gross proceeds of the offering. 
After May 15, 1990, the Partnership's Prospectus provided that the working
capital reserve could be reduced to 3% of capital raised depending upon
the Partnership's experience with its properties.  The working capital was
reduced to allow the Partnership to pay costs associated with the DR/US
refinancing.  In the event such reserves are insufficient to satisfy
unanticipated costs, the Partnership will be required to borrow additional
funds to meet such costs.  The General Partner does not anticipate having
to borrow for working capital reserves in 1996.

          The General Partner has deemed it advisable not to make any cash
distributions since May 1990.  The General Partner cannot determine whether any
cash will be available for distribution until the Bellevue mortgage is
refinanced.


                                    
Bellevue

        The Bellevue property was 100% leased at December 31, 1995 and
September 30, 1996.  Lease rents from the tenants amounts to $46,950 per
occupancy month.  In addition, the tenants pay common area maintenance
charges of $8,616 per month for a total of $55,566 per month.  

       On February 1, 1989, the Joint Venture obtained a $3,800,000 first
mortgage loan on this property from an unaffiliated lender.  The mortgage
bears interest at a rate of 10% per annum and required monthly
installments of interest only through February 1, 1991.   Monthly debt
service was $31,667 until March 1991 at which time monthly installments of
principal and interest rose to $33,743.  The Joint Venture has paid debt
service on a current basis.

Mass Mutual's mortgage matured in February of this year.  They did not wish to
renew because the amount of $3,700,000 is smaller than the loans they are
currently making.  They have granted various extensions and as of August 1,
1996, again extended for six months.

Your partnership applied for a mortgage with two lenders and have been turned
down by both.  The first lender did not feel comfortablethat Haverty's Furniture
Company's lease had only two more years before their renewal date.  They have a
large space in the center and the lender felt this was possibly a risk they did
not want to take.  By January 20, 1997, Haverty's has to tell us their intention
of either staying or leaving so that the unknown will become a known by then. If
they renew, the term would be for five years beginning October 31, 1997,
extending the lease to October 31, 2002.

The second lender, in their inspection, uncovered pollutants in the ground below
the dry cleaning tenant. This is caused by chemicals used in cleaning solvents. 
Law Engineering found traces of Dichlorocthene, Telrechloroethene "Perc" and
Trichloroethene.  Our next step is to determine the extent of these chemicalsand
secondly, whether or not it is possible to remove them.  The big question is can
the chemical residue be removed and if so, can we have someone tell us the
problem has been solved.  TVG Environmental has been hired to make additional
tests and to determine the extent of the pollution.

Due to all the above, it appears prudent to postpone any decision regarding cash
distributions to the partners.  If Haverty's does leave, it is important to have
cash available for tenant refinish and leasing commissions.  Secondly, we have
the unknown as to what has to be done regarding the chemical spill and how much
money it will take to fix the problem.


DR/US WEST END

Effective July 28, the partnership exchanged its interest in the assets of DR/US
West End General Partnership (DR/US) for an indirect 4.17% equity interest (held
through a limited partnership interest in Daniel S. E. Office Limited
Partnership) in Prudential/Daniel Office Venture, LLC (the LLC).  The LLC owns
six office buildings (including the DR/US property) located in Nashville,
Tennessee and Raleigh, North Carolina.  Management believes the fair value ofthe
partnership's interest in the LLC approximates capital contributions recognized
by the LLC (for the 4.17% interest) amounting to $1,361,445.  Such capital
contributions were valued based on management's (unaudited) estimated values of
the contributed properties.  The LLC interest has been valued in these financial
statements at $1,000, the partnership's carrying value in the DR/US investment.



<PAGE>
                     PART I - FINANCIAL INFORMATION
                                continued


          Results of Operations

              The Partnership holds a majority joint venture interests in
Bellevue Plaza Partners (66 2/3%).  The operational results of the Partnership
for the nine months ending September 30, 1996 are summarized below.

                          Bellevue         Partnership     Total 

Revenues                  $569,639          $  1,334      $570,973

Operating expenses         126,319            87,590       213,909
Interest                   272,720              -          272,720
Depreciation & amort.      124,393             7,821       132,214
                           523,432            95,411       618,843

Net income (loss)           46,207         (  94,077)    (  47,870)

Partnership share           66 2/3%              100%

Partnership net income
  (loss)                  $ 30,805         ($ 94,077)    ($ 63,272)
Partnership Oper. cash        
  flow                    $190,070         ($ 91,589)     $ 98,481

          Operational results for the comparable nine month period ended
September 30, 1995 were:
                          Bellevue         Partnership      Total    

Revenues                  $533,695          $  1,736      $535,431

Operating expenses         124,645            66,561       191,206
Interest                   275,146              -          275,146
Depreciation & amort.      124,392            11,417       135,809
                           524,183            77,978       602,161

Net income (loss)            9,512         (  76,242)    (  66,730)

Partnership share           66 2/3%               50%         100%

Partnership net income
  (loss)                  $  6,341         ($ 76,242)    ($ 69,901)

Partnership Operating
  cash flow               $ 94,557         ($ 64,825)     $ 29,732

         The Partnership utilized the proceeds of the offering to acquire,
operate and hold for investment existing income producing commercial real
estate properties.  Since the proceeds of the offering were less than the
maximum amount the Partnership was unable to diversify its investments to
the extent initially desired.

                       PART II - OTHER INFORMATION


ITEM 1.    Legal Proceedings

               None.

ITEM 2.    Changes in Securities

               None.

ITEM 3.    Default Upon Senior Securities

               None.

ITEM 4.    Submission of Matters to a Vote of Security Holders
 
               None.

ITEM 5.    Other Information
          
               None.

ITEM 6.    Exhibits and Reports on Form 8-K

               1.  Exhibits

                     None.
                                               
               2.  Form 8-K.

                     None.



                            


















                               SIGNATURES




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


                                 U.S. REALTY INCOME PARTNERS L.P.
                                 By:  Vanderbilt Realty Joint Venture,
                                      the General Partner

                                 By:  Vanderbilt Realty Associates, Inc.
                                      its Managing General Partner


                                 By:      Robert Bond Miller             
                                      Robert Bond Miller
                                      President, Director, Chief Executive 
                                      Officer, Chief Financial Officer and
                                      Chief Accounting Officer



November 10, 1996