FORM 10-K

                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549
(Mark One)

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

   For the fiscal year ended December 31, 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 0-17582

            AMERICA FIRST PREP FUND 2 PENSION SERIES
                       LIMITED PARTNERSHIP
             (Exact name of registrant as specified
            in its Agreement of Limited Partnership)

                                                        
Delaware                                              47-0719051
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

Suite 400, 1004 Farnam Street, Omaha, NE              68102
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including
 area code:                                           (402) 444-1630

Securities Registered Pursuant to Section 12(b) of the Act:

                                     None

Securities Registered Pursuant to Section 12(g) of the Act:

     Beneficial Unit Certificates representing assigned limited partnership 
     interests in the Registrant ("BUCs").

     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

     Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K (Section 229.405 of the chapter) is not contained 
herein, and will not be contained, to the best of the registrant's knowledge, 
in definitive proxy or information statements incorporated by reference in 
Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

     The Beneficial Unit Certificates representing assigned limited 
partnership interests in the Registrant (the "BUCs") are not currently traded 
in any market.  Therefore, there is no market price or average bid and asked 
price for the BUCs within the 60 days prior to the date of this filing.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                     None










<PAGE>                               - i -

                               TABLE OF CONTENTS

                                                                          Page


                                    PART I

Item 1.  Business                                                           1
Item 2.  Properties                                                         2
Item 3.  Legal Proceedings                                                  3
Item 4.  Submission of Matters to a Vote of Security Holders.               3

                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder 
         Matters                                                            3
Item 6.  Selected Financial Data                                            4
Item 7.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations                                          5
Item 8.  Financial Statements and Supplementary Data                        9
Item 9.  Changes in and Disagreements With Accountants on Accounting 
         and Financial Disclosure                                           9

                                  PART III

Item 10.  Directors and Executive Officers of Registrant                    9
Item 11.  Executive Compensation                                           10
Item 12.  Security Ownership of Certain Beneficial Owners and Management   10
Item 13.  Certain Relationships and Related Transactions                   11

                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K  12

SIGNATURES                                                                 25








































<PAGE>                            - ii -

                                  PART I

     Item 1.  Business.  America First PREP Fund 2 Pension Series Limited 
Partnership (the "Registrant" or the "Partnership") was formed on February 
2,1988, under the Delaware Revised Uniform Limited Partnership Act to invest 
principally in federally-insured first mortgages on multifamily residential 
properties, including retirement living centers, and in securities 
collateralized by first mortgages on multifamily residential properties.  The 
Registrant also invests in Preferred Real Estate Participations ("PREPs") in 
the form of limited partnership interests in the limited partnerships which 
own the financed properties.  The Registrant's business objectives are to 
provide investors:  (i) safety and preservation of capital; (ii) regular cash 
distributions; and, (iii) a potential for an enhanced yield from participations 
in the net cash flow and net capital appreciation from the financed properties 
received under the terms of the PREPs.

      A total of 905,974 BUCs were sold at $20 per BUC for total capital 
contributions of $16,697,101 after the payment of certain organization and 
offering costs.

      Through December 31, 1996, the Registrant had acquired:  (i) five 
mortgage-backed securities guaranteed as to principal and interest by the 
Government National Mortgage Association ("GNMA") collateralized by first 
mortgage loans on multifamily housing projects located in four states (the 
"GNMA Certificates"); (ii) various mortgage-backed securities collateralized 
by pools of single-family mortgages and guaranteed as to principal and 
interest by either GNMA or the Federal National Mortgage Association ("FNMA") 
(the "Single-Family Certificates") and; (iii) PREPs in five limited 
partnerships which own the multifamily housing properties financed by the GNMA 
Certificates.  The Partnership has been repaid by GNMA on two GNMA 
Certificates.  The Partnership no longer holds its PREP in one of the 
properties financed by one of the repaid GNMA Certificates and has sold its 
PREP in another property.  Collectively, the three remaining GNMA Certificates 
and the three remaining PREPs are referred to herein as the "Permanent 
Investments".  A description of the Permanent Investments held by the 
Registrant at December 31, 1996, (and the properties financed thereby) appears 
in Notes 5 and 6 to the Notes to Financial Statements filed in response to 
Item 8 hereof.  In addition, the Registrant held four Single-Family 
Certificates at December 31, 1996.  All Permanent Investments were made in 
conjunction with America First PREP Fund 2 Limited Partnership, an affiliate 
of the Registrant.

     The GNMA Certificates and the Single-Family Certificates provide the 
Registrant with monthly payments of principal and interest which are 
guaranteed either by GNMA or FNMA.  The PREPs are intended to provide the 
Registrant with a base return plus a participation in the net cash flow and 
net capital appreciation of the underlying real estate properties.  Therefore, 
the return to the Registrant depends, in part, on the economic performance of 
the real estate financed by the PREPs.

     While principal of and interest on the GNMA Certificates and 
Single-Family Certificates is guaranteed by the United States government, the 
amount of cash distributions received by the Registrant from the PREPs is a 
function of the net rental revenues generated by the properties financed by 
the Registrant.  Net rental revenues from a multifamily apartment complex 
depend on the rental and occupancy rates of the property and on the level of 
operating expenses.  Occupancy rates and rents are directly affected by the 
supply of, and demand for, apartments in the market areas in which a property 
is located.  This, in turn, is affected by several factors such as local or 
national economic conditions, the amount of new apartment construction and 
interest rates on single-family mortgage loans.  In addition, factors such as 
government regulation (such as zoning laws), inflation, real estate and other 
taxes, labor problems and natural disasters can affect the economic operations 
of a property.

     In each city in which the properties financed by the Registrant are 
located, such properties compete with a substantial number of other apartment 
complexes.  Apartment complexes also compete with single-family housing that 
is either owned or leased by potential tenants.  The principal method of 
competition is to offer competitive rental rates.  Such properties also 
compete by emphasizing regular maintenance and property amenities.




<PAGE>                              - 1 -

     The Registrant believes that each of the properties is in compliance in 
all material respects with federal, state and local regulations regarding 
hazardous waste and other environmental matters and the Registrant is not 
aware of any environmental contamination at any of such properties that would 
require any material capital expenditure by the Registrant for the remediation 
thereof.  

     The Registrant is engaged solely in the business of providing financing 
for the acquisition and improvement of real estate.  Accordingly, the 
presentation of information about industry segments is not applicable and 
would not be material to an understanding of the Registrant's business taken 
as a whole.

     The Registrant has no employees.  Certain services are provided to the 
Registrant by employees of America First Companies L.L.C. which is the general 
partner of the general partner of the Registrant, and the Registrant 
reimburses America First Companies L.L.C. for such services at cost.  The 
Registrant is not charged and does not reimburse for the services performed by 
managers and officers of America First Companies L.L.C.

     Item 2.  Properties.  The Registrant does not directly own or lease any 
physical properties.  The Registrant has invested in the Permanent Investments 
described in Item 1.  By virtue of its interest in the PREPs, the Partnership 
indirectly owns the properties it has financed through its Permanent 
Investments.  Descriptions of the multifamily housing projects collateralizing 
the Permanent Investments held by the Registrant as of December 31, 1996, 
are described in the following table:

<TABLE>
<CAPTION>
                                                                           Average
                                                            Number     Square Feet            Federal
Property Name                  Location                   of Units        Per Unit          Tax Basis
--------------------------     ----------------------     --------     -----------     ---------------
<S>                            <C>                        <C>          <C>             <C>
Broadmoor Court                Colorado Springs, CO            46             391      $    1,879,990
Laurel Park Apartments         Riverdale, GA                  387             855           7,692,161
Owings Chase Apartments        Pikesville, MD                 234             960           8,274,083
                                                          --------                     ---------------
                                                              667                      $   17,846,234
                                                          ========                     ===============
</TABLE>

     Depreciation is taken on each property on a straight-line basis over the 
estimated useful lives of the components of the properties ranging from five 
to 40 years.

     The average annual occupancy rate and average effective rental rate per 
unit for each of the properties for each of the last five years are listed in 
the following table:

<TABLE>
<CAPTION>
                                                       1996         1995         1994         1993         1992
                                                  ----------   ----------   ----------   ----------   ----------
<S>                                               <C>          <C>          <C>          <C>          <C>
 BROADMOOR COURT
 Average Occupancy Rate                                 96%           99%          98%          96%          84%
 Average Effective Annual Rental Per Unit           $21,400       $21,289      $20,540      $19,373      $16,731

 LAUREL PARK APARTMENTS
 Average Occupancy Rate                                 97%           95%          85%          74%          88%
 Average Effective Annual Rental Per Unit            $5,293        $4,867       $4,217       $3,503       $4,358

 OWINGS CHASE APARTMENTS
 Average Occupancy Rate                                 96%           95%          91%          83%          84%
 Average Effective Annual Rental Per Unit            $6,792        $6,580       $6,302       $5,933       $6,188
</TABLE>







<PAGE>                              - 2 -

     In the opinion of the Partnership's management, each of the properties is 
adequately covered by insurance.  For additional information concerning the 
properties, see "Management's Discussion and Analysis of Financial Condition 
and Results of Operations" and Note 6 to the Registrant's Financial 
Statements.  A discussion of general competitive conditions to which these 
properties is included in Item 1 hereof.

     Item 3.  Legal Proceedings.  There are no material pending legal  
proceedings to which the Registrant is a party or to which any of its property 
is subject.

     Item 4.  Submission of Matters to a Vote of Security Holders.  No 
matter was submitted during the fourth quarter of 1996 to a vote of the 
Registrant's security holders.

                                   PART II

     Item 5.  Market for Registrant's Common Equity and Related Stockholder 
Matters.

          (a)  Market Information.  The BUCs are subject to various transfer 
     restrictions imposed to prevent the Registrant from being treated as a 
     publicly traded partnership for federal income tax purposes and, 
     accordingly, there is no public trading market for the BUCs.

          (b)  Investors.  The approximate number of BUC Holders on December 
     31, 1996, was 799.

          (c)  Distributions.  Cash distributions are being made on a monthly 
     basis.  Total cash distributions paid or accrued to BUC Holders during 
     the fiscal years ended December 31, 1996, and December 31, 1995 equaled 
     $1,238,286 and $1,297,172, respectively.  The cash distributions paid per 
     BUC during the fiscal years ended December 31, 1996, and December 31, 1995
     were as follows:

<TABLE>
<CAPTION>
                                                       Per BUC
                                           Year Ended            Year Ended
                                       December 31, 1996     December 31, 1995
                                       -----------------     -----------------
              <S>                      <C>                   <C>
              Income                   $          .9017      $          .7573
              Return of Capital                   .4651                 .6745
                                       -----------------     -----------------
              Total                    $         1.3668      $         1.4318
                                       =================     =================
</TABLE>

     See Item 7, Management's Discussion and Analysis of Financial Condition 
and Results of Operations, for information regarding the sources of funds used 
for cash distributions and for a discussion of factors, if any, which may 
adversely affect the Registrant's ability to make cash distributions at the 
same levels in 1997 and thereafter.





















<PAGE>                              - 3 -

     Item 6.  Selected Financial Data.  Set forth below is selected financial 
data for the Partnership.  The information set forth below should be read in 
conjunction with the Financial Statements and Notes thereto filed in response 
to Item 8 hereof.

<TABLE>
<CAPTION>
		                                                          For the		      For the		      For the		      For the		      For the
	                                                       	Year Ended	   	Year Ended	   	Year Ended		   Year Ended		   Year Ended
		                                                    Dec. 31, 1996		Dec. 31, 1995		Dec. 31, 1994		Dec. 31, 1993		Dec. 31, 1992
										                                            -------------  -------------  -------------  -------------  -------------
<S>										                                         <C>            <C>            <C>            <C>            <C>
Mortgage-backed securities income	                    $    660,229 	 $    723,177 	 $    557,576 	 $   	655,722 	 $   	680,483
Equity in earnings of property partnerships		               20,381 		      62,475 	      	76,322      		 42,445      		146,056
Interest income on temporary cash investments		             94,739 		      84,722 		      78,415 		      94,691 		      73,249
Gain on sale of PREP                                       226,587           -              -              -              -
General and administrative expenses		                     (172,499)		    (171,190)		    (148,214)		    (178,832)		    (173,555)
Provision for losses on investment in PREPs		                 -       		     -       		     -       		     -    		    (150,000)
										                                            -------------  -------------  -------------  -------------  -------------
Net income	                                           $    829,437 	 $    699,184 	 $    564,099 	 $    614,026 	 $    576,233
										                                            =============  =============  =============  =============  =============
Net income per Beneficial Unit Certificate (BUC)	     $        .90 	 $        .76 	 $        .61 	 $        .66 	 $       	.62
										                                            =============  =============  =============  =============  =============
Cash distributions paid or accrued per BUC	           $     1.3668 	 $     1.4318 	 $     1.4898 	 $     1.5439 	 $     1.6117
										                                            =============  =============  =============  =============  =============
Investment in mortgage-backed securities	             $  8,506,853 	 $  9,361,640 	 $ 10,202,877 	 $ 10,251,266 	 $	11,061,151
										                                            =============  =============  =============  =============  =============
Investment in preferred real estate participations
 (PREPs), net of valuation allowance	                 $       -      $       -    	 $       -    	 $     99,499 	 $    292,524
										                                            =============  =============  =============  =============  =============
Total assets	                                         $ 10,690,796 	 $ 11,288,968 	 $ 11,879,769 	 $	12,577,331 	 $	13,363,547
										                                            =============  =============  =============  =============  =============
</TABLE>










































<PAGE>                              - 4 -

     Item 7.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

Liquidity and Capital Resources

The Partnership originally acquired: (i) five mortgage-backed securities 
guaranteed as to principal and interest by the Government National Mortgage 
Association (GNMA) collateralized by first mortgage loans on multifamily 
housing properties located in four states (the GNMA Certificates); (ii) 
various mortgage-backed securities collateralized by pools of single-family 
mortgages and guaranteed as to principal and interest by either GNMA or the 
Federal National Mortgage Association (FNMA) (the Single-Family Certificates) 
and; (iii) limited partnership interests (PREPs) in five limited partnerships 
which own the multifamily housing properties financed by the GNMA 
Certificates.  The Partnership has been repaid by GNMA on the GNMA 
Certificates collateralized by the Villages at Moonraker and Laurel Park 
Apartments.  During the second quarter of 1995, the Partnership withdrew as a 
limited partner of the operating partnership which owns the Villages at 
Moonraker, but has retained its PREP in Laurel Park Apartments.  During the 
fourth quarter of 1996, the Partnership sold its PREP in Ashwood Apartments, 
but retains its GNMA Certificate on this property.  Collectively, the three 
remaining GNMA Certificates and the three remaining PREPs are referred to as 
the Permanent Investments.  In addition, the Partnership held four 
Single-Family Certificates at December 31, 1996.

The following table shows the occupancy levels of the properties financed by 
the Partnership in which the Partnership continues to hold an equity interest 
at December 31, 1996:

<TABLE>
<CAPTION>
                                                                                                     Number          Percentage
                                                                                 Number            of Units            of Units
 Property Name                               Location                          of Units            Occupied            Occupied
-------------------------------------        ------------------               ---------          ----------         -----------
<S>                                          <C>                              <C>                <C>                <C>
 Broadmoor Court                             Colorado Springs, CO                   46                  44                  96%
 Laurel Park Apartments                      Riverdale, GA                         387                 371                  96%
 Owings Chase Apartments                     Pikesville, MD                        234                 231                  99%
                                                                              ---------          ----------         -----------
                                                                                   667                 646                  97%
                                                                              =========          ==========         ===========
</TABLE>

Distributions

Cash distributions paid or accrued per Beneficial Unit Certificate (BUC) were 
as follows:

<TABLE>
<CAPTION>
                                                                                 For the            For the            For the
                                                                              Year Ended         Year Ended         Year Ended
                                                                           Dec. 31, 1996      Dec. 31, 1995      Dec. 31, 1994
                                                                           --------------     --------------     --------------
<S>                                                                        <C>                <C>                <C>
Regular monthly distributions
 Income                                                                   $        .9017     $        .7573     $        .6076
 Return of capital                                                                 .4651              .6745              .8822
                                                                           --------------     --------------     --------------
                                                                          $       1.3668     $       1.4318     $       1.4898
                                                                           ==============     ==============     ==============
Distributions
	Paid out of cash flow (including mortgage principal payments)            $       1.3668     $       1.4318     $       1.4898
                                                                           ==============     ==============     ==============
</TABLE>









<PAGE>                               - 5 -

Regular monthly distributions to investors consist primarily of interest and 
principal received on GNMA Certificates and Single-Family Certificates.  
Additional cash for distributions is received from PREPs and temporary cash 
investments.  The Partnership may draw on reserves to pay operating expenses 
or to supplement cash distributions to BUC Holders.  The Partnership is 
permitted to replenish its reserves through the sale or refinancing of 
assets.  During 1996, a net amount of $430,010 of undistributed mortgage 
principal payments was placed in reserves.  The total amount held in reserves 
at December 31, 1996, was $4,515,330 of which $2,536,657 was invested in 
Single-Family Certificates.  

The Partnership believes that cash provided by operating and investing 
activities and, if necessary, withdrawals from the Partnership's reserves will 
be adequate to meet its short-term and long-term liquidity requirements, 
including the payments of distributions to BUC Holders.  Under the terms of 
the Partnership Agreement, the Partnership has the authority to enter into 
short-term and long-term debt financing arrangements; however, the Partnership 
currently does not anticipate entering into such arrangements.  The 
Partnership is not authorized to issue additional BUCs to meet short-term and 
long-term liquidity requirements.

Asset Quality

The Partnership continues to receive monthly principal and interest payments 
on its GNMA Certificates and Single-Family Certificates which are fully 
guaranteed either by GNMA or FNMA.  The obligations of GNMA are backed by the 
full faith and credit of the United States government.  

PREPs, however, are not insured or guaranteed.  The value of these investments 
is a function of the value of the real estate underlying the PREPs.  It is the 
policy of the Partnership to make a periodic review of the real estate 
underlying the PREPs in order to establish, when necessary, a valuation 
reserve on the investment in PREPs.  The allowance for losses on investment in 
PREPs is based on the fair value of the properties underlying the PREPs.  

The fair value of the properties underlying the PREPs is based on management's 
best estimate of the net realizable value of such properties, however; the 
ultimate realized values may vary from these estimates.  The net realizable 
value of the properties is determined based on the discounted estimated future 
cash flows from the properties, including estimated sales proceeds.  The 
calculation of discounted estimated future cash flows includes certain 
variables such as the assumed inflation rates for rents and expenses, 
capitalization rates and discount rates.  These variables are supplied to 
management by an independent real estate firm and are based on local market 
conditions for each property.  In certain cases, additional factors such as 
the replacement value of the property or comparable sales of similar 
properties are also taken into consideration.  The allowance is periodically 
reviewed and adjustments are made to the allowance when there are significant 
changes in the estimated net realizable value of the properties underlying the 
PREPs.

Based on the foregoing methodology, valuations and reviews performed during 
the year ended December 31, 1996, indicated that the investment in PREPs 
recorded on the balance sheet at December 31, 1996, required no adjustments to 
the current carrying amounts.




















<PAGE>                             - 6 -

Ashwood Apartments

Ashwood Apartments, located in Tulsa, Oklahoma, had an average occupancy rate 
of 97% during 1996, compared to 95% during 1995.  During the fourth quarter of 
1996, the Partnership sold its limited partnership interest in the operating 
partnership which owns Ashwood Apartments.  The Partnership received proceeds 
of $226,587 from the sale.  Since the Partnership had previously written off 
its entire equity interest in Ashwood Apartments, the Partnership realized a 
gain of $226,587 on the sale.  In addition to sale proceeds received from the 
sale of its limited partnership interest, the Partnership received 
approximately $20,000 in equity distributions from the partnership which owns 
the property; however, due to the sale of its limited partnership interest, 
the Partnership will no longer receive equity distributions from Ashwood 
Apartments.  The Partnership also received principal and interest payments on 
the GNMA Certificate collateralized by this property in 1996.

In conjunction with the Partnership's sale of its limited partnership interest 
discussed above, the operating partnership which owns Ashwood Apartments 
refinanced its mortgage loan.  As a result, in January 1997, GNMA redeemed the 
GNMA Certificate related to this property by paying the Partnership the full 
principal amount of $556,444 plus accrued interest through the redemption 
date.  As such, the Partnership will no longer receive payments on the GNMA 
Certificate.  

Broadmoor Court

Broadmoor Court, a senior assisted-living center located in Colorado Springs, 
Colorado, had an average occupancy rate of 96% during 1996, compared to 99% 
during 1995.  The mortgage loan on this property is current and the 
Partnership anticipates that property cash flow will be sufficient to pay debt 
service in 1997.  In addition to principal and interest payments received 
during 1996 on the GNMA Certificate collateralized by this property, the 
Partnership recorded approximately $48,000 in equity distributions from the 
partnership which owns the property.

Laurel Park Apartments

Laurel Park Apartments, located in Riverdale, Georgia, had an average 
occupancy rate of 97% during 1996 compared to 95% during 1995.  At December 
31, 1996 the Partnership's investment in this property consists only of a PREP 
since the Partnership has already been repaid by GNMA on its GNMA 
Certificate.  As previously reported, Laurel Park Apartments had not been 
current on its mortgage obligations since December 1994.  The General Partner 
of the Partnership and the general partner of the operating partnership which 
owns Laurel Park Apartments negotiated a Loan Modification Agreement (LMA) 
with HUD in August 1996.  Among other things, the LMA reduced the interest 
rate on the mortgage from 9.25% to 7.25% as well as satisfied all delinquent 
principal and interest.  The Partnership made an additional equity investment 
of $47,996 to effect the LMA.  Laurel Park Apartments has been current on its 
mortgage obligations since the LMA was effected; however, the Partnership did 
not receive any equity distributions on its PREP during 1996.  The General 
Partner feels the LMA will better position the property to remain current on 
its mortgage obligations as well as provide the Partnership with future equity 
distributions.  It is anticipated that Laurel Park Apartments will continue to 
generate cash flow sufficient to meet its mortgage obligations under the terms 
of the LMA during 1997.

Owings Chase Apartments

Owings Chase Apartments, located in Pikesville, Maryland, had an average 
occupancy rate of 96% during 1996, compared to 95% during 1995.  Cash flow 
from the operations of the property was sufficient to fully service debt on 
the mortgage loan in 1996.  The mortgage loan was current (under the modified 
terms of the mortgage) at December 31, 1996, and the Partnership anticipates 
that the property cash flow will continue to be sufficient to pay debt service 
in 1997.  The Partnership received principal and interest payments on the GNMA 
Certificate collateralized by this property in 1996; however the Partnership 
did not receive any equity distributions on its PREP during 1996.







<PAGE>                               - 7 -

RESULTS OF OPERATIONS

The table below compares the results of operations for each year shown.
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1996       Dec. 31, 1995       Dec. 31, 1994
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Mortgage-backed securities income                                       $      660,229      $      723,177      $      557,576
Equity in earnings of property partnerships                                     20,381              62,475              76,322
Interest income on temporary cash investments                                   94,739              84,722              78,415
Gain on sale of PREP                                                           226,587                -                   -
                                                                        ---------------     ---------------     ---------------
                                                                             1,001,936             870,374             712,313
General and administrative expenses                                            172,499             171,190             148,214
                                                                        ---------------     ---------------     ---------------
Net income                                                              $      829,437      $      699,184      $      564,099
                                                                        ===============     ===============     ===============
</TABLE>
<TABLE>
<CAPTION>
                                                                              Increase           Increase
                                                                             (Decrease)         (Decrease)
                                                                             From 1995          From 1994
                                                                        ---------------     ---------------
<S>                                                                     <C>                 <C>
Mortgage-backed securities income                                       $      (62,948)     $      165,601
Equity in earnings of property partnerships                                    (42,094)            (13,847)
Interest income on temporary cash investments                                   10,017               6,307
Gain on sale of PREP                                                           226,587                -
                                                                        ---------------     ---------------
                                                                               131,562             158,061
General and administrative expenses                                              1,309              22,976
                                                                        ---------------     ---------------
Net income                                                              $      130,253      $      135,085
                                                                        ===============     ===============
</TABLE>

Mortgage-backed securities income decreased $62,948 from 1995 to 1996, due to 
the continued amortization of the principal balances of the mortgage-backed 
securities.

Mortgage-backed securities income increased $165,601 from 1994 to 1995.  This 
increase was primarily a result of an increase of approximately $201,000 in 
interest received from Owings Chase Apartments due to the Partnership no 
longer eliminating self-charged interest, since the Partnership's equity in 
the property has been reduced to zero.  This increase was partially offset by 
a decrease of approximately $35,000 in mortgage investment income due to the 
continued amortization of the principal balances of the Partnership's other 
mortgage-backed securities.  

Equity in earnings of property partnerships is a function of the cash flow 
received by the Partnership from its interest in the operating partnerships 
which own the properties.  Prior to the write-down of each investment in PREPs 
to zero, equity in earnings of property partnerships also reflects the 
Partnership's allocable share of earnings generated by each of the properties. 

Equity in earnings of property partnerships decreased $42,094 from 1995 to 
1996 due primarily to the of recording a loss of approximately $48,000 for 
Laurel Park Apartments during the third quarter of 1996.  This loss resulted 
from expenses incurred in conjunction with entering into a loan modification 
agreement with HUD in August.  The loss related to Laurel Park Apartments was 
partially offset by an increase in cash flow of approximately $6,000 from 
Broadmoor Court.

Equity in earnings decreased $13,847 from 1994 to 1995 due primarily to the 
write-down of the investment in Owings Chase Apartments to zero in the last 
quarter of 1994 and due to the Partnership no longer eliminating self-charged 
interest as discussed above.  A decrease of approximately $43,000 related to 
Owings Chase Apartments was partially offset by increases in cash flow of 
approximately $24,000 from Broadmoor Court and $5,000 from Ashwood Apartments.


<PAGE>                               - 8 -

The increase in interest on temporary cash investments of $10,017 from 1995 to 
1996 and $6,307 from 1994 to 1995 was primarily attributable to the increase 
in cash reserves as undistributed principal was placed in reserves throughout 
1995 and 1996.

The Partnership recorded a gain of $226,587 in 1996 due to the sale of the 
Partnership's limited partnership interest in the operating partnership which 
owns Ashwood Apartments.  Due to this sale, the Partnership will no longer 
receive equity distributions from Ashwood Apartments.

General and administrative expenses increased $1,309 from 1995 to 1996, due 
primarily to an increase in travel expenses and professional fees.  General 
and administrative expenses increased $22,976 from 1994 to 1995.  These 
increases were primarily due to increases in salaries and related expenses and 
professional fees.

     Item 8.  Financial Statements and Supplementary Data.  The Financial 
Statements and supporting schedules of the Registrant are set forth in Item 14 
hereof and are incorporated herein by reference.

     Item 9.  Changes in and Disagreements With Accountants on Accounting and 
Financial Disclosure.  There were no disagreements with the Registrant's 
independent accountants on accounting principles and practices or financial 
disclosure during the fiscal years ended December 31, 1996 and 1995.

                                   PART III

     Item 10.  Directors and Executive Officers of Registrant. The Registrant 
has no directors or officers.  Management of the Registrant consists of the 
general partner of the Registrant, America First Capital Associates Limited 
Partnership Six ("AFCA"), and its general partner, America First Companies 
L.L.C.  The following individuals are managers and officers of America First 
Companies L.L.C., and each serves for a term of one year:

<TABLE>
<CAPTION>
    Name                    Position Held                 Position Held Since
-----------------------   --------------------------   -----------------------
<S>                       <C>                          <C>
Michael B. Yanney         Chairman of the Board,                  1987
                          President, Chief Executive
                          Officer and Manager
Michael Thesing           Vice President, Secretary,              1987
                          Treasurer and Manager
William S. Carter, M.D.   Manager                                 1994
George Kubat              Manager                                 1994
Martin A. Massengale      Manager                                 1994
Alan Baer                 Manager                                 1994
Gail Walling Yanney       Manager                                 1996
Mariann Byerwalter        Manager                                 1997
</TABLE>

	    Michael B. Yanney, 63, is the Chairman and President of America First 
Companies L.L.C.  From 1977 until the organization of the first such fund in 
1984, Mr. Yanney was principally engaged in the ownership and management of 
commercial banks.  Mr. Yanney also has investments in private corporations 
engaged in a variety of businesses.  From 1961 to 1977, Mr. Yanney was 
employed by Omaha National Bank and Omaha National Corporation (subsequently 
merged into FirsTier Financial, Inc.), where he held various positions, 
including the position of Executive Vice President and Treasurer of the 
holding company.  Mr. Yanney also serves as a member of the boards of 
directors of Burlington Northern Santa Fe Corporation, Forest Oil Corporation, 
MFS Communications Company, Inc., C-Tec Corporation, Mid-America Apartment 
Communities, Inc. and PKS Information Services, Inc..

	    Michael Thesing, 42, has been Vice President and Chief Financial Officer 
of affiliates of America First Companies L.L.C. since July 1984.  From January 
1984 until July 1984 he was employed by various companies controlled by Mr. 
Yanney.  He was a certified public accountant with Coopers & Lybrand from 1977 
through 1983.

	    William S. Carter, M.D., 70, is a retired physician.  Dr. Carter 
practiced medicine for 30 years in Omaha, Nebraska, specializing in 
otolaryngology (disorders of the ears, nose and throat).

<PAGE>                             - 9 -

	    George Kubat, 51, is the President and Chief Executive Officer of 
Phillips Manufacturing Co., an Omaha, Nebraska, based manufacturer of drywall 
and construction materials.  Prior to assuming that position in November 1992, 
Mr. Kubat was a certified public accountant with Coopers & Lybrand in Omaha, 
Nebraska, from 1969.  He was the tax partner in charge of the Omaha office 
from 1981 to 1992.  Mr. Kubat currently serves on the board of directors of 
Sitel Corporation, American Business Information, Inc., and G.B. Foods 
Corporation.

	    Martin A. Massengale, 63, is President Emeritus of the University of 
Nebraska, Director of the Center for Grassland Studies and Foundation 
Distinguished Professor.  Prior to becoming President in 1991, he served as 
Interim President from 1989, as Chancellor of the University of Nebraska 
Lincoln from 1981 until 1990 and as Vice Chancellor for Agriculture and 
Natural Resources from 1976 to 1981.  Prior to that time, he was a professor 
and associate dean of the College of Agriculture at the University of 
Arizona.  Dr. Massengale currently serves on the board of directors of Woodmen 
Accident & Life Insurance Company and IBP, Inc..

	    Alan Baer, 74, is presently Chairman of Alan Baer & Associates, Inc., a 
management company located in Omaha, Nebraska.  He is also Chairman of Lancer 
Hockey, Inc., Baer Travel Services, Wessan Telemarketing, Total Security 
Systems, Inc. and several other businesses.  Mr. Baer is the former Chairman 
and Chief Executive Officer of the Brandeis Department Store chain which, 
before its acquisition, was one of the larger retailers in the Midwest.  Mr. 
Baer has also owned and served on the board of directors of several banks in 
Nebraska and Illinois.

	    Gail Walling Yanney, 61, is a retired physician.  Dr. Walling practiced 
anesthesia and was most recently the Executive Director of the Clarkson 
Foundation until October of 1995.  In addition, she was a director of FirsTier 
Bank, N.A., Omaha prior to its merger with First Bank, N.A..  Ms. Yanney is 
the wife of Michael B. Yanney.

	    Mariann Byerwalter, 36, is Vice President of Business Affairs and Chief 
Financial Officer of Stanford University.  Ms. Byerwalter was Executive Vice 
President of AFEH and EurekaBank from 1988 to January 1996.  Ms. Byerwalter 
was Chief Financial Officer and Chief Operating Officer of AFEH, and Chief 
Financial Officer of EurekaBank from 1993 to January 1996.  She was an officer 
of BankAmerica Corporation and its venture capital subsidiary from 1984 to 
1987.  She served as Vice President and Executive Assistant to the President 
of Bank of America and was a Vice President in the bank's Corporate Planning 
and Development Department, managing several acquisitions and divestitures.  
During 1986, Ms. Byerwalter managed five divestitures, representing a total 
purchase price of over $100 million with assets aggregating more than $5.0 
billion.

     Item 11.  Executive Compensation.  Neither the Registrant nor AFCA has 
any directors or officers.  None of the managers or executive officers of 
America First Companies L.L.C. (the general partner of AFCA) receive 
compensation from the Registrant and AFCA receives no reimbursement from the 
Registrant for any portion of their salaries.  Remuneration paid by the 
Registrant to AFCA pursuant to the terms of its limited partnership agreement 
during the year ended December 31, 1996, is described in Note 7 of the Notes 
to the Financial Statements filed in response to Item 8 hereof.

     Item 12.  Security Ownership of Certain Beneficial Owners and 
Management.       

      (a)  National Bank of Detroit as trustee for the K-Mart Corporation 
Employee Welfare Benefit Plan, 611 Woodward Avenue, Detroit, Michigan 48232 
owns 386,598 Units representing approximately 42.67% of the outstanding BUCs.  
No other person is known by the Registrant to own beneficially more than 5% of 
the BUCs.

     (b)  No manager or officer of America First Companies L.L.C. and no 
partner of AFCA owns any BUCs.








<PAGE>                              - 10 -

     (c)  LB I Group, Inc. is the special limited partner of AFCA, with the 
right to become the managing general partner of AFCA, or to designate another 
corporation or other entity as the managing general partner, upon the 
happening of any of the following events: (1) the commission of any act which, 
in the opinion of LB I Group, Inc., constitutes negligence, misfeasance or 
breach of fiduciary duty on the part of the managing general partner, (2) the 
dissolution, insolvency or bankruptcy of the managing general partner or the 
occurrence of such other events which cause the managing general partner to 
cease to be a general partner under Delaware law, or (3) the happening of an 
event which results in the change in control of the managing general partner 
whether by operation of law or otherwise.

     There exists no other arrangement known to the Registrant, the operation 
of which may at any subsequent date result in a change in control of the 
Registrant.

     Item 13.  Certain Relationships and Related Transactions. The general 
partner of the Registrant is AFCA and the sole general partner of AFCA is 
America First Companies L.L.C.

     Except as described herein, the Registrant is not a party to any 
transaction or proposed transaction with AFCA, America First Companies L.L.C. 
or with any person who is (i) a manager or executive officer of America First 
Companies L.L.C., or any general partner of AFCA; (ii) a nominee for election 
as a manager of America First Companies L.L.C.; (iii) an owner of more than 5% 
of the BUCs; or, (iv) a member of the immediate family of any of the foregoing 
persons.

     During 1996, the Registrant paid or reimbursed AFCA or America First 
Companies L.L.C. $137,492 for certain costs and expenses incurred in 
connection with the operation of the Registrant, including legal and 
accounting fees and investor communication costs, such as printing and mailing 
charges.  See Note 7 to Notes to Financial Statements filed in response to 
Item 8 hereof for a description of these costs and expenses.

     AFCA is entitled to an annual administrative fee equal to .35% of the 
Partnership's outstanding investments which is paid by the Partnership to the 
extent such amounts are not paid by property owners. AFCA earned $27,621 in 
such administrative fees during 1996, and of such amount, the Partnership paid 
$25,303.

     The general partner of the property partnership which owns Owings Chase 
Apartments is principally owned by an employee of America First Companies 
L.L.C..  Such employee has a nominal interest in America First Companies 
L.L.C..  Affiliates of AFCA also own small interests in the general partner.  
The general partner has a nominal interest in the property partnership's 
profits, losses and cash flow which is subordinate to the interest of the 
Partnership.  The general partner did not receive cash distributions from the 
property partnership in 1996.

     The Registrant has entered into property management agreements with 
America First Properties Management Company, L.L.C..  (the "Manager") with 
respect to the day-to-day operation of Laurel Park Apartments and Owings Chase 
Apartments.  Such property management agreements provide that the Manager is 
entitled to receive a management fee equal to a stated percentage of the gross 
revenues generated by the property under management.  Management fees payable 
to the Manager range from 3.5% to 5% of gross revenues.  Because the Manager 
is an affiliate of AFCA the management fees payable by the Registrant to the 
Manager may not exceed the lesser of (i) the rates that the Registrant would 
pay an unaffiliated manager for similar services in the same geographic 
location or (ii) the Manager's actual cost for providing such services.  
During the year ended December 31, 1996, the Registrant paid the Manager 
property management fees of $40,261.












<PAGE>                              - 11 -

                                   PART IV

     Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 
8-K.  (a) The following documents are filed as part of this report:

            1.  Financial Statements.  The following financial statements are 
     included in response to Item 8 of this report:

            Independent Accountants' Report.

            Balance Sheets of the Registrant as of December 31, 1996, and 
            December 31, 1995.

            Statements of Income of the Registrant for the years ended 
            December 31, 1996, December 31, 1995, and December 31, 1994.

            Statements of Partners' Capital of the Registrant for the years 
            ended December 31, 1996, December 31, 1995, and December 31, 1994.

            Statements of Cash Flows of the Registrant for the years ended 
            December 31, 1996, December 31, 1995, and December 31, 1994.

            Notes to Financial Statements of the Registrant.

            2.  Financial Statement Schedules.  The information required to be 
set forth in the financial statement schedules is shown in the Notes to 
Financial Statements filed in response to Item 8 hereof.

            3.  Exhibits.  The following exhibits were filed as required by 
Item 14(c) of this report.  Exhibit numbers refer to the paragraph numbers 
under Item 601 of Regulation S-K:

                3.  Articles of Incorporation and Bylaws of America First 
            Fiduciary Corporation Number Sixteen (incorporated herein by 
            reference to Form S-11 Registration Statement filed April 13, 1987, 
            with the Securities and Exchange Commission by America First 
            Investment Funds (Commission File No. 33-13407)).

                4(a).  Agreement of Limited Partnership dated May 25, 1988 
            (incorporated herein by reference to Form 10-K dated December 31, 
            1988, filed pursuant to Section 13 or 15(d) of the Securities 
            Exchange Act of 1934 by America First PREP Fund 2 Pension Series 
            Limited Partnership (Commission File No. 0-17582)).

                4(b).  Form of Certificate of Exchangeable Unit (incorporated 
            by reference to Form S-11 Registration Statement filed April 13, 
            1987, with the Securities and Exchange Commission by America First 
            Investment Funds (Commission File No. 33-13407)).

                10(a).  Securities Purchase Agreement, dated September 14, 
            1988, between America First PREP Fund 2 Pension Series Limited 
            Partnership and American Mortgages, Inc. (incorporated herein by 
            reference to Form 10-K dated December 31, 1988, filed pursuant to 
            Section 13 or 15(d) of the Securities Exchange Act of 1934 by 
            America First PREP Fund 2 Pension Series Limited Partnership 
            (Commission File No. 0-17582)).

                10(b).  Securities Purchase Agreement, dated November 29, 
            1988, between America First PREP Fund 2 Pension Series Limited 
            Partnership and TRI Financial Corp. (incorporated herein by 
            reference to Form 10-K dated December 31, 1988, filed pursuant to 
            Section 13 or 15(d) of the Securities Exchange Act of 1934 by 
            America First PREP Fund 2 Pension Series Limited Partnership 
            (Commission File No. 0-17582)).

                24.  Power of Attorney.

     (b) The Registrant did not file any reports on Form 8-K during the last 
quarter of the period covered by this report.






<PAGE>                              - 12 -

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners
America First PREP Fund 2 Pension Series Limited Partnership:

We have audited the accompanying balance sheets of America First Prep Fund 2 
Pension Series Limited Partnership as of December 31, 1996 and 1995, and the 
related statements of income, partners' capital and cash flows for each of the 
three years in the period ended December 31, 1996.  These financial statements 
are the responsibility of the Partnership's management.  Our responsibility is 
to express an opinion on these financial statements based on our audits.  

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatements.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of America First Prep Fund 2 
Pension Series Limited Partnership as of December 31, 1996 and 1995, and the 
results of its operations and its cash flows for each of the three years in 
the period ended December 31, 1996, in conformity with generally accepted 
accounting principles.



Omaha, Nebraska
March 26, 1997                                    /s/Coopers & Lybrand L.L.P.










































<PAGE>                              - 13 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                              Dec. 31, 1996       Dec. 31, 1995
                                                                                             --------------      --------------
<S>                                                                                          <C>                 <C>
Assets
 Cash and temporary cash investments, at cost which                                                                            
  approximates market value                                                                  $   2,072,577       $   1,813,499
 Investment in mortgage-backed securities (Note 5)                                               8,506,853           9,361,640
	Investment in preferred real estate participations (PREPs),
	 net of valuation allowance (Note 6)                                                                 -                   -
	Interest receivable																																																																																60,561              64,454
 Other assets                                                                                       50,805														49,375
                                                                                             --------------      --------------
                                                                                             $  10,690,796       $  11,288,968
                                                                                             ==============      ==============
Liabilities and Partners' Capital
 Liabilities                                                                                                                   
  Accounts payable (Note 7)                                                                  $      54,401       $      58,676
  Distribution payable (Note 4)                                                                    101,945             213,157
                                                                                             --------------      --------------
                                                                                                   156,346             271,833
                                                                                             --------------      --------------
 Partners' Capital
  General Partner                                                                                      100                 100
  Beneficial Unit Certificate Holders
  ($11.63 per BUC in 1996 and $12.16 in 1995)                                                   10,534,350          11,017,035
                                                                                             --------------      --------------
                                                                                                10,534,450          11,017,135
                                                                                             --------------      --------------
                                                                                             $  10,690,796       $  11,288,968
                                                                                             ==============      ==============
</TABLE>
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1996       Dec. 31, 1995       Dec. 31, 1994
                                                                         --------------      --------------      --------------
<S>                                                                      <C>                 <C>                 <C>
Income
 Mortgage-backed securities income (Note 5)                              $     660,229       $     723,177       $     557,576
 Equity in earnings of property partnerships (Note 6)                           20,381              62,475              76,322
 Interest income on temporary cash investments                                  94,739              84,722              78,415
 Gain on sale of PREP                                                          226,587                -                   -
                                                                         --------------      --------------      --------------
                                                                             1,001,936             870,374             712,313
Expenses
 General and administrative expenses (Note 7)                                  172,499             171,190             148,214
                                                                         --------------      --------------      --------------
Net income                                                               $     829,437       $     699,184       $     564,099
                                                                         ==============      ==============      ==============
Net income allocated to:
 General Partner                                                         $      12,508       $      13,103       $      13,634
 BUC Holders                                                                   816,929             686,081             550,465
                                                                         --------------      --------------      --------------
                                                                         $     829,437       $     699,184       $     564,099
                                                                         ==============      ==============      ==============
Net income per BUC                                                       $         .90       $         .76       $         .61
                                                                         ==============      ==============      ==============

The accompanying notes are an integral part of the financial statements.
</TABLE>








<PAGE>                              - 14 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL
FROM DECEMBER 31, 1993, TO DECEMBER 31, 1996
<TABLE>
<CAPTION>

                                                                                           Beneficial Unit
                                                                              General          Certificate
                                                                              Partner              Holders               Total
                                                                        --------------     ----------------     ---------------
<S>                                                                     <C>                <C>                  <C>   
Partner's Capital (excluding net unrealized holding gains (losses))
 Balance at December 31, 1993	                                          $         100      $   	12,404,777	     $  	12,404,877
 Net income		                                                                  13,634		            550,465 		          564,099
 Cash distributions paid or accrued (Note 4)		                                (13,634)		        (1,349,720)		       (1,363,354)
                                                                        --------------     ----------------     ---------------
 Balance at December 31, 1994	                                          	         100	         	11,605,522	     	   11,605,622
 Net income		                                                                  13,103		            686,081		           699,184
 Cash distributions paid or accrued (Note 4)		                                (13,103)		        (1,297,172)		       (1,310,275)
                                                                        --------------     ----------------     ---------------
 Balance at December 31, 1995                                                     100           10,994,431          10,994,531
 Net income                                                                    12,508              816,929             829,437
 Cash distributions paid or accrued (Note 4)                                  (12,508)          (1,238,286)         (1,250,794)
                                                                        --------------     ----------------     ---------------
                                                                                  100           10,573,074          10,573,174
                                                                        --------------     ----------------     ---------------
Net unrealized holding gains (losses)
 Balance at December 31, 1994                                                    -                    -                   -
 Net change                                                                      -                  22,604              22,604
                                                                        --------------     ----------------     ---------------
 Balance at December 31, 1995                                                    -                  22,604              22,604
 Net change                                                                      -                 (61,328)            (61,328)
                                                                        --------------     ----------------     ---------------
                                                                                 -                 (38,724)            (38,724)
                                                                        --------------     ----------------     ---------------
Balance at December 31, 1996                                            $        100       $    10,534,350      $   10,534,450
                                                                        ==============     ================     ===============

The accompanying notes are an integral part of the financial statements.
</TABLE>



































<PAGE>                              - 15 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1996       Dec. 31, 1995       Dec. 31, 1994
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>   
Cash flows from operating activities                                                                                           
 Net income                                                             $      829,437      $      699,184      $      564,099
  Adjustments to reconcile net income to net cash 
   provided by operating activities
    Equity in earnings of property partnerships                                (20,381)            (62,475)            (76,322)
    Gain on sale of PREP                                                      (226,587)               -                   -
    Amortization of discount on mortgage-backed securities                      (9,912)            (11,061)            (20,757)
    Decrease in interest receivable                                              3,893               3,434              10,415
    (Increase) decrease in other assets                                         (1,430)              8,249               8,698
    Increase (decrease) in accounts payable                                     (4,275)              7,612              (7,091)
                                                                        ---------------     ---------------     ---------------
 Net cash provided by operating activities                                     570,745             644,943             479,042
                                                                        ---------------     ---------------     ---------------
Cash flows from investing activities
 Mortgage principal payments received                                          803,371             874,902           1,115,351
 Sale of PREP                                                                  226,587                -                   -
 Distributions received from PREPs                                              68,377              62,475             201,532
 Investment in PREP                                                            (47,996)               -                (25,711)
 Mortgage-backed securities prepayments                                           -                   -              3,219,593
 Acquisition of mortgage-backed securities                                        -                   -             (4,265,798)
                                                                        ---------------     ---------------     ---------------
 Net cash provided by investing activities                                   1,050,339             937,377             244,967
                                                                        ---------------     ---------------     ---------------
Cash flow used in financing activity
 Distributions paid                                                         (1,362,006)         (1,320,201)         (1,254,570)
                                                                        ---------------     ---------------     ---------------
Net increase (decrease) in cash and temporary cash investments                 259,078             262,119            (530,561)
Cash and temporary cash investments at beginning of year                     1,813,499           1,551,380           2,081,941 
                                                                        ---------------     ---------------     ---------------
Cash and temporary cash investments at end of year                      $    2,072,577      $    1,813,499      $    1,551,380
                                                                        ===============     ===============     ===============

The accompanying notes are an integral part of the financial statements.
</TABLE>
































<PAGE>                              - 16 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

1. Organization

America First PREP Fund 2 Pension Series Limited Partnership (the Partnership) 
was formed on February 2, 1988, under the Delaware Revised Uniform Limited 
Partnership Act for the purpose of acquiring a portfolio of federally-insured 
multifamily mortgages and other investments including preferred real estate 
participations (PREPs).  PREPs consist of equity interests which are intended 
to provide the Partnership with a participation in the net cash flow and net 
sale or refinancing proceeds of the properties collateralizing the mortgage 
loans.  The Partnership began operations with the first escrow closing on May 
25, 1988, and will continue in existence until December 31, 2017, unless 
terminated earlier under the provisions of the Partnership Agreement.  The 
General Partner of the Partnership is America First Capital Associates Limited 
Partnership Six (AFCA 6).    

2. Summary of Significant Accounting Policies

 A) Financial Statement Presentation
    The financial statements of the Partnership are prepared on the accrual 
    basis of accounting in accordance with generally accepted accounting 
    principles.

    The preparation of financial statements in conformity with generally 
    accepted accounting principles requires management to make estimates and 
    assumptions that affect the reported amounts of assets and liabilities and 
    disclosure of contingent assets and liabilities at the date of the 
    financial statements and the reported amounts of revenues and expenses 
    during the reporting period.  Actual results could differ from those 
    estimates.

 B) Investment in Mortgage-Backed Securities
    Investment securities are classified as held-to-maturity, 
    available-for-sale, or trading.  Investments classified as 
    held-to-maturity are carried at amortized cost.  Investments classified as 
    available-for-sale are reported at fair value with any unrealized gains or 
    losses excluded from earnings and reflected as a separate component of 
    partners' capital.  Subsequent increases and decreases in the net 
    unrealized gain/loss on the available-for-sale securities are reflected as 
    adjustments to the carrying value of the portfolio and adjustments to the 
    component of partners' capital.  The Partnership does not have investment 
    securities classified as trading.

 C) Investment in PREPs
    The investment in PREPs consists of interests in limited partnerships 
    which own properties underlying the mortgage-backed securities and are 
    accounted for	using the equity method.  When an investment in a PREP has 
    been reduced to zero, earnings are recorded to the extent that 
    distributions are received.  PREPs are not insured or guaranteed.  The 
    value of these investments is a function of the value of the real estate 
    underlying the PREPs.

 D) Allowance for Losses on Investments in PREPs
    The allowance for losses on investments in PREPs is a valuation reserve 
    which has been established at a level that management feels is adequate to 
    absorb potential losses on investments in PREPs.  The allowance is based 
    on management's best estimate of the net realizable value of such 
    properties; however, the ultimate realized values may vary from these 
    estimates.  The net realizable value of the properties is determined based 
    on the discounted estimated future cash flows from the properties, 
    including estimated sales proceeds.  The calculation of estimated future 
    cash flows includes certain variables such as the assumed inflation rates 
    for rents and expenses, capitalization rates and discount rates.  These 
    variables are supplied to management by an independent real estate firm and
    are based on local market conditions for each property.  In certain cases, 
    additional factors such as the replacement value of the property or 
    comparable sales of similar properties are also taken into consideration.  
    The allowance is periodically reviewed and adjustments are made to the 
    allowance when there are significant changes in the estimated net 
    realizable value of the properties underlying the PREPs.


<PAGE>                              - 17 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

 E) Income Taxes
    No provision has been made for income taxes since Beneficial Unit 
			 Certificate (BUC) Holders are required to report their share of the 
			 Partnership's income for federal and state income tax purposes.  The tax 
    basis of the Partnership's assets and liabilities exceeded the reported 
    amounts by $1,758,888 and $1,863,187 at December 31, 1996, and December 31,
    1995, respectively.

 F) Temporary Cash Investments
    Temporary cash investments are invested in short-term debt securities 
			 purchased with an original maturity of three months or less. 

	G) Net Income Per BUC
			 Net income per BUC has been calculated based on the number of BUCs 
			 outstanding (905,974) for all years presented.

 H) New Accounting Pronouncement
    The Financial Accounting Standards Board has issued Financial Accounting 
    Standards No. 128 "Earnings Per Share" (FAS 128).  FAS 128, which is 
    effective for periods ending after December 15, 1997, is not expected to 
    have an impact on the Partnership's computation, presentation or 
    disclosure of earnings per BUC.

3. Partnership Reserve Account

The Partnership maintains a reserve account which consisted of the following 
at December 31, 1996:

<TABLE>
<S>                                                                   <C>
 Cash and temporary cash investments                                  $    1,978,673
 GNMA Certificates                                                         1,490,176
 FNMA Certificates                                                         1,046,481
                                                                      ---------------
                                                                      $    4,515,330
																																																																						===============
</TABLE>

The reserve account was established to maintain working capital for the 
Partnership and is available for distribution to BUC Holders and for any 
contingencies related to Permanent Investments and the operation of the 
Partnership.  See Note 5 regarding the investment in mortgage-backed 
securities.

4. Partnership Income, Expenses and Cash Distributions

The Partnership Agreement contains provisions for distributing the cash 
available for distribution and for the allocation of income and expenses for 
tax purposes among AFCA 6 and BUC Holders.  Income and expenses are allocated 
to each BUC Holder on a monthly basis based on the number of BUCs held by each 
Holder as of the last day of the month for which such allocation is to be 
made.    

Net Operating Income during each distribution period will be distributed 99% 
to the BUC Holders and 1% to AFCA 6 until the BUC Holders, as a class, receive 
distributions of Net Operating Income equal to a cumulative noncompounded 
annual return of 9% on their Adjusted Capital Contributions.  Thereafter, 
remaining Net Operating Income during such distribution period will be 
distributed 90% to the BUC Holders and 10% to AFCA 6 until BUC Holders, as a 
class, receive distributions of Net Operating Income equal to a cumulative 
noncompounded annual return of 11% on their Adjusted Capital Contributions. 
Thereafter, remaining Net Operating Income during such distribution period 
will be distributed 95% to BUC Holders and 5% to AFCA 6.








<PAGE>                              - 18 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

Net Capital Transaction Proceeds will be distributed 100% to the BUC Holders 
until the BUC Holders, as a class, have received distributions from all 
sources in an amount equal to $20 per BUC.  Thereafter, Net Capital 
Transaction Proceeds will be distributed 99% to the BUC Holders and 1% to 
AFCA 6 until BUC Holders, as a class, have received distributions from all 
sources in an amount equal to $20 per BUC plus an amount equal to a cumulative 
noncompounded annual return of 9% on their Adjusted Capital Contributions.  
Thereafter, any remaining Net Capital Transaction Proceeds will be distributed 
90% to BUC Holders and 10% to AFCA 6 until BUC Holders, as a class, have 
received distributions from all sources in an amount equal to $20 per BUC plus 
an amount equal to a cumulative noncompounded annual return of 11% on their 
Adjusted Capital Contributions.  Thereafter any remaining Net Capital 
Transactions Proceeds will be distributed 95% to BUC Holders and 5% to AFCA 6.

Proceeds from a Capital Transaction which result in the liquidation of the 
Partnership for federal income tax purposes will be distributed in the same 
manner as distributions from nonliquidating Capital Transactions, subject to 
the requirement that the distributions be initially made to the BUC Holders 
and AFCA 6 in accordance with their positive capital account balances. 	 

Cash distributions are presently made on a monthly basis but may be made 
quarterly or semiannually if AFCA 6 so elects.  Cash distributions included in 
the financial statements represent the actual cash distributions made during 
each year and the cash distributions accrued at the end of each year.

5. Investment in Mortgage-Backed Securities

The mortgage-backed securities held by the Partnership represent Government 
National Mortgage Association (GNMA) Certificates and Federal National 
Mortgage Association (FNMA) Certificates.  The GNMA Certificates are backed by 
first mortgage loans on multifamily housing properties and pools of 
single-family properties.  The FNMA Certificates are backed by pools of 
single-family properties.  The GNMA Certificates are debt securities issued by 
a private mortgage lender and are guaranteed by GNMA as to the full and timely 
payment of principal and interest on the underlying loans.  The FNMA 
Certificates are debt securities issued by FNMA and are guaranteed as to the 
full and timely payment of principal and interest on the underlying loans.

At December 31, 1996, the total amortized cost, gross unrealized holding 
gains, gross unrealized holding losses, and aggregate fair value of 
available-for-sale securities are $2,575,381, $22,868, $61,592 and $2,536,657, 
respectively.  The total amortized cost, gross unrealized holding gains, gross 
unrealized holding losses, and aggregate fair value of held-to-maturity 
securities are $5,970,196, $174,257, $287,449 and $5,857,004, respectively. 

At December 31, 1995, the total amortized cost, gross unrealized holding 
gains, gross unrealized holding losses, and aggregate fair value of 
available-for-sale securities are $3,071,819, $37,616, $15,012 and $3,094,423, 
respectively.  The total amortized cost, gross unrealized holding gains, gross 
unrealized holding losses, and aggregate fair value of held-to-maturity 
securities are $6,267,217, $175,318, $290,919 and $6,151,616, respectively. 

Prior to June 30, 1995, the Partnership classified all investments in 
mortgage-backed securities as held-to-maturity.  However, during the quarter 
ended June 30, 1995, the Partnership reassessed the appropriateness of the 
classification of securities held in the reserve account (see Note 3).  The 
Partnership concluded, given the nature of the reserve account, it would be 
more appropriate to classify securities held in the reserve account as 
available-for-sale rather than as held-to-maturity.  Accordingly, on June 30, 
1995, the Partnership transferred all securities held in the reserve account 
from the held-to-maturity classification to the available-for-sale 
classification.  The total amortized cost, gross unrealized holding gains, 
gross unrealized holding losses and aggregate fair value of the securities 
transferred were $3,378,771, $25,982, $56,198 and $3,348,555, respectively.







<PAGE>                              - 19 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

Descriptions of the Partnership's mortgage-backed securities at December 31, 
1996, are as follows:

<TABLE>
<CAPTION>
                                                                                                                        Income
                                      					               	   Number	 Interest				  				Maturity  				Carrying          Earned 
Type of Security and Name        					Location             	of Units 	    Rate  				  						Date  						Amount         in 1996
----------------------------------				--------------------  --------  --------  	 	-------------  -------------   -------------
<S>                              					<C>                  	<C>       <C>   						 <C>			    		   <C>             <C>
Held-to-Maturity
  GNMA Certificates:                                                                                  
   Ashwood Apartments            					Tulsa, OK            				144    	9.25%   			  		07/15/23    $  		556,444    $     51,662
   Broadmoor Court	              					Colorado Springs, CO     	46		  	9.25%   				  	10/15/29			   			581,351          53,881
	  Owings Chase Apartments												Pikesville, MD											234					6.75%   					  12/15/23						 3,193,872         216,795
	  Pools of single-family mortgages  																										   					8.74%(1)		 2016 to 2018						 1,638,529         160,059
                                                                                                  -------------   -------------
                                                                                                     5,970,196         482,397
                                                                                                  -------------   -------------

Available-for-Sale
  GNMA Certificates:
	  Pools of single-family mortgages 																											   					6.03%(1)									 	2008								 757,554(2)       49,990
	  Pools of single-family mortgages 																											   					7.58%(1)									 	2008									732,622(2)       58,757

  FNMA Certificates:
	  Pools of single-family mortgages 																											   					5.52%(1)								 		2000							1,046,481(2)       69,085
																																																																																																		-------------   -------------
																																																																																																				 2,536,657         177,832
                                                                                      												-------------   -------------
Balance at December 31, 1996                                                                      $  8,506,853    $    660,229
                                                                                        										=============   =============
</TABLE>
  (1) Represents yield to the Partnership.
		(2)	Reserve account asset - see Note 3.

Reconciliation of the carrying amount of the mortgage-backed securities is as 
follows:
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1996       Dec. 31, 1995       Dec. 31, 1994
                                                                        ---------------     ---------------     ---------------
<S>																																																																					<C>                 <C>                 <C>
Balance at beginning of year																																											 $    9,361,640				  $	 	10,202,877      $   10,251,266
		Additions
			Amortization of discount on mortgage-backed securities																			     9,912														11,061              20,757
   Acquisition of mortgage-backed securities                                      -                   -              4,265,798
   Change in net unrealized holding gains on
    available-for-sale securities                                                 -                 22,604                -
		Deductions
			Mortgage principal payments received																																							(803,371)									  (874,902)         (1,115,351)
   Mortgage-backed securities prepayments                                         -                   -             (3,219,593)
   Change in net unrealized holding losses on
    available-for-sale securities                                              (61,328)               -                   -
																																																																								---------------     ---------------     ---------------
Balance at end of year																																																	 $    8,506,853					 $			 9,361,640      $   10,202,877
																																																																								===============     ===============     ===============
</TABLE>

6.	Investment in PREPs

The Partnership's PREPs consist of interests in limited partnerships which own 
multifamily properties financed by the Partnership.  The limited partnership 
agreements originally provided for the payment of a base return on the equity 
provided to the limited partnerships and for the payment of additional amounts 
out of a portion of the net cash flow or net sale or refinancing proceeds of 
the properties subject to various priority payments.  Certain of the 
agreements have been amended to defer payment of the base return.

<PAGE>                              - 20 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

Descriptions of the PREPs held during the year ended December 31, 1996, are as 
follows:

<TABLE>
<CAPTION>
                                                                                                                     Equity in
                                                                                                                      Earnings
                                                                                                                       (Losses)
                                                                                                    Carrying       of Property
Name                       Location                Partnership Name                                   Amount      Partnerships
-----------------------    --------------------    -----------------------------------------    -------------     ------------
<S>                        <C>                     <C>                                          <C>               <C>
Broadmoor Court            Colorado Springs, CO    Stazier Associates Colorado Springs, Ltd.    $     53,547      $    48,476
Owings Chase Apartments    Pikesville, MD          Owings Chase Limited Partnership                  150,000             -
Ashwood Apartments         Tulsa, OK               129th Street Limited Partnership                     -   (1)        19,901
Laurel Park Apartments     Riverdale, GA           Gold Key Venture                                     -             (47,996)
                                                                                                -------------     ------------
                                                                                                     203,547      $    20,381
Less valuation allowance                                                                            (203,547)     ============
                                                                                                -------------
Balance at December 31, 1996                                                                    $       -
                                                                                                =============
</TABLE>
(1) During the fourth quarter of 1996, the Partnership sold its limited 
partnership interest in 129th Street Limited Partnership.  Therefore, the 
Partnership no longer has an equity interest in this property.

Reconciliation of the carrying amount of the PREPs is as follows:
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1996       Dec. 31, 1995       Dec. 31, 1994
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Balance at beginning of year                                            $      203,547      $      328,067      $      427,566
  Additions
   Investment in PREPs                                                          47,996                -                 25,711
   Equity in earnings of property partnerships                                  20,381              62,475              76,322
  Deductions
   Distributions received from PREPs                                           (68,377)            (62,475)           (201,532)
   Write-off(1)                                                                   -               (124,520)               -
                                                                        ---------------     ---------------     ---------------
Balance at end of year                                                  $      203,547      $      203,547      $      328,067
                                                                        ===============     ===============     ===============
</TABLE>

The following summarizes the activity in the valuation allowance:
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1996       Dec. 31, 1995       Dec. 31, 1994
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Balance at beginning of year                                            $      203,547      $      328,067      $      328,067
  Write-off(1)                                                                    -               (124,520)               -
                                                                        ---------------     ---------------     ---------------
Balance at end of year                                                  $      203,547      $      203,547      $      328,067
                                                                        ===============     ===============     ===============
</TABLE>
(1)  During the second quarter of 1995, the Partnership withdrew as a limited 
partner of the operating partnership which owns the Villages at Moonraker.  
Therefore, the valuation allowance which had previously been established for 
the full amount of this equity investment was written off.






<PAGE>                              - 21 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                                              				1996              		1995		              1994
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Combined condensed financial information for the PREPs is as follows:
Assets
	Real estate	                                                           $   17,830,781      $   20,381,335    	 $   32,725,035
	Restricted deposits and funded reserves		                                     977,821             484,879           		384,196
 Other assets		                                                              1,191,345           1,378,718		         1,901,395
                                                                        ---------------     ---------------     ---------------
			                                                                     $   19,999,947      $   22,244,932    	 $   35,010,626
                                                                        ===============     ===============     ===============
Liabilities and Partners' Capital
	Liabilities
  Mortgage notes payable	                                               $   20,459,706      $   22,313,737	     $   34,181,180
  Other liabilities		                                                        1,653,940           1,846,124		         7,286,837
	Partners' Capital (Deficit)
		General Partners		                                                        (2,545,305)         (2,346,535)		       (7,379,538)
  Limited Partners
   America First PREP Fund 2 Limited Partnership		                             341,523             341,523		           707,544
   America First PREP Fund 2 Pension Series Limited Partnership		              203,547             203,547		           328,067
   Other                                                                      (113,464)           (113,464)           (113,464)
                                                                        ---------------     ---------------     ---------------
			                                                                     $   19,999,947      $   22,244,932	     $   35,010,626
                                                                        ===============     ===============     ===============
Rental income	                                                          $    5,550,385      $    6,423,813	     $    7,019,554
    		                                                                  ===============     ===============     ===============
Combined results of operations	                                         $     (469,952)     $   (1,163,422)	    $   (2,344,145)
	                                                                       ===============     ===============     ===============
Equity in earnings of property partnerships
   (as calculated pursuant to the Limited Partnership Agreements)       $       20,381      $       62,475	     $      	76,322
	                                                                       ===============     ===============     ===============
</TABLE>

7. Transactions with Related Parties

Substantially all the Partnership's general and administrative expenses are 
paid by AFCA 6 or an affiliate and reimbursed by the Partnership.  The amount 
of such expenses reimbursed to AFCA 6 or an affiliate are shown below.  The 
reimbursed expenses are presented on a cash basis and do not reflect accruals 
made at each year end.

<TABLE>
<CAPTION>
                                                                        										1996	              	1995	             	1994
														                                                          ---------------     ---------------     ---------------
<S>														                                                       <C>                 <C>                 <C>
Reimbursable salaries and benefits								                              $       83,883    	 $      	83,922 	    $       68,450
Professional fees and expenses									                                         16,755 		           18,828 		           19,749
Investor services and custodial fees									                                   10,038            		10,296 		           11,343
Report preparation and distribution									                                     8,319 		            7,777 		            8,923
Other expenses									                                                          5,782 		            3,194 		            2,446
Consulting and travel expense									                                           5,648		               628             		  693
Insurance								                                                               	4,434 	            	3,867 		            2,891
Telephone									                                                               1,395 		            1,453 		            1,255
Registration fees									                                                       1,238 		            1,049 	               705
														                                                          ---------------     ---------------     ---------------
									                                                               $     	137,492 	    $      131,014 	    $      116,455
														                                                          ===============     ===============     ===============
</TABLE>

AFCA 6 is entitled to an administrative fee of .35% per annum of the 
outstanding principal amounts invested in mortgage-backed securities, PREPs, 
and temporary cash investments to be paid by the Partnership to the extent 
such amount is not paid by property owners.  The administrative fee earned by 
AFCA 6 was $27,621 in 1996, $28,841 in 1995, and $30,252 in 1994.  Of these 
amounts, $25,303 in 1996, $26,508 in 1995, and $27,456 in 1994 was paid by 
the Partnership and the remainder was paid by property owners.


<PAGE>                              - 22 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

The general partner of the property partnership which owns Owings Chase 
Apartments is principally owned by an employee of an affiliate of AFCA 6.  
Such employee has a nominal interest in the affiliate.  Affiliates of AFCA 6 
also own small interests in the general partner.  The general partner has a 
nominal interest in the property partnership's profits, losses and cash flow 
which is subordinate to the interest of the Partnership.  The general partner 
did not receive cash distributions from the property partnership in 1996, 1995 
or 1994.

An affiliate of AFCA 6 has been retained to provide property management 
services for Laurel Park Apartments and Owings Chase Apartments.  The fees for 
services provided represent the lower of (i) costs incurred in providing 
management of the property, or (ii) customary fees for such services 
determined on a competitive basis and amounted to $40,261, $36,740 and $26,995 
in 1996, 1995 and 1994, respectively.

8. Fair Value of Financial Instruments

The following methods and assumptions were used by the Partnership in 
estimating the fair value of its financial instruments:

  Cash and temporary cash investments:  Fair value approximates the carrying 
  value of such assets.

  Investment in mortgage-backed securities:  Fair values are based on amounts 
  obtained from an independent pricing source.
<TABLE>
<CAPTION>
                                                        At December 31, 1996                    At December 31, 1995
                                                -----------------------------------     -----------------------------------
                                                      Carrying           Estimated            Carrying           Estimated
                                                        Amount          Fair Value              Amount          Fair Value
                                                ---------------     ---------------     ---------------     ---------------
<S>                                             <C>                 <C>                 <C>                 <C>
Cash and temporary cash investments             $    2,072,577      $    2,072,577      $    1,813,499      $    1,813,499
Investment in mortgage-backed securities        $    8,506,853      $    8,393,661      $    9,361,640      $    9,246,039
</TABLE>

9.	Summary of Unaudited Quarterly Results of Operations													
<TABLE>
<CAPTION>
								                                                 First		            Second		             Third		            Fourth
From January 1, 1996, to December 31, 1996						       Quarter		           Quarter		           Quarter		           Quarter
														                                  ---------------     ---------------     ---------------     ---------------
<S>                                             <C>                 <C>                 <C>                 <C>
Total income						                              $      233,336 	    $      193,445 	    $      162,616 	    $      412,539(1)
Total expenses							                                  (44,955)		          (46,850)		          (45,278)		          (35,416)
														                                  ---------------     ---------------     ---------------     ---------------
Net income						                                $     	188,381    	 $      146,595    	 $     	117,338 	    $      377,123
														                                  ===============     ===============     ===============     ===============
Net income per BUC						                        $         	.20 	    $       	  .16    	 $          .13 	    $          .41
														                                  ===============     ===============     ===============     ===============
</TABLE>

(1) During the fourth quarter of 1996, the Partnership recorded a gain of 
    $226,587 on the sale of its limited partnership interest in the operating 
    partnership which owns Ashwood Apartments.














<PAGE>                              - 23 -

<TABLE>
<CAPTION>
								                                                 First		            Second		             Third		            Fourth
From January 1, 1995, to December 31, 1995						       Quarter		           Quarter		           Quarter		           Quarter
														                                  ---------------     ---------------     ---------------     ---------------
<S>                                             <C>                 <C>                 <C>                 <C>
Total income						                              $      241,690 	    $      205,721 	    $      221,614 	    $      201,349
Total expenses							                                  (44,616)		          (44,468)		          (41,644)		          (40,462)
														                                  ---------------     ---------------     ---------------     ---------------
Net income						                                $     	197,074    	 $      161,253    	 $     	179,970 	    $      160,887
														                                  ===============     ===============     ===============     ===============
Net income per BUC						                        $         	.21 	    $       	  .18    	 $          .20 	    $          .17
														                                  ===============     ===============     ===============     ===============
</TABLE>

10. Subsequent Event

During the fourth quarter of 1996, the operating partnership which owns 
Ashwood Apartments refinanced its mortgage loan.  As a result, in January 
1997, GNMA redeemed the GNMA Certificate related to Ashwood Apartments by 
paying the Partnership the full principal amount of $556,444 plus accrued 
interest through the redemption date.





















































<PAGE>                              - 24 -

                                  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.

                                   AMERICA FIRST PREP FUND 2 PENSION
                                   SERIES LIMITED PARTNERSHIP

                                   By America First Capital
                                      Associates Limited
                                      Partnership Six, General
                                      Partner of the Registrant

                                   By America First Companies L.L.C.,
                                      General Partner of America First
                                      Capital Associates Limited
                                      Partnership Six


                                   By /s/ Michael Thesing
                                      Michael Thesing,
                                      Vice President
Date:  March 26, 1997


















































<PAGE>                              - 25 -

     Pursuant to the requirements of the Securities and Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the 
Registrant and in the capacities and on the dates indicated.

Date:  March 26, 1997              By /s/ Michael B. Yanney*
                                      Michael B. Yanney
                                      Chairman of the Board, President, Chief
                                      Executive Officer and Manager
                                      (Principal Executive Officer)


Date:  March 26, 1997              By /s/ Michael Thesing
                                      Michael Thesing
                                      Vice President, Secretary, Treasurer and
                                      Manager (Principal Financial Officer)


Date:  March 26, 1997              By
                                      William S. Carter, M.D.
                                      Manager


Date:  March 26, 1997              By /s/George Kubat*
                                      George Kubat
                                      Manager


Date:  March 26, 1997              By /s/ Martin A. Massengale*
                                      Martin A. Massengale
                                      Manager


Date:  March 26, 1997              By /s/ Alan Baer*
                                      Alan Baer
                                      Manager


Date:  March 26, 1997              By /s/ Gail Walling Yanney*
                                      Gail Walling Yanney
                                      Manager

Date:  March 26, 1997	             By	/s/ Mariann Byerwalter*	
		                                    Mariann Byerwalter
 		                                   Manager


*By Michael Thesing Attorney-in-Fact


/s/ Michael Thesing
Michael Thesing
























<PAGE>                              - 26 -


































                                  EXHIBIT 24


                               POWER OF ATTORNEY






































<PAGE>                              - 27 -

                               POWER OF ATTORNEY


     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1996, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

     America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P.
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 25th day of March, 1997.


                                                							  /s/ Michael B. Yanney
                                                 							Michael B. Yanney



















































<PAGE>                               - 28 -

                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1996, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 25th day of March, 1997.


                                                					  /s/ Gail Walling Yanney
                                               							Gail Walling Yanney




















































<PAGE>                               - 29 -

                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1996, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 25th day of March, 1997.


                                                					  /s/ George Kubat
                                               							George Kubat




















































<PAGE>                               - 30 -

                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1996, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

     America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P.
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 25th day of March, 1997.


                                                				 /s/  Martin A. Massengale
                                                				Martin A. Massengale




















































<PAGE>                               - 31 -

                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1996, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 25th day of March, 1997.


                                                  							        /s/ Alan Baer
                                                         							Alan Baer




















































<PAGE>                               - 32 -

                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1996, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 25th day of March, 1997.


                                                  			/s/ Mariann Byerwalter
                                                    Mariann Byerwalter




















































<PAGE>                              - 33 -