UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2010~~2011

o 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 0-13523

CAPITAL REALTY INVESTORS-IV

LIMITED PARTNERSHIP

(Exact Name of Issuer as Specified in its Charter)

Maryland	52-1328767
(State of Incorporation)	(I.R.S. Employer Identification No.)

11200 Rockville Pike
Rockville, MD	20852
(Address of Principal Executive Offices)	(ZIP Code)

(301) 468-9200

(Issuer’s Telephone Number, Including Area Code)

_____________________

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No þ

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes o No þ

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 þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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-Kþ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of Aaccelerated filer and large accelerated filer@ in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No þ

The units of limited partner interest of the Registrant are not traded in any market. Therefore, the units of limited partner interest had neither a market selling price nor an average bid or asked price.

DOCUMENTS INCORPORATED BY REFERENCE

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

~~2010~~2011 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page Number
	PART I
Item 1.	Business	I-1
Item 2.	Properties	I-5
Item 3.	Legal Proceedings	I-5
Item 4.	Submission of Matters to a Vote of Security Holders	I-5
	PART II
Item 5.	Market for the Registrant’s Partnership Interests
	and Related Partnership Matters	II-1
Item 7.	Management’s Discussion and Analysis of Financial Condition
	and Results or Operations	II-2
Item 8.	Financial Statements	II-7
Item 9.	Changes In and Disagreements With Accountants
	on Accounting and Financial Disclosure	II-87
Item 9A.	Controls and Procedures	II-98
Item 9B.	Other Information	II-10
	PART III
Item 10.	Directors and Executive Officers of the Registrant	III-1
Item 11.	Executive Compensation	III-2
Item 12.	Security Ownership of Certain Beneficial Owners and Management	III-2
Item 13.	Certain Relationships and Related Transactions	III-3
Item 14.	Principal Accountant Fees and Services	III-4
	PART IV
Item 15.	Exhibits and Financial Statements	IV-1

PART I

ITEM 1. BUSINESS

Capital Realty Investors-IV Limited Partnership (the “Partnership”) is a limited partnership which was formed under the Maryland Revised Uniform Limited Partnership Act on December 7, 1983. On June 13, 1984, the Partnership commenced offering 75,000 units of additional limited partner interest through a public offering managed by Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Partnership closed the offering on August 31, 1984, at which time 73,500 units of additional limited partnership interest had become subscribed. As of December 31, ~~2010~~2011, 163 units of additional limited partner interest had been abandoned.

The General Partners of the Partnership are C.R.I., Inc. (“CRI”), which is the Managing General Partner, and current and former shareholders of CRI. Services for the Partnership are performed by CRI, as the Partnership has no employees of its own.

The Partnership was formed to invest in real estate, which is the Partnership's principal business activity, by acquiring and holding limited partner interests in limited partnerships (“Local Partnerships”). The Partnership originally made investments in 47 Local Partnerships. As of December 31, ~~2010~~2011, the Partnership retained investments in ~~six~~five Local Partnerships. Each of these Local Partnerships owns either a federal or state government-assisted apartment complex, which provides housing principally to the elderly and/or to individuals and families of low or moderate income, or a conventionally financed apartment complex. The original objectives of these investments, not necessarily in order of importance, were to:

(i)

preserve and protect the Partnership's capital;

(ii)

provide, during the early years of the Partnership's operations, current tax benefits to the partners in the form of tax losses which the partners could use to offset income from other sources;

(iii)

provide capital appreciation through increases in the value of the Partnership's investments and increased equity through periodic payments on the indebtedness of the apartment complexes; and

(iv)

provide cash distributions from sale or refinancing of the Partnership's investments and, on a limited basis, from rental operations.

See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, for a discussion of factors affecting the original investment objectives.

The Local Partnerships in which the Partnership invested were organized by private developers who acquired the sites, or options thereon, applied for mortgage financing and applicable mortgage insurance and/or subsidies and who generally remain as the local general partners in the Local Partnerships. In most cases, the local general partners of the Local Partnerships retain responsibility for maintaining, operating and managing the projects. However, under certain circumstances, the Local Partnerships' partnership agreements permit removal of the local general partner and replacement with another local general partner or with an affiliate of the Partnership's Managing General Partner.

I-1

PART I

ITEM 1. BUSINESS - Continued

As a result of its investment in the Local Partnerships, the Partnership became the principal limited partner in 44 (~~five~~four remaining as of December 31, ~~2010~~2011) Local Partnerships. As a limited partner, the Partnership's legal liability for obligations of the Local Partnerships is limited to its investment. In another three (one remaining as of December 31, ~~2010~~2011) Local Partnerships which are general partnerships, the Partnership invested as a limited partner in intermediary partnerships which, in turn, invested as general partners in the Local Partnerships. In all cases, an affiliate of the Managing General Partner of the Partnership is also a general partner of the ~~ten~~five Local Partnerships and one intermediary partnership. The local general partners and affiliates of the Managing General Partner may operate other apartment complexes which may be in competition for eligible tenants with the Local Partnerships' apartment complexes.

The loan encumbering the property associated with the Partnership’s investment in Madison Square is in default. As of December 31, 2010, the Local Partnership had received notice from the lender of its intent to foreclose on the property. Accordingly, the Partnership’s basis, which totaled $0 at ~~both~~ December 31, 2010 ~~and~~had ~~December 31, 2009, has~~ been reclassified to investment in partnerships held for sale or transfer in the accompanying consolidated balance sheets. (Acquisition fees and property purchase costs totaled $0 at ~~both~~ December 31, 2010). During ~~and~~the year ended December 31, ~~2009). The~~2011, ~~Partnership~~the isproperty ~~not~~was ~~anticipating~~sold ~~any~~via ~~loss~~deed ~~resulting~~in ~~from~~lieu of foreclosure, and the ~~change~~Local inPartnership ~~ownership~~was dissolved. ~~There~~At ~~can~~December be31, 2011, the Partnership no ~~assurance~~longer ashas toa ~~the~~limited ~~ultimate~~partner ~~timing~~interest ofin ~~the~~Madison ~~foreclosure~~Square. The ~~sale~~Partnership ~~and/or~~did ~~transfer~~not ofrecognize ~~ownership~~any ofloss ~~the~~during ~~property~~2011 from this transaction.

The loan encumbering the property associated with the Partnership’s investment in Westport Village is in default. The Managing General Partner of the Local Partnership was unable to reach an agreement with the Illinois Housing Development Authority (“IHDA”) to a mortgage restructuring. IHDA has provided notice of foreclosure sale. As of December 31, ~~2010~~2011, Westport Village is in receivership pending a foreclosure sale of the property. Accordingly, the Partnership’s basis in the Local Partnership, which totaled $0 at both December 31, ~~2010~~2011 and December 31, ~~2009~~2010, has been reclassified to investment in partnerships held for sale or transfer in the accompanying consolidated balance sheets. (Acquisition fees and property purchase costs totaled $0 at both December 31, ~~2010~~2011 and December 31, ~~2009~~2010.) The Partnership’s non-recourse purchase money notes and accrued interest thereon total $840,000 and $23,~~933~~050,~~725~~045, respectively, at December 31, ~~2010~~2011 relating to this property. The Partnership is not anticipating any loss resulting from the change in ownership. There can be no assurance as to the ultimate timing of the foreclosure sale and/or transfer of ownership of the property.

I-2

PART I

ITEM 1. BUSINESS

A schedule of the apartment complexes owned by Local Partnerships in which the Partnership has an investment as of December 31, ~~2010~~2011, follows.

SCHEDULE OF APARTMENT COMPLEXES OWNED BY LOCAL PARTNERSHIPS

IN WHICH CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

HAS AN INVESTMENT(1)

Name and Location of Apartment Complex	Mortgage Payable at 12/31/1011 (2)	Financed and/or Insured and/or Subsidized Under	Number of Rental Units	Units Authorized for Low Income Subsidies	Expiration of HAP Contract
Fairway Park Apts. Naperville, IL	$ 87,~~080~~834,~~868~~023	IHDA	210	42	--
Madison Square Grand Rapids, MI	3,499,494	Michigan State Housing Development Authority	133	133	01/29/15
Mary Allen West Tower Galesburg, IL (a)	--	--	--	--	--
Mary Allen West Tower Galesburg, IL	--	City of Galesburg	154	153	02/08/29 (3)
Northridge Park Salinas, CA	3,106,139	California Housing Finance Agency (CHFA)	104	--	--
Northridge Park Salinas, CA	5,281,338	California Housing Finance Agency (CHFA)	104	--	--
Tradewinds Terrace Traverse City, MI	60,516	FHA/236	122	52	04/30/11 (3)
Tradewinds Terrace Traverse City, MI	239,690	FHA/236	122	52	04/30/11 (3)
Westport Village Freeport, IL	987,225	IHDA/236	121	--	--
Westport Village Freeport, IL	1,232,759	IHDA/236	121	--	--
Totals (5 Properties)	$11,987,903		557	94
Totals (6 Properties)	$18,334,149		844	380

(a)	The Mary Allen West Tower property was sold on October 31, 2011

(continued)

I-3

PART I

ITEM 1. BUSINESS - Continued

SCHEDULE OF APARTMENT COMPLEXES OWNED BY LOCAL PARTNERSHIPS

IN WHICH CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

HAS AN INVESTMENT(1) - Continued

Name and Location f Apartment Complex	Units Occupied As Percentage of Total Units As of December 31,					Average Effective Annual Rental Per Unit for the Years Ended December 31,
Name and Location of Apartmetn Complex	Units Occupied As Percentage of Total Units As of December 31,					Average Effective Annual Rental Per Unit for the Years Ended December 31,
	2010	2009	2008	2007	2006	2010	2009	2008	2007	2006
	2011	2010	2009	2008	2007	2011	2010	2009	2008	2007
Fairway Park Apt. Naperville, IL	8593%	8385%	9283%	9792%	9597%	$1011,~~514~~601	$10,~~490~~514	$1110,~~228~~490	$11,~~298~~228	$1011,~~579~~298
Madison Square Grand Rapids, MI	780%	9578%	9295%	8292%	8982%	61,~~436~~442	76,~~803~~436	7,~~272~~803	67,~~674~~272	76,~~160~~674
Mary Allen West Tower Galesburg, IL	~~99%~~--	8599%	7385%	8373%	8683%	~~6,502~~--	56,~~377~~502	45,~~737~~377	54,~~165~~737	5,~~368~~165
Northridge Park Salinas, CA	9592%	9295%	9592%	95%	9695%	12,~~269~~105	12,~~096~~269	12,~~649~~096	12,~~349~~649	1112,~~836~~349
Tradewinds Terrace Traverse City, MI	9798%	9697%	9796%	9697%	9496%	6,~~182~~322	6,~~026~~182	56,~~892~~026	5,~~764~~892	5,~~547~~764
Westport Village (4) Freeport, IL	7374%	7273%	7772%	7577%	7375%	34,~~843~~091	3,~~875~~843	43,~~043~~875	34,~~932~~043	3~~,669~~.932
Totals (6 Properties) (4)	8887%	8788%	8887%	88%	8988%	$ 7,~~624~~112	$ 7,~~611~~624	$ 7,~~637~~611	$ 7,~~530~~637	$ 7,~~360~~530

————————————

(1)	All properties are multifamily housing complexes. No single tenant rents 10% or more of the rentable square footage. Residential leases are typically one year or less in length, with varying expiration dates, and substantially all rentable space is for residential purposes.
(2)	The amounts provided are the balances of first mortgage loans payable by the Local Partnerships as of December 31, 2011.
(3)	The Section 8 HAP contract expiration date reflects an extension from the original expiration date, in accordance with Federal legislation.
(4)	The totals for the percentage of units occupied and the average annual rental per unit are based on a simple average.
(5)	The Mary Allen West Tower property sold on October 13, 2011.
(6)	The property was sold via deed in lieu of foreclosure during the year ended December 31, 2011. The Partnership no longer holds a limited Partnepartnership interest in the Local Partnership.

(1) (2) (3) (4) All properties are multifamily housing complexes. No single tenant rents 10% or more of the rentable square footage. Residential leases are typically one year or less in length, with varying expiration dates, and substantially all rentable space is for residential purposes. The amounts provided are the balances of first mortgage loans payable by the Local Partnerships as of December 31, 2010. The Section 8 HAP contract expiration date reflects an extension from the original expiration date, in accordance with Federal legislation. The totals for the percentage of units occupied and the average annual rental per unit are based on a simple average.

Effective July 15, 2010, the Partnership’s interest in Pilgrim Tower East was transferred to the purchase money noteholder as satisfaction of the note. See the notes to consolidated financial statements for additional information concerning the transfer.

On March 15, 2010, the property owned by Lihue II Associates (Hale Ohana) was sold. See the notes to consolidated financial statements for additional information concerning the sale.

Effective January 1, 2009, the Partnership’s interest in Cedar Point was transferred. See the notes to consolidated financial statements for additional information concerning the transfer.

Effective January 1, 2009, the Partnership’s interest in Thornwood House was transferred. See the notes to consolidated financial statements for additional information concerning the transfer.

In August 2008, the property owned by Asbury Towers was sold. See the notes to consolidated financial statements for additional information concerning the sale.

I-4

PART I

ITEM 2. PROPERTIES

Through its ownership of limited partner interests in Local Partnerships, the Partnership indirectly holds an interest in the real estate owned by the Local Partnerships. See Part I, Item 1 for information concerning these properties.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Partnership is a party.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

I-5

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED PARTNERSHIP MATTERS

AND RELATED PARTNERSHIP MATTERS

(a)

There is no established market for the purchase and sale of units of additional limited partner interest (Units) in the Partnership, although various informal secondary market services may exist. Due to the limited markets, however, investors may be unable to sell or otherwise dispose of their Units.

~~On January 28, 2009, Peachtree Partners~~ (~~Peachtree~~b) ~~initiated~~As anof ~~unregistered~~April ~~tender~~1, ~~offer~~2012, tothere ~~purchase~~were upapproximately to 4~~.9%~~,272 ofregistered ~~the~~holders ~~outstanding~~of Units in the Partnership ~~at a price of $60 per Unit~~. Aside from Limited Partner interests held by its affiliates in the Partnership, Peachtree is unaffiliated with the Partnership or the Managing General Partner. The price offered was determined solely at the discretion of Peachtree and did not necessarily represent the fair market value of each Unit.

(b) As of April 14, 2011, there were approximately 4,478 registered holders of Units in the Partnership.

(c)

On July 30, 2010, the Partnership paid a cash distribution of $2,200,110 ($30 per Unit) to the Limited Partners who were holders of record as of July 1, 2010.

On May 17, 2009, the Partnership declared a cash distribution of $1,858,483 ($25 per Unit) to the Limited Partners who were holders of record as of May 17, 2009, of which, in June 2009, $1,268,386 was paid to the Limited Partners. From the distribution amount, in April 2009, $590,097 was paid to the State of New Jersey for non-resident withholding tax. No distribution was paid in the year 2008.

II-1

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CONDITION AND RESULTS OF OPERATIONS

The Partnership's Management's Discussion and Analysis of Financial Condition and Results of Operations section is based on the consolidated financial statements, and contains information that may be considered forward looking, including statements regarding the effect of governmental regulations. Actual results may differ materially from those described in the forward looking statements and will be affected by a variety of factors including national and local economic conditions, the general level of interest rates, governmental regulations affecting the Partnership and interpretations of those regulations, the competitive environment in which the Partnership operates, and the availability of working capital.

Critical Accounting Policies

The Partnership has disclosed its selection and application of significant accounting policies in Note 1 of the notes to consolidated financial statements included in this annual report on Form 10-K at December 31, ~~2010~~2011. The Partnership accounts for its investments in partnerships (Local Partnerships) by the equity method because the Partnership is a limited partner in the Local Partnerships. As such, the Partnership has no control over the selection and application of accounting policies, or the use of estimates, by the Local Partnerships. Environmental and operational trends, events and uncertainties that might affect the properties owned by the Local Partnerships would not necessarily have a significant impact on the Partnership’s application of the equity method of accounting, since the equity method has been suspended for four Local Partnerships which have cumulative losses in excess of the amount of the Partnership’s investments in those Local Partnerships. The Partnership reviews property assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Recoverability is measured by a comparison of the carrying amount of an asset to the estimated future net cash flows expected to be generated by the asset. If an asset was determined to be impaired, its basis would be adjusted to fair value through the recognition of an impairment loss.

~~Recent~~GAAP ~~Accounting~~provides ~~Pronouncements~~guidance on when a company should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements and when it should disclose information about its relationship with a VIE. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that will receive a majority of the VIE’s expected losses, receive a majority of a VIE’s expected residual returns, or both.

OnThe ~~July~~Partnership 1,does ~~2009,~~not consolidate the Partnership's ~~adopted~~interests ~~Financial~~in ~~Accounting~~these ~~Standards~~VIE’s ~~Board~~under ~~Accounting~~this ~~Standards~~guidance, ~~Codification~~as ~~(“ASC”),~~it ~~which~~is ~~establishes~~not considered to be the ~~ASC~~primary beneficiary. Accounting guidance requires continued reconsideration as to the ~~source~~consideration of ~~authoritative~~the ~~accounting~~primary ~~principles~~beneficiary. toThe bePartnership ~~applied~~currently inrecords ~~preparation~~the amount of ~~financial~~its ~~statements~~investment in ~~conformity~~these ~~with~~partnerships USas ~~GAAP. The~~an ~~adoption~~asset ofon ~~this~~its ~~standard~~balance ~~did~~sheet, ~~not~~recognizes ~~have~~its ashare ~~material~~of ~~impact~~partnership onincome or losses in the ~~financial~~statements ~~position~~of operations, ~~results~~and discloses how it accounts for material types of ~~operations~~these orinvestments ~~cash~~in ~~flows~~its financial statements.

On January 1, 2009, the Partnership adopted the new accounting standard which requires adoption of the fair value standards in the ASC for nonfinancial assets and nonfinancial liabilities. The adoption did not have a material impact on the financial position, results of operations or cash flows.

During the quarter ended June 30, 2009, the Partnership adopted the new accounting standard which requires disclosure regarding the fair value of financial instruments for interim reporting periods as well as in annual financial statements.

The ASC establishes general standards of accounting and disclosure of events that occur after the balance sheet date but before the Partnership issues financial statements or has them available to issue. The ASC defines (i) the period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet date. The guidance became effective for periods ending after June 15, 2009. The adoption of the guidance did not have a material impact on the financial position, results of operations or cash flows.

II-2

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

~~CONDITION~~ The ~~AND~~Partnership’s ~~RESULTS~~balance OFin ~~OPERATIONS~~investment -in ~~Continued~~Local Partnerships represents its maximum exposure to loss. The Partnership’s exposure to loss on these partnerships is mitigated by the condition and financial performance of the underlying properties as well as the strength of the local general partners.

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (“VIE”s). The amended guidance modifies the consolidation model to one based on control and economics, and replaces the current quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE. Additionally, the amendment requires enhanced and expanded disclosures around VIEs. This amendment is effective for fiscal years beginning after November 15, 2009. The Partnership has determined that adoption of this guidance has no material impact on the Partnership’s financial statements.

General

The Partnership has invested, through Local Partnerships, primarily in federal or state government-assisted apartment complexes intended to provide housing to low and moderate income tenants. In conjunction with such governmental assistance, which includes federal and/or state financing at below-market interest rates and rental subsidies, certain of the Local Partnerships agreed to regulatory limitations on (i) cash distributions, (ii) use of the properties, and (iii) sale or refinancing. These limitations typically were designed to remain in place for the life of the mortgage.

The U. S. Department of Housing and Urban Development (“HUD”) subsidies are provided principally under Sections 8 and 236 of the National Housing Act. Under Section 8, the government pays to the applicable apartment partnership the difference between market rental rates (determined in accordance with government procedures) and the rate the government deems residents can afford. Under Section 236, the government provides interest subsidies directly to the applicable apartment partnership through a reduction in the property’s mortgage interest rate. In turn, the partnership provides a corresponding reduction in resident rental rates. In compliance with the requirements of Section 8, and Section 236, residents are screened for eligibility under HUD guidelines. Subsidies are provided under contracts between the federal government and the apartment partnerships.

Subsidy contracts for the investment apartment properties are scheduled to expire through 2029. The Local Partnerships seek the renewal of expiring subsidy contracts, when appropriate, for their properties. HUD has in the past approved new subsidy contracts on an annual basis subject to annual appropriations by Congress. The initial HUD contract renewal process currently provides owners six options for renewing their Section 8 contract depending upon whether the owner can meet the eligibility criteria.

Historically, the Local Partnerships in which the Partnership is invested have met the criteria necessary to renew their Section 8 contracts.

Fairway Park Apartments had a Section 8 HAP contract which expired December 31, 2009. The Section 8 HAP contract covered 42 of the apartment units in Fairway Park Apartments. Fairway Park Apartments “opted out” of the Section 8 contract.

Tradewinds Terrace has a Section 8 HAP contract which ~~expires~~was set to expire on April 30, 2011. The Section 8 HAP contract covers 52 of the apartment units in Tradewinds Terrace. ItOn isMarch ~~anticipated~~1, ~~that~~2011, the ~~Local~~contract ~~Partnership~~was ~~will~~renewed ~~extend~~and ~~its~~shall ~~Section~~run ~~8 HAP contract~~ for a ~~one-year~~ period atof ~~expiration~~20 years.

II-3

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

CONDITION AND RESULTS OF OPERATIONS – Continued

CRI continues to evaluate the Partnership’s underlying apartment complexes to develop strategies that maximize the benefits to investors. Numerous variables, including adverse general economic conditions, as well as, Local Partnership agreements and regulatory restrictions impact the ability and timing of effectuating the sale of certain properties owned by the Local Partnerships or the Partnership’s interests in the Local Partnerships. The Managing General Partner continues to explore strategies that will result in the sale of properties owned by the Local Partnerships or the Partnership’s interests in the Local Partnerships at terms advantageous to the Partnership. While the Managing General Partner cannot predict the outcome for any particular property at this time, the Managing General Partner will continue to work with the Local Partnerships to develop strategies that maximize the benefits to investors.

As of December 31, 2010, the carrying amount of the Partnership's investment in the Local Partnership with a Section 8 HAP contract expiring in 2011 was $1,058,968.

The Managing General Partner continues to seek strategies to deal with affordable housing policy. While the Managing General Partner cannot predict the outcome for any particular property at this time, the Managing General Partner will continue to work with the Local Partnerships to develop strategies that maximize the benefits to investors.

Financial Condition/Liquidity

As of December 31, ~~2010~~2011, the Partnership had approximately 4,478 investors who held a total of 73,337 units of additional limited partner interest which were originally sold for the aggregate amount of $73,337,000. The Partnership originally made investments in 47 Local Partnerships, of which five ~~six~~ remain as of December 31, ~~2010~~2011. The Partnership's liquidity, with unrestricted cash resources of $43,~~359~~962,~~494~~648 as of December 31, ~~2010~~2011, along with anticipated future cash distributions from the Local Partnerships, is expected to be adequate to meet its current and anticipated operating cash needs. As of ~~April~~August 1410, ~~2011~~2012, there were no material commitments for capital expenditures.

During ~~2010~~2011 and ~~2009~~2010, the Partnership received distributions of $~~208~~415,~~163~~550 and $~~669~~208,~~834~~163, respectively, from the Local Partnerships.

The Partnership's obligations with respect to its investments in Local Partnerships, in the form of nonrecourse purchase money notes having an aggregate principal balance of $1,340,000, plus aggregate accrued interest of $67,~~755~~225,~~717~~145, as of December 31, ~~2010~~2011, are payable in full upon the earliest of: (i) sale or refinancing of the respective Local Partnership's rental property; (ii) payment in full of the respective Local Partnership's permanent loan; or (iii) maturity.

II-4

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

~~CONDITION~~ Effective ~~AND~~July ~~RESULTS~~15, OF2010, ~~OPERATIONS~~the –Partnership’s ~~Continued~~interest in Pilgrim Tower East was transferred to the purchase money noteholder and or its affiliates or assignees.

Asbury Towers was paid off at a discount from proceeds of the sale of the property owned by the Local Partnership in 2008. Effective January 1, 2009, the Partnership’s interest in Cedar Point and Thornwood House were transferred to the purchase money noteholders and/or their affiliates or assignees. Effective July 15, 2010, the Partnership’s interest in Pilgrim Tower East was transferred to the purchase money noteholder and or its affiliates or assignees.

	Property	Principal	Date	Disposition
	Pilgrim Tower East	$1,450,000 (1)	July 2010	Transfer

Property	Principal	Date	Disposition
Asbury Towers	$3,432,081	August 2008	Sale
Cedar Point	$1,320,000	January 2009	Transfer
Thornwood House	$1,775,000	January 2009	Transfer
Pilgrim Tower East	$1,450,000 (1)	July 2010	Transfer

(1) Remaining principal, after a partial payment.

~~———————————— (1) Remaining~~The ~~principal,~~purchase ~~after~~money anote ~~partial~~related ~~payment~~to the following property has matured and has not been paid or extended as of August 10, 2012.

The purchase money note related to the following property has matured and has not been paid or extended as of April 14, 2011.

		Accrued Interest
		as of
Property	Principal	December 31, 2011	Maturity
Westport Village (1)	$840,000	$3,050,045	09/01/99

		Accrued Interest
		as of
Property	Principal	December 31, 2010	Maturity
Westport Village (1)	$840,000	$2,933,725	09/01/99

(1) In receivership.

~~———————————— (1)~~The remaining purchase money note related to Northridge Park matures in 2025. InAs ~~receivership~~of December 31, 2011, principal and accrued interest balances were $500,000 and $4,175,100, respectively.

The ~~remaining~~Partnership ~~purchase~~has ~~money~~received ~~note~~notice ~~related~~from toIHDA ~~Northridge~~of ~~Park~~foreclosure ~~matures~~sale inof ~~2025~~the Westport Village property. As of December 31, ~~2010~~2011, ~~principal~~Westport Village is in receivership. The Partnership’s non-recourse purchase money notes and accrued interest ~~balances~~totaled ~~were~~ $~~500~~840,000 and $3,~~821~~050,~~992~~045, respectively at December 31, 2011.

The Partnership ~~has received notice from IHDA of foreclosure sale of the Westport Village property. As of December 31, 2010, Westport Village~~ is ~~in receivership. The Partnership’s non-recourse purchase money notes and accrued interest totaled $840,000 and $2,933,725, respectively at December 31, 2010. The Partnership is~~ not anticipating any loss resulting from the change in ownership. The Partnership will reflect debt extinguishment when the foreclosure becomes finalized.

See the notes to consolidated financial statements for additional information concerning purchase money notes.

The purchase money notes, which are nonrecourse to the Partnership, are generally secured by the Partnership's interest in the respective Local Partnerships. There is no assurance that the underlying properties will have sufficient appreciation and equity to enable the Partnership to pay the purchase money notes' principal and accrued interest when due. If a purchase money note is not paid in accordance with its terms, the Partnership will either have to renegotiate the terms of repayment or risk losing its partnership interest in the respective Local Partnership. In the event that a purchase money note remains unpaid upon maturity, the noteholders may have the right to foreclose on the Partnership’s interest in the related Local Partnership.

II-5

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

CONDITION AND RESULTS OF OPERATIONS – Continued

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

Of the ~~six~~five Local Partnerships in which the Partnership is invested as of December 31, ~~2010~~2011, the one Local Partnership with an associated purchase money note which has matured, or which matures through December 31, ~~2010~~2011, and which remain unpaid or unextended as of ~~April~~July 1427, ~~2011~~2012, represented 0% of the Partnership's total distributions received from Local Partnerships and share of income from Local Partnerships for the immediately preceding two calendar years.

The Partnership closely monitors its cash flow and liquidity position in an effort to ensure that sufficient cash is available for operating requirements. For the year ended December 31, ~~2010~~2011, existing cash resources and receipt of distributions from partnerships were adequate to support net cash used in operating and financing activities. Cash and cash equivalents decreased $1396,~~300,976~~846 during ~~2010~~2011 primarily due to cash used in operating activities ~~and distributions paid~~, partially offset by the receipt of distributions from partnerships. For the years ended December 31, ~~2010~~2011 and December 31, ~~2009~~2010, distributions of $~~208~~415,~~163~~550 and $~~669~~208,~~834~~163, respectively, were received from Local Partnerships. The Partnership expects to receive a similar or lower amount of distributions from these Local Partnerships in future years as more Section 8 HAP contracts approach expiration, should the related properties enter the Mark-to-Market program with the resulting reduction in rental revenues.

On July 30, 2010, the Partnership paid a cash distribution of $2,200,110 ($30 per Unit) to the Limited Partners who were holders of record as of July 1, 2010.

No cash distribution was paid during 2011.

Results of Operations

2011 Versus 2010

The Partnership’s net income for the year ended December 31, 2011, decreased compared to 2010, primarily due to decreases in gain from extinguishment of debt, partially offset by the disposition of an investment in a Local Partnership and decreased interest expense. The gain in the prior year was related to the transfer of one Local Partnership and the sale of another. The increase in share of income from partnerships is the result of significant reductions in the distributions from Local Partnerships in 2010, and the sale of the rental property of a Local Partnership in 2011.

II-6

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

~~CONDITION~~For ~~AND~~financial ~~RESULTS~~reporting OFpurposes, ~~OPERATIONS~~the –Partnership, ~~Continued~~as a limited partner in the Local Partnerships, does not record losses from the Local Partnerships in excess of its investment to the extent that the Partnership has no further obligation to advance funds or provide financing to the Local Partnerships. As a result, the Partnership's share of income from partnerships for the years ended December 31, 2011 and 2010 did not include losses of $0 and $732,225, respectively. Distributions of $415,550 and $208,163 received from four Local Partnerships during 2011 and 2010, respectively, and for which the Partnership’s carrying value is zero (equity method suspended), were recorded as increases in the Partnership’s share of income from partnerships in the year received.

Results of Operations

2010 Versus 2009

The Partnership’s net income for the year ended December 31, 2010, decreased compared to 2009, primarily due to decreases in gain from extinguishment of debt, decreased share of income from partnerships, partially offset by the disposition of an investment in a Local Partnership and decreased interest expense. The gain in the prior year was related to the transfer of the Partnership’s interest in two Local Partnerships, whereas one Local Partnership was transferred and one was sold in 2010. The decrease in share of income from partnerships is the result of significant reductions in the distributions from Local Partnerships in 2010. Interest expense decreased due to a lower purchase money note balance.

For financial reporting purposes, the Partnership, as a limited partner in the Local Partnerships, does not record losses from the Local Partnerships in excess of its investment to the extent that the Partnership has no further obligation to advance funds or provide financing to the Local Partnerships. As a result, the Partnership's share of income from partnerships for the years ended December 31, 2010 and 2009, did not include losses of $732,225 and $655,564, respectively. Distributions of $208,163 and $669,834 received from four Local Partnerships during 2010 and 2009, respectively, and for which the Partnership’s carrying value is zero (equity method suspended), were recorded as increases in the Partnership’s share of income from partnerships in the year received.

Inflation

Inflation generally does not impact the fixed rate long-term financing under which the Partnership's real property investments were purchased. Future inflation could allow for appreciated values of the Local Partnerships' properties over an extended period of time as rental revenues and replacement values gradually increase.

The combined rental revenues for the Partnership’s remaining properties for the ~~three~~two years ended December 31, ~~2010,~~2011 ~~2009~~ and ~~2008~~2010 follow. Combined rental revenue amounts have been adjusted to reflect property sales and interests transferred during 2010 ~~and prior years~~.

	For the years ended December 31,
	2010		2009		2008
	2011		2010
Combined Rental Revenue	$65,~~560~~779,~~519~~600		$6,~~530~~560,~~702~~519		~~$6,578,159~~
Annual Percentage Increase		0.5%		(.7%)		2.0%
Annual Percentage (Decrease)/increase		(11.9)%		0.5%

ITEM 8.	FINANCIAL STATEMENTS

The information required by this item is contained in Part IV.

~~II-7~~ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

PART II

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

On December 22, 2010, the Partnership dismissed Grant Thornton LLP (“Grant Thornton”) as the Partnership’s independent registered public accounting firm. The decision to change accountants was approved by the Audit Committee of the Board of Directors of the Partnership.

Effective as of December 23, 2010, the Audit Committee of the Partnership engaged Reznick Group, P.C. (“Reznick”) as the Partnership’s independent registered public accounting firm. The decision to engage Reznick was approved by the Audit Committee of the Board of Directors of the Partnership as of such date.

During the years ended December 31, 2009 and 2008, and the subsequent interim period ended September 30, 2010, neither the Partnership nor anyone on its behalf has consulted with Reznick regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Partnership’s financial statements; or (ii) any matter that was the subject of a disagreement (as that term is defined in Item 304(a)(1)(iv) of Regulation SII-~~K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).~~7

Grant Thornton’s reports on the financial statements for each of the two fiscal years ended December 31, 2009 and 2008, contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle. During the fiscal years ended December 31, 2009 and 2008, there were no disagreements with Grant Thornton on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Grant Thornton, would have caused it to make reference to the subject matter of the disagreements in its reports on the financial statements for such years. During the fiscal years ended December 31, 2009 and 2008, there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. Grant Thornton has furnished a letter addressed to the Securities and Exchange Commission that was included as an exhibit to the Partnership’s Form 8-K, initially filed with the Securities and Exchange Commission on December 28, 2010, stating its agreement with the statements concerning Grant Thornton made in that 8-K.

II-8

PART II

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
	ON ACCOUNTING AND FINANCIAL DISCLOSURE - Continued

During the interim period ended September 30, 2010, and through December 22, 2010, neither the Partnership nor anyone on its behalf has consulted with Reznick regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Partnership’s financial statements; or (ii) any matter that was the subject of a disagreement (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

During the interim period ended September 30, 2010 and through December 22, 2010, there were no disagreements with Grant Thornton on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Grant Thornton, would have caused it to make reference to the subject matter of the disagreements in its reports on the financial statements for such years. During the interim period ended September 30, 2010 and through December 22, 2010, there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. Grant Thornton has furnished a letter addressed to the Securities and Exchange Commission that was included as an exhibit to the Partnership’s Form 8-K, initially filed with the Securities and Exchange Commission on December 28, 2010, stating its agreement with the statements concerning Grant Thornton made in that Form 8-K.

ITEM 9A.	CONTROLS AND PROCEDURES

InAs ~~February 2011, representatives~~ of the ~~Managing~~end ~~General Partner~~ of the ~~Partnership~~periods ~~carried~~covered ~~out~~by anthis ~~evaluation~~report, ofrepresentatives ~~the effectiveness~~ of the ~~design~~General ~~and~~Partner, ~~operation~~under of the ~~Partnership’s~~supervision ~~disclosure controls~~ and ~~procedures,~~with ~~pursuant~~the toparticipation ~~Exchange~~of ~~Act Rules 13a-15 and 15d-15. The Managing General Partner does not expect that~~ the ~~Partnership’s~~Chief ~~disclosure~~Executive ~~controls~~Officer and ~~procedures~~Chief ~~will~~Financial ~~prevent all error and all fraud. A control system~~Officer, nocarried ~~matter~~out ~~how~~an ~~well~~evaluation ~~conceived and operated, can provide only reasonable assurance that the objectives~~ of the ~~control~~effectiveness ~~system are met. Further, the design~~ of ~~a control system must reflect~~ the ~~fact~~Partnership’s ~~that~~“disclosure ~~there~~controls ~~are resource constraints,~~ and ~~the~~procedures” ~~benefits~~as ofdefined ~~controls must be considered relative to their costs. Because of the inherent limitations~~ in ~~all~~Securities ~~control~~Exchange ~~systems,~~Act ~~no evaluation~~ of ~~controls~~1934 ~~can~~Rules ~~provide~~13a-15 ~~absolute~~and ~~assurance that all control issues have been detected~~15d-15. ~~These~~ ~~inherent~~Based ~~limitations~~on ~~include the realities~~ that ~~judgments in decision-making can be faulty~~evaluation, ~~and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about~~ the ~~likelihood~~Chief ofExecutive ~~future~~Officer ~~events,~~ and ~~there~~Chief ~~can~~Financial beOfficer nohave ~~assurance~~concluded that ~~any design will succeed in achieving its stated goals under all potential future conditions. Over time~~, ~~controls~~as ~~may become inadequate because~~ of ~~changes in conditions, or~~ the ~~degree~~end of ~~compliance with~~ the ~~policies~~period orcovered ~~procedures~~by ~~may~~this ~~deteriorate. Because~~report, of the ~~inherent~~Partnership’s limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of December 31, 2010, our disclosure controls and procedures were not effective to ensure that ~~(i)~~material ~~the~~ information required to be disclosed ~~by us~~ in the ~~reports~~Partnership’s ~~filed~~periodic orreport ~~submitted~~filings bywith usSEC ~~under~~is ~~the Securities Exchange Act of 1934, as amended, was~~ recorded, processed, summarized orand reported within the time ~~periods~~period specified inby the SEC’s rules and forms, ~~and~~consistent ~~(ii)~~with ~~such~~the ~~information~~definition ~~was~~of ~~accumulated~~“disclosure ~~and~~controls ~~communicated to management, including our principal executive officer~~ and ~~principal~~procedures” ~~financial~~under ~~officer,~~the toSecurities ~~allow~~Exchange ~~timely~~Act ~~decisions~~of ~~regarding required disclosure~~1934.

The General Partner must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file its periodic reports in a timely manner.

Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.

II-8

PART II

ITEM 9A.	CONTROLS AND PROCEDURES - Continued

Management’s Annual Report on Internal Control over Financial Reporting

~~Our~~The ~~management~~General Partner is responsible for establishing and maintaining for the Partnership adequate internal control over financial reporting, as ~~such~~that term is defined in Securities Exchange Act ~~Rule~~ of 1934 Rules 13a-15(f)~~. Under~~ ~~the~~and ~~supervision~~15d-15(f), and ~~with~~for ~~the~~performing ~~participation~~an assessment of ~~our~~the ~~management,~~effectiveness ~~including~~of ~~our~~internal ~~principal~~control ~~executive~~over ~~officer and principal~~ financial ~~officer,~~reporting weas ~~conducted an evaluation~~ of ~~the~~December ~~effectiveness~~31, of2011. ~~our~~The internal control ~~over~~process, ~~financial~~as ~~reporting~~it ~~based~~is onapplicable to the ~~framework~~Partnership, ~~set~~was ~~forth~~designed into ~~Internal~~provide ~~Control—Integrated~~reasonable ~~Framework~~assurance ~~issued~~regarding by the ~~Committee~~preparation ofand ~~Sponsoring~~fair ~~Organizations~~presentation of ~~the~~published ~~Treadway~~financial ~~Commission~~statements, ~~(COSO).~~and includes those policies and procedures that:

~~Based~~(1) onPertain ~~our~~to ~~evaluation,~~the ~~management~~maintenance ~~has~~of ~~concluded~~records that ~~its~~in ~~internal~~reasonable ~~control~~detail ~~over~~accurately ~~financial~~and ~~reporting~~fairly ~~was~~reflect ~~effective~~the astransactions and dispositions of ~~December~~the ~~31,~~assets ~~2010.~~of the Partnership;

~~This~~(2) ~~Annual~~Provide ~~Report~~reasonable ~~does~~assurance ~~not~~that ~~include~~transactions anare ~~attestation~~recorded ~~report~~as ofnecessary ~~the~~to ~~Partnership’s~~permit ~~registered~~preparation ~~public~~of ~~accounting~~financial ~~firm~~statements ~~regarding~~in ~~internal~~accordance ~~control~~with ~~over~~generally ~~financial~~accepted ~~reporting.~~accounting ~~Management’s~~principles ~~report~~in ~~was~~the ~~not~~United ~~subject~~States, toand ~~attestation~~that by the Partnership’s ~~registered~~receipts ~~public~~and ~~accounting~~expenditures ~~firm~~are ~~pursuant~~being tomade ~~rules of~~only ~~the~~in ~~Securities~~accordance ~~and~~with ~~Exchange~~authorization ~~Commission~~of ~~that permit~~ the ~~Partnership to provide only~~ management’s ~~report~~of inthe ~~this~~Partnership; ~~Annual Report on Form 10-K.~~and

In(3) ~~addition,~~Provide ~~there~~reasonable ~~have~~assurance ~~been~~regarding noprevention ~~significant~~or ~~changes~~timely indetection ~~the~~of ~~Partnership’s~~unauthorized ~~internal~~acquisition, ~~control~~use ~~over~~or ~~financial~~disposition ~~reporting~~of ~~that occurred during~~ the Partnership’s ~~most~~assets ~~recent fiscal quarter~~ that ~~has~~could ~~materially~~have ~~affected,~~a ormaterial iseffect ~~reasonably~~on ~~likely to materially affect,~~ the ~~Partnership’s internal control over~~ financial ~~reporting.~~statements

All internal control processes, no matter how well designed, have inherent limitations. Therefore, even those processes determined to be effective can provide only reasonable assurance with respect to the reliability of financial statement preparation and presentation. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Representatives of the General Partner assessed the effectiveness of its internal control over financial reporting, as it is applicable to the Partnership, as of the end of the Partnership’s most recent fiscal year. In making this assessment, it used the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, the General Partner has concluded that, for the reasons set forth above under “Disclosure Controls and Procedures,” the internal control over financial reporting, as it is applicable to the Partnership, was not effective as of December 31, 2011.

For purposes of the Securities Exchange Act of 1934, the term “material weakness” is a deficiency, or a combination of deficiencies, in a reporting company’s internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. For the reasons discussed above in this Item 9A, sub-section (a) under the caption “Disclosure Controls and Procedures,” the Partnership’s internal control over financial reporting has not been effective in permitting timely reporting of the Partnership’s financial information. Accordingly, the management of the Partnership believes that this inability to generate timely reports constitutes a material weakness in its internal control over financial reporting.

Changes in internal controls

There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended March 31, 2012 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

II-9

PART II

ITEM 9B.	OTHER INFORMATION

Certain states may assert claims against the Partnership for failure to withhold and remit state income tax on operating profit or where the sale(s) of property in which the Partnership was invested failed to produce sufficient cash proceeds with which to pay the state tax and/or to pay statutory partnership filing fees. The Partnership is unable to quantify the amount of such potential claims at this time. The Partnership has consistently advised its Partners that they should consult with their tax advisors as to the necessity of filing non-resident returns in such states with respect to their proportional taxes due.

II-10

PART III

ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) and (b)

The Partnership has no directors, executive officers or employees of its own.

(a) and (b)

The names, ages and business experience of the directors and executive officers of C.R.I., Inc. (CRI), the Managing General Partner of the Partnership, follow.

William B. Dockser, 7475, has been the Chairman of the Board and a Director of CRI since 1974. Prior to forming CRI, he served as President of Kaufman and Broad Asset Management, Inc., an affiliate of Kaufman and Broad, Inc., which managed publicly held limited partnerships created to invest in low and moderate income multifamily apartment properties. Prior to joining Kaufman and Broad, he served in various positions at HUD, culminating in the post of Deputy FHA Commissioner and Deputy Assistant Secretary for Housing Production and Mortgage Credit, where he was responsible for all federally insured housing production programs. Before coming to the Washington, D.C., area, Mr. Dockser was a practicing attorney in Boston and served as a special Assistant Attorney General for the Commonwealth of Massachusetts. He holds a Bachelor of Laws degree from Yale University Law School and a Bachelor of Arts degree, cum laude, from Harvard University.

H. William Willoughby, 6465, has been President, Secretary and a Director of CRI since January 1990, and was Senior Executive Vice President, Secretary and a Director of CRI from 1974 to 1989. Effective May 7, 2005, he assumed the duties of Principal Financial Officer and Principal Accounting Officer of CRI. He is principally responsible for the financial management of CRI and its associated partnerships. Prior to joining CRI in 1974, he was Vice President of Shelter Corporation of America and a number of its subsidiaries dealing principally with real estate development and equity financing. Before joining Shelter Corporation, he was a senior tax accountant with Arthur Andersen & Co. He holds a Juris Doctor degree, a Master of Business Administration degree and a Bachelor of Science degree in Business Administration from the University of South Dakota.

(c)

There is no family relationship between any of the foregoing directors and executive officers.

(d)

Involvement in certain legal proceedings.

None.

III-1

PART III

ITEM 11.	EXECUTIVE COMPENSATION

(a), (b), (c), (d), (e), (f), (g) and (h)

The Partnership has no officers or directors. However, in accordance with the Partnership Agreement, and as disclosed in the public offering, various kinds of compensation and fees were paid or are payable to the General Partners and their affiliates. Additional information required by this Item 11 is incorporated herein by reference to Notes 3 and 4 of the notes to consolidated financial statements contained in Part IV.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND MANAGEMENT

(a)

Security ownership of certain beneficial owners.

The following table sets forth certain information concerning any person (including any "group") who is known to the Partnership to be the beneficial owner of more than five percent of the issued and outstanding units of additional limited partner interest (Units) at ~~April~~June 1430, ~~2011~~2012.

% of Total
Name and Address	Amount and Nature	Units Issued
of Beneficial Owner	of Beneficial Ownership	and Outstanding
Equity Resource Investments, LLC	1718,~~991~~111 Units	24.5364%
& Affiliates
44 Brattle Street
Cambridge, MA 02138
Peachtree Partners & Affiliates	56,~~803~~551 Units	78.91%
P. O. Box 47638
Phoenix, AZ 85068

(b)

Security ownership of management.

The following table sets forth certain information concerning all Units beneficially owned, as of ~~April~~June 1430, ~~2011~~2012, by each director and by all directors and officers as a group of the Managing General Partner of the Partnership.

Name and Address	Amount and Nature	% of Total
of Beneficial Owner	of Beneficial Ownership	Units Issued

William B. Dockser	None	0.0%
H. William Willoughby	None	0.0%
All Directors and Officers
as a Group (2 persons)	None	0.0%

III-2

PART III

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - Continued

AND MANAGEMENT - Continued

(c)

Changes in control.

There exists no arrangement known to the Partnership, the operation of which may, at a subsequent date, result in a change in control of the Partnership. There is a provision in the Limited Partnership Agreement which allows, under certain circumstances, the ability to change control.

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a) and (b)

Transactions with management and others.

The Partnership has no directors or officers. In addition, the Partnership has had no transactions with individual officers or directors of the Managing General Partner of the Partnership other than any indirect interest such officers and directors may have in the amounts paid to the Managing General Partner or its affiliates by virtue of their stock ownership in CRI. Item 11 of this report, which contains a discussion of the fees and other compensation paid or accrued by the Partnership to the General Partners or their affiliates, is incorporated herein by reference. Note 3 of the notes to consolidated financial statements contained in Part IV, which contains disclosure of related party transactions, is also incorporated herein by reference.

(c)

Certain business relationships.

The Partnership's response to Item 13(a) is incorporated herein by reference. In addition, the Partnership has no business relationship with entities of which the officers and directors of the Managing General Partner of the Partnership are officers, directors or equity owners other than as set forth in the Partnership's response to Item 13(a).

(d)

Transactions with promoters.

Not applicable.

III-3

PART III

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

For the years ended December 31, ~~2010~~2011 and December 31, ~~2009~~2010, the Partnership incurred professional fees for the services of the Partnership’s independent registered public accounting ~~firm~~firms Reznick Group P.C. and Grant Thornton as follows:

	2010		2011
	2011		2010
Audit fees (1)	$	38109,~~185~~500	$	~~140~~38,~~500~~185
Audit-related fees (2)		--		--
Tax fees (2)		13,000		23,685
Tax fees (3)		23,685		22,500
Total billed	$	122,500	$	61,870
All other fees		--		--
Total billed	$	61,870	$	163,000

————————————

(1)	Principally fees for the audit of the Partnership’s annual financial statements, the independent registered public accounting firm’s review of the Partnership’s quarterly financial statements, and services provided in connection with the Partnership’s regulatory filings.

(2) ~~Principally~~Fees ~~fees~~ for ~~assurance~~preparation ~~and~~of ~~related services performed by the~~ Partnership’s ~~independent~~federal ~~registered~~and ~~public~~state ~~accounting~~tax ~~firm that are reasonably related to the performance of the audit or review of the Partnership’s financial statements~~returns.

(3) Fees for preparation of Partnership federal and state tax returns.

The Partnership has no directors or officers. The Board of Directors of the Managing General Partner of the Partnership, serving as the Audit Committee, has approved in advance 100% of the fees paid to, and services provided by the Partnership’s independent registered public accounting firm. Prior to approving the Partnership’s independent registered public accounting firm providing any non-audit services, the Board of Directors of the Managing General Partner of the Partnership would assess whether the provision of those services would compromise the Partnership’s independent registered public accounting firm independence.

Grant Thornton was dismissed as the Partnership’s independent registered public accounting firm after the filing of the Partnership’s Form 10-Q for the third quarter of fiscal year 2010. Reznick was engaged as the Partnership’s new independent registered public accounting firm and performed the fiscal 2010 yearend audit. Reznick provided partnership tax return preparation services for the year ended December 31, ~~2010~~2011 and Grant Thornton provided partnership tax return preparation services during the years ended December 31, 2010 ~~and December 31~~, ~~2009,~~ which services it was determined did not compromise Reznick’s or Grant Thornton’s independence.

III-4

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS

1. Financial Statements

a. The following documents are included as part of this report:

(1) Financial Statements

Report of Independent Registered Public Accounting Firm

Balance Sheets

Statements of Operations

Statements of Changes in Partners’ (Deficit) Capital

Statements of Cash Flows

Notes to Financial Statements

(2) Financial Statement Schedules

None.

(3) Exhibits

Index of Exhibits (Listed according to the number assigned in the table in Item 601 of Regulation S-K.)

Exhibit No. 3 - Articles of Incorporation and bylaws.

Certificate of Limited Partnership of Capital Realty Investors-IV Limited Partnership. (Incorporated by reference to Exhibit No. 3 to Registrant's Registration Statement on Form S-11, as amended, dated June 7, 1984.)

Exhibit No. 4 - Instruments defining the rights of security holders, including indentures.

Limited Partnership Agreement of Capital Realty Investors-IV Limited Partnership. (Incorporated by reference to Exhibit No. 4 to Registrant's Registration Statement on Form S-11, as amended, dated June 7, 1984.)

Exhibit No. 10 - Material Contracts.

Management Services Agreement between CRI and Capital Realty Investors-IV Limited Partnership. (Incorporated by reference to Exhibit No. 10(b) to Registrant's Registration Statement on Form S-11, as amended, dated June 7, 1984.)

IV-1

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS

Exhibit No. 31.1 -

Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit No. 31.2 -

Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit No. 32 -

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit No. 99 -

Additional Exhibits.

Prospectus of the Partnership, dated June 13, 1984. (Incorporated by reference to Registrant's Registration Statement on Form S-11, as amended, dated June 7, 1984.)

Reports of other auditors relating to the audits of the financial statements of Local Partnerships in which Capital Realty Investors-IV Limited Partnership has invested.

IV-2

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	~~CAPITAL REALTY INVESTORS-IV~~	CAPITAL REALTY INVESTORS-IV
	~~LIMITED PARTNERSHIP~~		LIMITED PARTNERSHIP
	~~(Registrant)~~	(Registrant)
April 14, 2011	By:	/s/ William B. Dockser
August 10, 2012		by:		/s/ William B. Dockser
DATE	~~William B. Dockser~~			William B. Dockser,
	Director, Chairman of the Board,
				Director, Chairman of the Board
	~~and Treasurer~~				and Treasurer
	Principal Executive Officer
				Principal Executive Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

April 14, 2011	By:	/s/ H. William Willoughby
August 10, 2012		by:	/s/ H. William Willoughby
DATE	~~H. William Willoughby~~		H. William Willoughby
	~~Director, President, Secretary,~~		Director, President, Secretary,
	~~Principal Financial Officer and~~		Principal Financial Officer and
	~~Principal Accounting Officer~~			Principal Accounting Officer

IV-3

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Financial Statements of Capital Realty Investors-IV Limited Partnership
Report of Independent Registered Public Accounting Firm	IV-5-6
Consolidated Balance Sheets as of December 31, 2010 and 2009	IV-7
Consolidated Balance Sheets as of December 31, 2011 and 2010	IV-6
Consolidated Statements of Operations for the Years Ended
December 31, 2010, 2009 and 2008	IV-8
December 31, 2011 and 2010	IV-7
Consolidated Statements of Changes in Partners’ Deficit for the Years Ended
Consolidated Statements of Changes in Partners’ Capital (Deficit) for the Years Ended
December 31, 2010, 2009 and 2008	IV-9
December 31, 2011 and 2010	IV-8
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2010, 2009 and 2008	IV-10
December 31, 2011 and 2010	IV-9
Notes to Consolidated Financial Statements	IV-11

IV-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Partners

Capital Realty Investors- IV Limited Partnership

We have audited the accompanying consolidated balance ~~sheet~~sheets of Capital Realty Investors - IV Limited Partnership and subsidiary (the Partnership) as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in partners’ capital (deficit) ~~capital~~, and cash flows for the ~~year~~years then ended. These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our ~~audit~~audits.

We conducted our ~~audit~~audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our ~~audit~~audits ~~provides~~provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Capital Realty Investors - IV Limited Partnership and subsidiary as of December 31, 2011 and 2010, and the consolidated results of its consolidated operations and its consolidated cash flows for the ~~year~~years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ REZNICK GROUP, P.C.

Bethesda, Maryland

~~April~~August 1410, ~~2011~~2012

IV-5

Report of Independent Registered Public Accounting Firm

The Partners

Capital Realty Investors – IV Limited Partnership

We have audited the accompanying consolidated balance sheet of Capital Realty Investors – IV Limited Partnership (a Maryland limited partnership) and subsidiaries (the Partnership) as of December 31, 2009, and the related consolidated statements of operations, changes in partners’ (deficit) capital, and cash flows for each of the two years in the period ended December 31, 2009. These consolidated 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 did not audit the financial statements of the Local Partnerships. The Partnership’s share of income from these Local Partnerships constitutes $0 and $2,191 of income in 2009, and 2008, respectively, included in the Partnership’s 2009 and 2008 net income. The financial statements of these Local Partnerships were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amount included for these Local Partnerships, is based solely upon the reports of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial position of Capital Realty Investors – IV Limited Partnership as of December 31, 2009, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

McLean, Virginia

April 12, 2010

IV-6

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

ASSETS

	For the years ended
	December 31
	December 31,
	2011		2010
	2010		2009
Investments in partnerships	$	1,192,336	$	1,058,968
Investments in partnerships	$	1,058,968	$	2,860,931
Investment in partnerships held for sale or transfer		4,767,709		2,348,551
Investment in partnerships held for sale or transfer		2,348,551		32,888
Cash and cash equivalents		3,962,648		4,359,494
Cash and cash equivalents		4,359,494		5,660,470
Acquisition fees, principally paid to related parties,
net of accumulated amortization of $50,324 and $60,663, respectively		27,435		36,149
net of accumulated amortization of $39,866 and $70,990, respectively		25,491		27,435
Property purchase costs,
Net of accumulated amortization of $74,111 and $80,224, respectively		18,981		24,640
net of accumulated amortization of $67,924 and $42,764, respectively		17,641		18,981
Other assets		~~2,911~~-		--2,911
Total assets	$	79,~~816~~965,~~340~~825	$	87,~~615~~816,~~078~~340

LIABILITIES AND PARTNERS'’ CAPITAL (DEFICIT)

Due on investments in partnerships	$	1,340,000		$	21,~~790~~340,000
Accrued interest payable		67,~~755~~225,~~717~~145			116,~~225~~755,~~330~~717
Accounts payable and accrued expenses		87206,~~985~~365			3087,~~153~~985
Total liabilities		8,~~183~~771,~~702~~510			148,~~045~~183,~~483~~702
Commitments and contingencies
Partners' deficit:
Partners' deficit
Capital paid in:
Capital paid-in:
General Partners		2,000			2,000
Limited Partners		73,501,500			73,501,500
		73,503,500			73,503,500
Less:
Accumulated distributions to partners		(23,219,810	)		(2123,~~019~~219,~~700~~810	)
Offering costs		(7,562,894	)		(7,562,894	)
Accumulated losses		(4341,~~088~~526,~~158~~481	)		(5043,~~351~~088,~~311~~158	)
Total partners' deficit		(367,362	)		(5,430,405	)
Total partners' capital (deficit)		1,194,315			(367,362	)
Total liabilities and partners' deficit	$	7,816,340		$	8,615,078
Total liabilities and partners' capital	$	9,965,825		$	7,816,340

The accompanying notes are anthe integral part

of these ~~consolidated~~ financial statements.

IV-76

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the years ended
	December 31,
	2010			2009		2008
	2011			2010
Share of income from partnerships	$	~~743~~2,~~855~~968,076		$	~~787~~743,~~649~~855	$	~~653,351~~
Other revenue and expenses:
Other revenue and expenses
Revenue:
Gain from extinguishment of debt		~~6,368,609~~-			86,~~957~~368,~~777~~609		~~28,168,263~~
Gain on disposition of investment in
Loss on disposition of property, net of
partnerships, net of disposition fee		1,603,594			--		--
disposition fee		(70,000	)		-
Interest		--			22,427		222,077
Gain on disposition of investment in
		7,972,203			8,980,204		28,390,340
partnerships, net of disposition fee		-			1,603,594
Expenses:
Interest		8,630			-
Interest		560,519			638,561		1,760,933
		(61,370	)		7,972,203
Management fee		375,000			375,000		375,000
Expenses:
General and administrative		322,512			345,490		288,782
Interest		469,428			560,519
State tax		--			243,527		--
Management fee		375,000			375,000
Professional fees		191,397			107,366		126,085
General and administrative		235,682			322,512
Amortization of deferred costs		3,477			29,630		8,182
State tax		60,797			-
		1,452,905			1,739,574		2,558,982
Professional fees		200,838			191,397
Total other revenue and expenses		6,519,298			7,240,630		25,831,358
Amortization of deferred costs		3,284			3,477
Net income	$	7,263,153		$	8,028,279	$	26,484,709
		1,345,029			1,452,905
Net income allocated to General Partners (1.51%)	$	109,674		$	121,227	$	399,919
Total other revenue and (expenses)		(1,406,399	)		6,519,298
Net income allocated to Initial and Special Limited Partners (1.49%)	$	108,221		$	119,621	$	394,622
Net income	$	1,561,677		$	7,263,153
Net income allocated to Additional Limited Partners (97%)	$	7,045,258		$	7,787,431	$	25,690,168
Net income allocated to General Partners (1.51%)	$	23,581		$	109,674
Net income per unit of Additional Limited Partner Interest,
Net income allocated to Initial and
based on 73,337 units outstanding, respectively	$	96.07		$	106.19	$	350.30
Special Limited Partners (1.49%)	$	23,269		$	108,221
Net income allocated to Additional Limited
Partners (97%)	$	1,514,827		$	7,045,258
Net income per unit of Additional Limited Partner
Interest based on 73,337 units outstanding	$	20.66		$	96.07

The accompanying notes are anthe integral part

of these ~~consolidated~~ financial statements.

IV-7

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (DEFICIT)

				Initial and
				special			Additional
	General			Limited			Limited
	Partners			Partners			Partners			Total


Partners' (deficit) capital, January 1, 2010	$	(804,471	)	$	(801,738	)	$	(3,824,196	)	$	(5,430,405	)

Net income		109,674			108,221			7,045,258			7,263,153

Distribution of $30 per Unit
of Additional Limited Partner Interest		-			-			(2,200,110	)		(2,200,110	)

Partners' (deficit) capital, December 31, 2010		(694,797	)		(693,517	)		1,020,952			(367,362	)

Net income		23,581			23,269			1,514,827			1,561,677

Partners' (deficit) capital, December 31 2011	$	(671,216	)	$	(670,248	)	$	2,535,779		$	1,194,315

The accompanying notes are the integral part

of these financial statements.

IV-8

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF ~~CHANGES~~CASH ~~IN PARTNERS' (DEFICIT) CAPITAL~~FLOWS

				Initial and
	For the years ended
				Special			Additional
	December 31,
	General			Limited			Limited
	2011			2010
	Partners			Partners			Partners			Total
Cash flows from operating activities:
Partners' deficit, January 1, 2008	$	(1,325,617	)	$	(1,315,981	)	$	(35,443,312	)	$	(38,084,910	)
Net income	$	1,561,677		$	7,263,153
Net income		399,919			394,622			25,690,168			26,484,709
Adjustments to reconcile net income to net cash
Partners’ deficit, December 31, 2008		(925,698	)		(921,359	)		(9,753,144	)		(11,600,201	)
used in operating activities:
Net income		121,227			119,621			7,787,431			8,028,279
Share of income from partnerships		(2,968,076	)		(743,855	)
Distribution of $25.00 per unit
Gain from extinguishment of debt		-			(6,368,609	)
of Additional Limited Partner Interest		--			--			(1,858,483	)		(1,858,483	)
Gain on disposition of investment in partnerships
Partners’ deficit, December 31, 2009		(804,471	)		(801,738	)		(3,824,196	)		(5,430,405	)
net of fees		-			(1,603,594	)
Net income		109,674			108,221			7,045,258			7,263,153
Loss on disposition of property net of disposition fee		70,000			-
Distribution of $30.00 per unit
Amortization of deferred costs		3,284			3,477
of Additional Limited Partner Interest		--			--			(2,200,110	)		(2,200,110	)
Changes in assets and liabilities:
Partners’ (deficit) capital,
Decrease (increase) in other assets		2,911			(2,911	)
December 31,2010	$	(694,797	)	$	(693,517	)	$	1,020,952		$	(367,362	)
Increase in accrued interest payable		469,428			474,810
Increase in accounts payable and accrued expenses		48,380			57,832
Net cash used in operating activities		(812,396	)		(919,697	)
Cash flows from investing activities:
Receipt of distributions from partnerships		415,550			208,163
Proceeds from disposition of investment in partnerships		-			1,688,168
Disposition fee paid		-			(77,500	)
Net cash provided by investing activities		415,550			1,818,831
Cash flows from financing activities:
Distributions to Additional Limited Partners		-			(2,200,110	)
Net cash used in financing activities		-			(2,200,110	)
Net decrease in cash and cash equivalents		(396,846	)		(1,300,976	)
Cash and cash equivalents, beginning of year		4,359,494			5,660,470
Cash and cash equivalents, end of year	$	3,962,648		$	4,359,494
Disposition fee included in accounts payable and accrued expenses	$	70,000		$	-

The accompanying notes are anthe integral part

of these ~~consolidated~~ financial statements.

IV-9

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended
	December 31,
	2010			2009			2008
Cash flows from operating activities:
Net income	$	7,263,153		$	8,028,279		$	26,484,709
Adjustments to reconcile net income to net cash
Used in operating activities:
Share of income from partnerships		(743,855	)		(787,649	)		(653,351	)
Gain from extinguishment of debt		(6,368,609	)		(8,957,777	)		(28,168,263	)
Gain on disposition of investment in partnerships,
net of disposition fees		(1,603,594	)		--			--
Amortization of deferred costs		3,477			29,630			8,182
Changes in assets and liabilities:
(Increase) decrease in other assets		(2,911	)		8,313			23,917
Increase in accrued interest payable		474,810			638,561			1,760,933
Increase (decrease)in accounts payable and
accrued expenses		57,832			(85,599	)		(76,635	)
Net cash used in operating activities		(919,697	)		(1,126,242	)		(620,508	)
Cash flows from investing activities:
Receipt of distributions from partnerships		208,163			669,834			549,270
Proceeds from disposition of investment in partnerships		1,688,168			--			--
Disposition fee paid		(77,500	)		--			--
Net cash provided by investing activities		1,818,831			669,834			549,270
Cash flows from financing activities:
Distribution to Additional Limited Partners		(2,200,110	)		(1,268,386	)		--
Tax distribution on behalf of Limited Partners		--			(590,097	)		--
Net cash used in financing activities		(2,200,110	)		(1,858,483	)		--
Net decrease in cash and cash equivalents		(1,300,976	)		(2,314,891	)		(71,238	)
Cash and cash equivalents, beginning of year		5,660,470			7,975,361			8,046,599
Cash and cash equivalents, end of year	$	4,359,494		$	5,660,470		$	7,975,361

The accompanying notes are an integral part

of these consolidated financial statements.

IV-10

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization

Capital Realty Investors-IV Limited Partnership (the Partnership) was formed under the Maryland Revised Uniform Limited Partnership Act on December 7, 1983, and shall continue until December 31, 2038, unless sooner dissolved in accordance with the terms of the Partnership Agreement. The Partnership was formed to invest in real estate by acquiring and holding limited partner interests in limited partnerships (Local Partnerships) that own and operate federal or state government-assisted apartment properties, which provide housing principally to the elderly or to individuals and families of low or moderate income, or conventionally financed apartment properties, located throughout the United States.

The General Partners of the Partnership are C.R.I., Inc. (CRI), which is the Managing General Partner, and current and former shareholders of CRI. The Initial Limited Partner is Rockville Pike Associates Limited Partnership-IV, a limited partnership which includes certain current officers and former employees of CRI or its affiliates. The Special Limited Partner had been Two Broadway Associates-III, a limited partnership comprised of an affiliate and employees of Merrill Lynch, Pierce, Fenner and Smith, Incorporated. Effective January 1, 2002, Two Broadway Associates-III transferred its interest to MLH Merger Corporation and three individuals.

The Partnership sold 73,500 units at $1,000 per unit of additional limited partner interest through a public offering. The offering period was terminated on August 31, 1984. As of December 31, ~~2010~~2011, 163 units of additional limited partner interest had been abandoned.

b. Method of accounting

The consolidated financial statements of the Partnership are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

c. Principles of consolidation

These consolidated financial statements include the accounts of one intermediary limited partnership which has invested in one Local Partnership. All activity between the intermediary limited partnership and the Partnership has been eliminated in consolidation.

~~d. Variable interest entities~~IV-10

GAAP provides guidance on when a company should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements and when it should disclose information about its relationship with a VIE. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that will receive a majority of the VIE’s expected losses, receive a majority of a VIE’s expected residual returns, or both.

IV-11

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -– Continued

~~The Partnership does not consolidate the Partnership's interests in these VIE’s under this guidance, as it is not considered to be the primary beneficiary~~d. ~~The~~ Variable ~~Partnership~~interest currently records the amount of its investment in these partnerships as an asset on its balance sheet, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements.entities

The Partnership does not consolidate the Partnership's interests in these VIE’s under this guidance, as it is not considered to be the primary beneficiary. Accounting guidance requires continued reconsideration as to the consideration of the primary beneficiary. The Partnership currently records the amount of its investment in these partnerships as an asset on its balance sheet, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements.

The Partnership’s balance in investment in Local Partnerships represents its maximum exposure to loss. The Partnership’s exposure to loss on these partnerships is mitigated by the condition and financial performance of the underlying properties as well as the strength of the local general partners.

e. Investments in and advances to partnerships

The Partnership’s investment in Local Partnerships is considered to be variable interest entities (VIEs) because the owners of the equity at risk in these entities do not have the power to direct their operations. However, the Partnership is not considered the primary beneficiary of the Local Partnerships since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. Therefore, and because the Partnership is a limited partner in the Local Partnerships, the Partnership accounts for the investment in its Local Partnerships using the equity method of accounting. Under the equity method, the initial investment is recorded at cost, increased or decreased by the Partnership’s share of income or losses, and decreased by distributions received and syndication costs. The investment balance cannot be reduced below zero. After the investment account is reduced to zero, receivables due from the Local Partnership are decreased by the Partnership’s share of losses. Distributions received after the investment account is reduced to zero are recorded as income.

As of December 31, 2010 and 2009, the Partnership's share of cumulative losses for four and six of the Local Partnerships, respectively, exceeded the amount of the Partnership's investments in those Local Partnerships by $7,237,563 and $7,066,408, respectively. Since the Partnership has no further obligation to advance funds or provide financing to these Local Partnerships, the excess losses have not been reflected in the accompanying consolidated financial statements. The Partnership’s carrying value is zero and the equity method has been suspended for the following four and six Local Partnerships as of December 31, 2010 and as of December 31, 2009, respectively: Fairway Park, Madison Square, Northridge, and Westport Village as of December 31, 2010, and Fairway Park, Madison Square, Northridge, and Westport Village, Hale Ohana, and Pilgrim Tower East as of December 31, 2009, respectively. Distributions of $208,163, $669,834 and $549,270 received from three, four and four Local Partnerships during 2010, 2009 and 2008, respectively, and for which the Partnership's carrying value is zero (equity method suspended), were recorded as increases in the Partnership's share of income from partnerships in the year received.IV-11

Costs incurred in connection with acquiring these investments have been capitalized and are being amortized using the straight-line method over the estimated useful lives of the properties owned by the Local Partnerships.

IV-12

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -– Continued

fAs of December 31, 2011 and 2010, the Partnership's share of cumulative losses for three and six of the Local Partnerships, respectively, exceeded the amount of the Partnership's investments in those Local Partnerships by $1,441,170 and $7,237,563, respectively. ~~Investment~~ Since the Partnership has no further obligation to advance funds or provide financing to these Local Partnerships, the excess losses have not been reflected in ~~partnerships~~the ~~held~~accompanying consolidated financial statements. The Partnership’s carrying value is zero and the equity method has been suspended for ~~sale~~the orfollowing ~~transfer~~three Local Partnerships as of December 31, 2011: Fairway Park, Northridge, and Westport Village. As of December 31, 2010, the equity method had been suspended for the following four Local Partnerships: Fairway Park, Northridge, Westport Village and Madison Square. Distributions of $415,550 and $208,163 received from two and three Local Partnerships during 2011 and 2010, respectively, and for which the Partnership's carrying value is zero (equity method suspended), were recorded as increases in the Partnership's share of income from partnerships in the year received.

f. Deferred Costs

Acquisition Fees and Property Purchase Costs incurred for services rendered to acquire the Local Partnerships are amortized over 40 years using the straight-line method, beginning upon commencement of operations of the Local Partnerships. The Partnership regularly assesses deferred costs for the existence of impairment in conjunction with the assessment of its investment in Local Partnerships. Amortization expense for the years ended December 31, 2011 and 2010 was $3,284 and $3,477, respectively. Estimated amortization expense for each of the ensuing years through December 31, 2016 is $3,284.

g. Investment in partnerships held for sale or transfer

When investments are reclassified to investment in partnerships held for sale or transfer, amortization of the acquisition fees and property purchase costs are discontinued. Assets held for sale or transfer are recorded at the lower of the carrying amount or expected sales price less costs to sell.

gh. Cash and cash equivalents

Cash and cash equivalents consist of money market funds, time and demand deposits and repurchase agreements with original maturities of three months or less. Interest income is recognized as earned.

hi. Income taxes

~~For~~The ~~federal~~Partnership ~~and~~has ~~state~~elected to be treated as a pass-through entity for income tax purposes and, ~~each~~as ~~partner~~such, ~~reports~~is onnot ~~his~~subject orto ~~her~~income ~~personal~~taxes. Rather, all items of taxable income, deductions and tax ~~return~~credits ~~his~~are orpassed ~~her~~through ~~share~~to ofand ~~the~~are reported by its owners on their respective income tax returns. The Partnership'’s ~~income~~federal ortax ~~loss~~status as ~~determined~~a ~~for~~pass-through entity is based on its legal status as a partnership. Accordingly, the partnership is not required to take any tax ~~purposes~~positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, nothese ~~provision~~financial ~~has~~statements ~~been~~do ~~made~~not reflect a provision for income taxes inand ~~these~~the ~~consolidated~~Partnership ~~financial~~has ~~statements~~no other tax positions which must be considered for disclosure.

~~i. Use of estimates~~IV-12

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, the Partnership is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

j. Fair value of financial instruments

On January 1, 2009, the Partnership adopted the new accounting standard which requires adoption of the fair value standards in the Financial Accounting Standards Board Accounting Standards Codification (ASC) for nonfinancial assets and nonfinancial liabilities. The adoption did not have a material impact on the financial position, results of operations or cash flows.

The ASC establishes a hierarchy for inputs used in measuring fair value as follows:

1. Level 1 Inputs -- quoted prices in active markets for identical assets and liabilities.

2. Level 2 Inputs -- observable inputs other than quoted prices in active markets for identical assets and liabilities.

3. Level 3 Inputs -- unobservable inputs.

IV-13

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

j. Use of estimates

k. Fair Value of Financial Instruments

The Financial Accounting Standards Board Accounting Standards Codification establishes a hierarchy for inputs used in measuring fair value as follows:

1.	Level 1 Inputs – quoted priced in active markets for identical assets and liabilities.

2.	Level 2 Inputs – observable inputs other than quoted prices in active markets for identical assets and liabilities.

3.	Level 3 Inputs – unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

The Partnership has determined that the fair value of the purchase money notes is de minimus, as the notes are secured by limited partnership interests only, are non-recourse to the Partnership and of which two are in default.

The balance sheet carrying amount for cash and cash equivalents approximates their fair value.

kl. Impairment analysis

The Partnership reviews property assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Recoverability is measured by a comparison of the carrying amount of an asset to the estimated future net cash flows expected to be generated by the asset. Impairment for investments in partnerships is determined by review of the performance of the underlying asset and expected proceeds from the sale of the investment. If an asset were determined to be impaired, its basis would be adjusted to fair value through the recognition of an impairment loss. Impairment loss for the years ended December 31, 2011 and 2010 totaled $216,940 and is included in share of income from partnerships on the consolidated statements of operations.

lm. Allocation of net income (loss)

Net income (loss) is allocated based on respective partnership interest or units outstanding. The Partnership has no dilutive interests.

~~m. Debt Extinguishment~~IV-13

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

n. Debt Extinguishment

From time to time, the Partnership transfers its interests in certain equity investments to its purchase money noteholders in satisfaction of notes payable. The Partnership records a gain on extinguishment of debt for the difference between the book value of the investment being transferred and the book value of the debt and associated acquisition fees and property purchase costs.

no. Subsequent events

Events that occur after the balance sheet date but before the financial statements were available to be issued must be evaluated for recognition or disclosure. The effects of subsequent events that provide evidence about conditions that existed at the balance sheet date are recognized in the accompanying financial statements. Subsequent events which provide evidence about conditions that existed after the balance sheet date require disclosure in the accompanying notes. Management evaluated the activity of the Partnership and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

p. Recent accounting pronouncements

In May 2009, the FASB issued guidance addressing the accounting for and disclosure requirements of events or transactions that occur after the balance sheet date, but before the financial statements are issued. The Partnership adopted the guidance as of June 30, 2009 as it was effective for interim and annual periods ending after June 15, 2009. The adoption did not have a significant impact on the subsequent that the Partnership reports, either through recognition or disclosure, in the consolidated financial statements. In February 2010, however, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore the Partnership did not include the disclosure in this form 10-K.

In June 2009, the Financial Accounting Standards Board (FASB) issued an amendment to the accounting and disclosure requirements for the consolidation of VIEs. The amended guidance modifies the consolidation model to one based on control and economics, and replaces the current quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE. Additionally, the amendment requires enhanced and expanded disclosures around VIEs. This amendment is effective for fiscal years beginning after November 15, 2009. The adoption of this guidance on January 1, 2010 did not have a material effect on the Partnership’s financial statements.

IV-14

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

o. Recent accounting pronouncements

On July 1, 2009, the Partnership adopted Financial Accounting Standards Board Accounting Standards Codification, which establishes the ASC as the source of authoritative accounting principles to be applied in preparation of financial statements in conformity with US GAAP. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows.

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs). The amended guidance modifies the consolidation model to one based on control and economics, and replaces the current quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE. Additionally, the amendment requires enhanced and expanded disclosures around VIEs. This amendment is effective for fiscal years beginning after November 15, 2009. The Partnership has determined that adoption of this guidance has no material impact on the Partnership’s financial statements.

IV-15

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS

a. Due on investments in partnerships and accrued interest payable

As of December 31, ~~2010~~2011 and ~~2009~~2010, the Partnership held limited partner interests in six ~~and eight~~ Local Partnerships, ~~respectively,~~ which were organized to develop, construct, own, maintain and operate rental apartment properties. The remaining amounts due on investments in the Local Partnerships follow.

	December 31,
	2010		2009
	2011		2010
Purchase money notes due in:
1999	$	840,000	$	840,000
2003		--		1,450,000
2025		500,000		500,000
Subtotal		1,340,000		21,~~790~~340,000
Accrued interest payable		67,~~755~~225,~~717~~145		116,~~225~~755,~~330~~717
Total	$	8,~~095~~565,~~717~~145	$	148,~~015~~095,~~330~~717

The remaining purchase money notes have stated interest rates ranging from 8.17% to 9.00%, of which Northridge Park compounds annually and Westport Village has simple interest. The purchase money notes are non- recourse, but their terms provide for payment in full upon the earliest of: (i) sale or refinancing of the respective Local Partnership's rental property; (ii) payment in full of the respective Local Partnership's permanent loan; or (iii) maturity.

~~Asbury Towers was paid off at a discount from proceeds of the sale of the property owned by the Local Partnership in 2008.~~ Effective ~~January 1, 2009, the Partnership’s interest in Cedar Point and Thornwood House were transferred to the purchase money noteholders and/or their affiliates or assignees. Effective~~ July 15, 2010, the Partnership’s interest in Pilgrim Tower East was transferred to the purchase money noteholder and or its affiliates or assignees.

Property	~~Property~~Principal	~~Principal~~Date	~~Date~~Disposition	~~Disposition~~
	Asbury Towers	$3,432,081	August 2008	Sale
Pilgrim Tower East	$1,450,000 (1)	July 2010	Transfer
	Cedar Point	$1,320,000	January 2009	Transfer
	Thornwood House	$1,775,000	January 2009	Transfer
	Pilgrim Tower East	$1,450,000 (1)	July 2010	Transfer

~~————————————~~ (1) Remaining principal, after a partial payment.

The purchase money note related to the following property has matured and has not been paid or extended as of ~~April~~August 1410, ~~2011~~2012.

		Accrued Interest
		as of
Property	Principal	December 31, ~~2010~~2011	Maturity
Westport Village (1)	$840,000	$23,~~933~~050,~~725~~045	09/01/99

~~————————————~~ (1) In receivership.

~~IV-16~~The remaining purchase money note related to Northridge Park matures in 2025. As of December 31, 2011, principal and accrued interest balances were $500,000 and $4,175,100, respectively.

IV-15

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

The Partnership has received notice from IHDA of foreclosure sale of the Westport Village property. As of December 31, 2010, Westport Village is in receivership. The Partnership’s non-recourse purchase money notes and accrued interest totaled $840,000 and $2,933,725, respectively at December 31, 2010. The Partnership is not anticipating any loss resulting from the change in ownership.

Of the ~~six~~five Local Partnerships in which the Partnership is invested as of December 31, ~~2010~~2011, the one Local Partnership with an associated purchase money note which has matured, or which matures through December 31, ~~2010~~2011, and which remain unpaid or unextended as of ~~April~~August 1410, ~~2011~~2012, represented 0% of the Partnership's total distributions received from Local Partnerships and share of income from Local Partnerships for the immediately preceding two calendar years.

The Managing General Partner continues to address the maturity and impending maturity of the Partnership’s debt obligations and to seek solutions that will provide the most favorable outcome to the Limited Partners. However, there can be no assurance that these strategies will be successful.

None of the debt extinguishments resulting from the sale or transfer of Local Partnerships (as described below) were with related parties.

Interest expense on the Partnership's purchase money note for the years ended December 31, ~~2010,~~2011 ~~2009~~ and ~~2008~~ 2010, was $~~560~~469,~~519,~~428 ~~$638,561~~ and $1560,~~760~~519,~~933,~~ respectively. The accrued interest payable on the purchase money notes of $67,~~755~~225,~~717~~145 and $116,~~225~~755,~~330~~717 as of December 31, ~~2010~~2011 and ~~2009~~2010, respectively, is due on the respective maturity dates of the purchase money notes or earlier, in some instances, if (and to the extent of a portion thereof) the related Local Partnership has distributable net cash flow, as defined in the relevant Local Partnership agreement.

IV-1716

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS -– Continued

Cedar Point

The Partnership defaulted on its purchase money note secured by its interest in Southwest Development Company (Cedar Point) on August 30, 2004, when the note matured and was not paid. The default amount included principal and accrued interest of $1,320,000 and $3,122,592, respectively. The Partnership had agreed in principle to assign its interest in Cedar Point to the noteholders in satisfaction of the nonrecourse note. There had been no communication with the noteholders since 2006. Therefore, on December 31, 2007, the Partnership’s basis in Cedar Point, along with associated acquisition fees and property purchase costs which had been reclassified to investment in partnerships held for sale or transfer, were returned to their respective operating accounts. The Partnership was subsequently informed by counsel of the purchase money noteholders that consent to transfer the Partnership’s interest had been obtained from the Illinois Housing Development Authority (IHDA). Effective January 1, 2009, the Partnership’s interest was transferred to the purchase money noteholders. As of January 1, 2009, the principal and accrued interest balances were $1,320,000 and $3,907,607, respectively. The transfer resulted in gain from extinguishment of debt for financial statement purposes of $2,566,944 in 2009 and in gain of $3,541,229 for federal tax purposes.

Thornwood House

The Partnership defaulted on its purchase money note secured by its interest in Thornwood House Associates (Thornwood House) on August 30, 2004, when the note matured and was not paid. The default amount included principal and accrued interest of $1,775,000 and $4,025,568, respectively. The Partnership had agreed in principle to assign its interest to the noteholder in satisfaction of the nonrecourse note. There had been no communication with the noteholders since 2006. Therefore, on December 31, 2007, the Partnership’s basis in Thornwood House, along with associated acquisition fees and property purchase costs which had been reclassified to investment in partnerships held for sale or transfer, were returned to their respective operating accounts. The Partnership was subsequently informed by counsel of the purchase money noteholders that consent to transfer the Partnership’s interest had been obtained from IDHA. Effective January 1, 2009, the Partnership’s interest was transferred to the purchase money noteholders. As of January 1, 2009, the principal and accrued interest balances were $1,775,000 and $5,071,035, respectively. The transfer resulted in gain from extinguishment of debt for financial statement purposes of $6,390,833 in 2009 and in gain of $7,213,962 for federal tax purposes.

Westport Village

The purchase money note secured by the Partnership’s interest in Westport Associates (Westport Village) matured on September 1, 1999 and was not paid. The default amount included principal and accrued interest of $840,000 and $1,615,644, respectively. The Partnership was sued by the noteholders but there has not been any legal action since 2000.

~~IV-18~~The mortgage loan encumbering the property associated with the Partnership’s investment in Westport Village is in default. The Managing General Partner of the Local Partnership was unable to reach an agreement with IHDA to a mortgage restructuring. IHDA has provided notice of foreclosure sale of the property. As of December 31, 2011, Westport Village is in receivership.

~~CAPITAL~~Due ~~REALTY~~to ~~INVESTORS~~the impending foreclosure, the Partnership’s basis in the Local Partnership, along with the net unamortized amount of acquisition fees and property purchase costs, which totaled $0 at both December 31, 2011 and December 31, 2010, has been reclassified to investment in partnerships held for sale or transfer in the accompanying consolidated balance sheets. The Partnership’s non-IVrecourse ~~LIMITED~~purchase ~~PARTNERSHIP~~money notes and accrued interest thereon total $840,000 and $3,050,045, respectively, at December 31, 2011 relating to this property. There can be no assurance as to the ultimate timing of the foreclosure sale and/or transfer of ownership of the property.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS – Continued

The mortgage loan encumbering the property associated with the Partnership’s investment in Westport Village is in default. The Managing General Partner of the Local Partnership was unable to reach an agreement with IHDA to a mortgage restructuring. IHDA has provided notice of foreclosure sale of the property. As of December 31, 2010, Westport Village is in receivership.

Due to the impending foreclosure, the Partnership’s basis in the Local Partnership, along with the net unamortized amount of acquisition fees and property purchase costs, which totaled $0 at both December 31, 2010 and December 31, 2009, has been reclassified to investment in partnerships held for sale or transfer in the accompanying consolidated balance sheets. The Partnership’s non-recourse purchase money notes and accrued interest thereon total $840,000 and $2,933,725, respectively, at December 31, 2010 relating to this property. Accordingly, the purchase money note and the accrued interest thereon have been reclassified to as held for sale in the accompanying consolidated balance sheets. There can be no assurance as to the ultimate timing of the foreclosure sale and/or transfer of ownership of the property.

Pilgrim Tower East

The Partnership defaulted on its purchase money note secured by its interest in Pilgrim Tower East Associates (Pilgrim Tower East) on December 1, 1999, when the note matured and was not paid. The default amount included principal and accrued interest of $1,650,000 and $2,719,372, respectively. The Partnership and the noteholders signed a contract to sell the Partnership’s interest in Pilgrim Tower East to the noteholder in exchange for the outstanding principal and accrued interest on the purchase money note and two $100,000 payments on the purchase money note, one of which was paid in February 2002, and one of which was paid in January 2003. The noteholders failed to obtain required regulatory consent to the sale within the required time frame and the contract for the sale of the Partnership’s interest expired in November 2003. Under the terms of the note and the Assignment and Security Agreement, the noteholders had the right to enforce their security interests in the Local Partnership subject to approval by California Housing Finance Agency (CHFA) and all other government agencies with jurisdiction over the property. Effective July 15, 2010, the Partnership’s interest in Pilgrim Tower East was transferred to the purchase money noteholder as satisfaction of the note. As of July 15, 2010, the principal and accrued interest balances were $1,450,000 and $4,944,423, respectively. The sale resulted in gain from extinguishment of debt for financial statement purposes of $6,368,609 in 2010 and in gain of approximately $7.5 million for federal tax purposes. Net acquisition fees and property purchase costs of $25,814 were written off associated with the sale and included in gain on disposition of investment in partnerships.

IV-1917

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS -– Continued

b. Interests in profits, losses and cash distributions made by Local Partnerships

The Partnership has a 96.00% to 98.99% interest in profits, losses and cash distributions (as restricted by various federal and state housing agencies) (collectively, the “Agencies”) of each Local Partnership. An affiliate of the Managing General Partner of the Partnership is also a general partner of each Local Partnership or the intermediary limited partnership which invested in the Local Partnership. As stipulated by the Local Partnerships’ partnership agreements, the Local Partnerships are required to make annual cash distributions from surplus cash flow, if any. During ~~2010,~~2011 ~~2009~~ and ~~2008~~2010, the Partnership received cash distributions from rental operations of the Local Partnerships totaling $~~208~~415,~~163,~~550 ~~$669,834~~ and $~~549~~208,~~270~~163, respectively. As of December 31, ~~2010~~2011 and ~~2009~~2010, ~~two~~three and ~~four~~two of the Local Partnerships had aggregate surplus cash, as defined by their respective regulatory Agencies, in the amounts of $~~530~~864,~~200~~504 and $~~548~~530,~~154~~200, respectively, which may be available for distribution in accordance with their respective regulatory Agencies' regulations.

The cash distributions to the Partnership from the operations of the Local Partnerships may be limited by the Agencies’ regulations. Such regulations limit annual cash distributions to a percentage of the owner's equity investment in a rental property. Funds in excess of those which may be distributed to owners are generally required to be placed in a residual receipts account held by the governing state or federal agency for the benefit of the property. In addition, local general partners have the authority to withhold funds if needed for property repairs, improvements, or other property needs.

Upon sale or refinancing of a property owned by a Local Partnership, or upon liquidation of a Local Partnership, the proceeds from such sale, refinancing or liquidation shall be distributed in accordance with the respective provisions of each Local Partnership's partnership agreement. In accordance with such provisions, the Partnership would receive from such proceeds its respective percentage interest of any remaining proceeds, after payment of (i) all debts and liabilities of the Local Partnership and certain other items, (ii) the Partnership's capital contributions plus certain specified amounts as outlined in each partnership agreement, and (iii) certain special distributions to the general partners and related entities of the Local Partnership.

c. Assets held for sale or transfer

~~Madison~~ Mary ~~Square~~Allen West Tower

On ~~May~~October 713, ~~2008~~2011, the ~~Local~~Mary ~~Managing~~Allen ~~General~~West ~~Partner~~Tower ~~signed a contract to sell the~~ property ~~related~~was tosold. At ~~Madison~~December ~~Square~~31, ~~Ltd.~~2011, ~~Dividend~~the ~~Housing~~Partnership ~~Associates~~still ~~(Madison~~has ~~Square) to~~ a ~~non-profit.~~limited ~~The~~partner ~~potential~~interest ~~purchaser~~in of the ~~property~~Local ~~defaulted on the contract~~Partnership. The ~~mortgage loan encumbering the property associated with the Partnership’s~~ investment inbalance ~~Madison Square is in default. The Michigan State Housing Development Authority is foreclosing on the property. Accordingly, the Partnership’s basis, which totaled $0~~ at ~~both~~ December 31, ~~2010~~2011 ~~and~~was ~~December 31~~$4, ~~2009~~767,709. This ~~has~~represents ~~been~~the ~~reclassified~~proceeds ~~to investment in partnerships held for sale or transfer in~~ the ~~accompanying~~Partnership ~~consolidated~~received ~~balance~~from ~~sheet at that date. There can be no assurance as to~~ the ~~ultimate~~sale ~~timing~~ of the ~~foreclosure~~property. The ~~sale~~proceeds ~~and/or~~were ~~transfer~~received ofon ~~ownership~~February of22, ~~the property~~2012.

IV-2018

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

~~Mary~~Accordingly, ~~Allen~~the ~~Tower~~Partnership ~~West~~has recognized an impairment loss of $216,940 for the year ended December 31, 2011. This represents the difference of the investment balance at December 31, 2011 of $4,973,753 and the proceeds received of $4,767,709, which totals $206,044 and the net unamortized acquisition fees and property purchase costs of $10,896. The impairment loss of $216,940 is included in share of income from partnerships on the accompanying consolidated statements of operations.

OnFrom ~~May 12, 2010, a contract for~~ the sale ofproceeds, the ~~Mary~~Partnership ~~Allen~~is ~~Tower~~obligated ~~West property was executed. Due~~ to ~~the~~pay ~~possible sale of the property related to Mary Allen Tower West~~CRI, ~~the~~Inc. ~~Partnership’s~~a ~~basis~~fee in the ~~Local~~amount ~~Partnership~~of ~~was~~ $270,~~348,551,~~000 ~~which~~for ~~includes~~services ~~net~~provided ~~unamortized~~in ~~acquisition~~connection ~~fees~~with ~~and~~the ~~purchase~~sale ~~property~~of ~~costs,~~the ~~which~~Mary ~~totaled~~Allen ~~$10,896~~West asTower property. At of December 31, ~~2010,~~2011 ~~have~~this ~~been~~fee ~~reclassified~~has tobeen ~~investment~~accrued inand ~~partnerships~~is ~~held~~included ~~for sale or transfer~~ in ~~the~~accounts ~~accompanying~~payable ~~balance~~and ~~sheet. There~~accrued isexpenses noon ~~assurance that~~ the ~~sale~~accompanying ofconsolidated ~~the~~balance ~~property will occur~~sheets.

Westport Village

See Note 2.a., above.

d. Completed sales

~~Asbury~~Madison ~~Tower~~Square

~~The~~On ~~purchase~~May ~~money~~7, ~~note~~2008, ~~secured by~~ the ~~Partnership’s~~Local ~~interest~~Managing inGeneral ~~Asbury~~Partner ~~Tower~~signed ~~Associates~~a ~~Limited~~contract ~~Partnership~~to ~~(Asbury~~sell ~~Tower)~~the ~~was~~property ~~due~~related to ~~mature~~Madison ~~on August 31~~Square, ~~2004~~Ltd. ~~However,~~ ~~the~~Dividend ~~noteholder~~Housing ~~orally~~Associates ~~agreed~~(Madison Square) to ~~extend~~a ~~the~~non-profit ~~maturity~~organization. ~~date~~The onpotential apurchaser ~~month~~of tothe ~~month~~property ~~basis~~defaulted ~~until~~on ~~such time as~~ the ~~noteholder~~contract. The ~~provides~~mortgage aloan 30encumbering ~~day~~the ~~advance~~property ~~notice~~associated towith the Partnership~~. Effective~~’s ~~January~~investment 1,in ~~2008~~Madison ~~the~~Square ~~interest~~is ~~rate~~in ~~was~~default. During ~~reduced~~the toyear 4ended ~~percent. On~~December ~~August 28~~31, ~~2008~~2011, ~~the~~The ~~property~~Michigan ~~owned~~State byHousing ~~Asbury~~Development ~~Towers~~Authority ~~was~~has sold tothe anproperty ~~affiliate~~via ofdeed ~~the~~in ~~Local~~lieu ~~Managing~~of ~~General Partner~~foreclosure. ~~Proceeds~~The ~~from~~Partnership’s ~~the~~basis ~~sale~~in ~~were~~this ~~used~~Local toPartnership ~~pay~~was ~~off~~$0 ~~the~~at ~~purchase~~both ~~money~~December ~~note~~31, at2011 aand ~~discount~~2010. As ofAcquisition ~~August~~fees ~~28,~~and ~~2008,~~property ~~the~~purchase ~~principal~~costs ~~and~~totaled ~~accrued~~$0 ~~interest~~at ~~balances~~both ~~were~~December $331,~~432,081~~ 2011 and ~~$24~~2010. As of December 31,~~789~~ 2011,~~908,~~ ~~respectively. The~~the ~~sale~~Local ~~resulted~~Partnership inwas ~~gain~~dissolved, ~~from~~and ~~extinguishment~~the ofPartnership ~~debt~~no ~~for~~longer ~~financial~~holds ~~statement~~a ~~purposes~~limited ofpartner ~~$28,168,263~~interest in ~~2008~~Madison ~~and~~Square. The ~~total~~Partnership ~~gain~~did ofnot ~~$29,838,732~~recognize ~~for~~any ~~federal~~loss ~~tax~~during ~~purposes~~2011 from this transaction.

Hale Ohana

On March 15, 2008 the Local Partnership entered into a contract with a third party to sell its property for approximately $3,875,000. The sale was completed on March 15, 2010. The sale resulted in gain on disposition of investment in partnerships for financial statement purposes of $1,603,594 in 2010 ~~and~~($1,048,768 recognized in ~~gain~~the ofperiod ~~approximately~~ended March 31, 2010 and $2554,~~086,000~~825 ~~for~~recognized ~~federal~~in ~~tax~~the ~~purposes. Net~~period ~~acquisition~~ended ~~fees~~September ~~and~~30, ~~property~~2010) ~~purchase~~and ~~costs~~a gain of $72,~~074~~217,581 ~~were~~for ~~written~~federal ~~off~~tax ~~associated~~purposes. As ~~with~~of ~~the~~December ~~sale~~31, ~~and~~2011, ~~included~~the inPartnership’s ~~gain~~share onof ~~disposition~~cash ofproceeds ~~investment~~from insale ~~partnerships~~has been received. In accordance with the terms of the Partnership Agreement, in March 2010, the Managing General Partner was paid a disposition fee ofor $77,500 related to the sale. The fee was netted against the related gain on disposition of investment in partnerships. As of December 31, 2010, The Local Partnership is in process of closing the business of the partnership and reconciling the final liquidation and termination of the Local Partnership. The Partnership believes that the local General Partner has retained approximately $100,000 which is intended to be escrowed for contingent liabilities. It is anticipated that the Local Partnership will be terminated and any funds remaining in the escrow will be released to partners, pursuant to the Local Partnership agreement, in the second half of 2011.

IV-2119

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

Pilgrim Tower East

See Note 2.a., above.

e. Summarized financial information

Combined balance sheets and combined statements of operations for the six Local Partnerships in which the Partnership is invested as of December 31, 2011, follow. The information is presented separately for two Local Partnerships which have investment basis (equity method), and for three Local Partnerships for which the Partnership’s carrying value is zero (equity method suspended).

COMBINED BALANCE SHEETS

December 31, 2011

	Equity
	Method			Suspended			Total

Number of Local Partnerships		2	(a)		3	(b)		5

Rental property, at cost, net of accumulated
depreciation of $2,742,918 and $23,232,543,
respectively	$	710,424		$	3,481,864		$	4,192,288
Land		176,923			2,912,649			3,089,572
Other assets		5,334,742			2,529,541			7,864,283

Total assets	$	6,222,089		$	8,924,054		$	15,146,143


Mortgage notes payable	$	60,516		$	11,927,387		$	11,987,903
Other liabilities		90,588			3,160,711			3,251,299
Due to general partners		--			--			--

Total liabilities		151,104			15,088,098			15,239,202

Partners' capital (deficit)		6,070,985			(6,164,044	)		(93,059	)

Total liabilities and partners' capital	$	6,222,089		$	8,924,054		$	15,146,143

_______________________________

(a) Mary Allen West Tower; Tradewinds

(b) Fairway Park; Westport Village; Northridge

IV-20

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS – Continued

COMBINED STATEMENTS OF OPERATIONS

For the year ended December 31, 2011

	Equity
	Method			Suspended			Total

Number of Local Partnerships		2	(a)		3	(b)		5

Revenue:
Rental	$	1,589,442		$	4,190,158		$	5,779,600
Other		2,386,044			211,299			2,597,343

Total revenue		3,975,486			4,401,457			8,376,943

Expenses:
Operating		1,053,431			2,374,368			3.583,910
Interest		--			624,740			624,740
Depreciation and amortization		124,335			665,119			789,454

Total expenses		1,177,766			3,905,989			5,083,755

Net income	$	2,797,720		$	495,468		$	3,293,188

Cash distributions	$	--		$	415,550		$	415,550

Cash distributions recorded as reduction of
Investments in partnerships	$	--		$	--		$	--

Cash distributions recorded as income	$	--		$	415,550		$	415,550

Partnership’s share of Local Partnership
net income		2,769,466			--			2,769,466

Share of income from partnerships	$	2,769,466		$	415,550		$	3,185,016

IV-21

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

e. Summarized financial information

Combined balance sheets and combined statements of operations for the six Local Partnerships in which the Partnership is invested as of December 31, 2010, follow. The information is presented separately for two Local Partnerships which have investment basis (equity method), and for four Local Partnerships for which the Partnership’s carrying value is zero (equity method suspended).

COMBINED BALANCE SHEETS

December 31, 2010

	Equity
	Method			Suspended			Total
Number of Local Partnerships		2	(a)		4	(b)		6
Rental property, at cost, net of accumulated
depreciation of $2,618,583, $22,572,329,
depreciation of $2,618,583 and $22,572,329,
and $25,190,912, respectively	$	778,290		$	4,986,601		$	5,764,891
respectively	$	778,290		$	4,986,601		$	5,764,891
Land		176,923			3,143,551			3,320,474
Other assets		2,852,364			2,293,140			5,145,504
Total assets	$	3,807,577		$	10,423,292		$	14,230,869
Mortgage notes payable	$	239,690		$	18,094,459		$	18,334,149
Other liabilities		294,622			3,871,170			4,165,792
Due to general partners		--			--			--
Total liabilities		534,312			21,965,629			22,499,941
Partners' capital (deficit)		3,273,265			(11,542,337	)		(8,269,072	)
Total liabilities and partners' capital	$	3,807,577		$	10,423,292		$	14,230,869

~~———————————— (a) Mary Allen Tower West; Tradewind~~_______________________________

(a) Mary Allen West Tower; Tradewinds

(b) Fairway Park; Madison Square; Northridge; Westport Village

IV-22

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

COMBINED ~~STATEMENT~~STATEMENTS OF OPERATIONS

For the year ended December 31, 2010

	Equity
	Method			Suspended			Total

Number of Local Partnerships		2	(a)		4	(b)		6

Revenue:
Rental	$	1,755,474		$	4,805,045		$	6,560,519
Other		127,861			242,308			370,169

Total revenue		1,883,335			5,047,353			6,930,688

Expenses:
Operating		1,148,854			3,208,189			4,357,043
Interest		--			1,268,090			1,268,090
Depreciation and amortization		189,070			1,022,202			1,211,272

Total expenses		1,337,924			5,498,481			6,836,405

Net income (loss)	$	545,411		$	(451,128	)	$	94,283

Cash distributions	$	--		$	208,163		$	208,163

Cash distributions recorded as reduction of
Investments in partnerships	$	--		$	--		$	--

Cash distributions recorded as income	$	--		$	208,163		$	208,163

Partnership’s share of Local Partnership
net income		535,692			--			535,692

Share of income from partnerships	$	535,692		$	208,163		$	743,855

All of the cash distributions recorded as income are included in share of income from partnerships on the consolidated statements of operations for the respective years, and are recorded as cash receipts on the respective consolidated balance sheets. Cash distributions recorded as a reduction of the related investment are recorded as cash receipts on the respective consolidated balance sheets, and are recorded as a reduction of investments in partnerships, also on the respective consolidated balance sheets.

IV-23

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

~~Combined~~f. Reconciliation ~~balance sheets and combined statements~~ of ~~operations for~~ the ~~eight~~ Local Partnerships' infinancial which the Partnership is invested as of December 31, 2009, follow. The information is presented separately for two Local Partnerships which have investment basis (equity method), and for six Local Partnerships for which the Partnership’s carrying value is zero (equity method suspended).statement

~~COMBINED~~net ~~BALANCE~~income ~~SHEETS~~to taxable income

December 31, 2009

	Equity
	Method			Suspended			Total
Number of Local Partnerships		2	(a)		6	(b)		8
Rental property, at cost, net of accumulated
depreciation of $7,516,806, $30,731,539,
and $38,248,345, respectively	$	1,857,965		$	7,649,693		$	9,507,658
Land		352,874			3,502,815			3,855,689
Other assets		1,226,194			4,248,427			5,474,621
Total assets	$	3,437,033		$	15,400,935		$	18,837,968
Mortgage notes payable	$	404,314		$	23,395,601		$	23,799,915
Other liabilities		304,865			3,734,994			4,039,859
Due to general partners		--			--			--
Total liabilities		709,179			27,130,595			27,839,774
Partners' capital (deficit)		2,727,854			(11,729,660	)		(9,001,806	)
Total liabilities and partners' capital	$	3,437,033		$	15,400,935		$	18,837,968

——————————— (a) Mary Allen Tower West; Tradewinds

(b) Fairway Park; Madison Square; Northridge; Westport Village, Hale Ohana, Pilgrim Tower East

IV-23

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

COMBINED STATEMENTS OF OPERATIONS

For the year ended December 31, 2009

	Equity
	Method			Suspended			Total
Number of Local Partnerships		2	(a)		6	(b)		8
Revenue:
Rental	$	1,563,228		$	7,116,047		$	8,679,275
Other		112,374			230,773			343,147
Total revenue		1,675,602			7,346,820			9,022,422
Expenses:
Operating		1,236,894			4,532,120			5,769,014
Interest		2,366			1,651,569			1,653,935
Depreciation and amortization		317,324			1,419,095			1,736,419
Total expenses		1,556,584			7,602,784			9,159,368
Net income (loss)	$	119,018		$	(255,964	)	$	(136,946	)
Cash distributions	$	--		$	669,833		$	669,883
Cash distributions recorded as reduction of
Investments in partnerships	$	--		$	--		$	--
Cash distributions recorded as income	$	--		$	669,833		$	669,833
Partnership’s share of Local Partnership net Income		117,816			--			117,816
Share of income from partnerships	$	117,816		$	669,833		$	787,649

IV-25

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

Combined statements of operations for the ten Local Partnerships in which the Partnership was invested as of December 31, 2008, follow. The information is presented separately for four Local Partnerships which have investment basis (equity method), and for six Local Partnerships for which the Partnership’s carrying value is zero (equity method suspended).

COMBINED STATEMENTS OF OPERATIONS

For the year ended December 31, 2008

	Equity
	Method			Suspended			Total
Number of Local Partnerships		4			6	(1)		10
Revenue:
Rental	$	3,469,230		$	7,199,774		$	10,669,004
Other		332,227			331,231			663,458
Total revenue		3,801,457			7,531,005			11,332,462
Expenses:
Operating		3,096,721			4,573,699			7,670,420
Interest		(92,761	)		1,689,289			1,596,528
Depreciation and amortization		692,355			1,420,404			2,112,759
Total expenses		3,696,315			7,683,392			11,379,707
Net income (loss)	$	105,142		$	(152,387	)	$	(47,245	)
Cash distributions	$	--		$	549,270		$	549,270
Cash distributions recorded as income	$	--		$	549,270		$	549,270
Partnership’s share of Local Partnership net income		104,081			--			104,081
Share of income from partnerships	$	104,081		$	549,270		$	653,351

———————————— (1) Westport Village is in receivership.

f. Reconciliation of the Local Partnerships' financial statement net loss to taxable income

For federal income tax purposes, the Local Partnerships report on a basis whereby: (i) certain revenue and the related assets are recorded when received rather than when earned; (ii) certain costs are expensed when paid or incurred rather than capitalized and amortized over the period of benefit; and (iii) a shorter life is used to compute depreciation on the property as permitted by the Internal Revenue Code and the underlying regulations. These returns are subject to examination and, therefore, possible adjustment by the IRS.

~~IV-26~~A reconciliation of the Local Partnerships' financial statement net income reflected above to taxable income follows.

	December 31,
	2011		2010

Financial statement net income	$	3,293,188	$	94,283

Differences between financial statement
and tax depreciation, amortization,
and miscellaneous differences		7,333,041		999,699

Taxable income	$	10,626,229	$	1,093,982

g. Investment reconciliation

The following is a reconciliation of investments in partnerships at December 31, 2011 and 2010:

Investments in partnerships at January 1, 2010:	$	940,105

Share of income from partnerships		322,696
Distribution from partnerships		(203,833	)

Investments in partnerships at December 31, 2010:		1,058,968

Share of income from partnerships		548,918
Distribution from partnerships		(415,550	)

Investments in partnerships at December 31, 2011:	$	1,192,336

IV-24

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENTS IN PARTNERSHIPS - Continued

AThe following is a reconciliation of ~~the~~investments ~~Local~~in ~~Partnerships'~~partnerships ~~financial~~held ~~statement~~for ~~net~~sale ~~income~~or ~~(loss)~~transfer ~~reflected~~at ~~above~~December to31, ~~taxable~~2011 ~~income~~and ~~follows.~~2010:

	December 31,
Investments in partnerships at January 1, 2010:	$	1,931,722
	2010			2009			2008
Share of income from partnerships		421,159
Financial statement net income (loss)	$	94,283		$	(136,946	)	$	(47,245	)
Distribution from partnerships		(4,330	)
Differences between financial statement
Investments in partnerships at December 31, 2010:		2,348,551
and tax depreciation, amortization,
Share of income from partnerships		2,636,098
and miscellaneous differences		999,699			1,346,769			855,789
Write off investment due to sale of property		(216,940	)
Taxable income	$	1,093,982		$	1,209,823		$	808,544
Investments in partnerships at December 31, 2011:	$	4,767,709

3. RELATED PARTY TRANSACTIONS

In accordance with the terms of the Partnership Agreement, the Partnership paid the Managing General Partner a fee for services in connection with the review, selection, evaluation, negotiation and initial acquisition of the original interests in the Local Partnerships. The fee amounted to $1,470,000, which is equal to two percent of the Additional Limited Partners' capital contributions to the Partnership. The acquisition fee was capitalized and is being amortized over a 40-year period using the straight-line method.

In accordance with the terms of the Partnership Agreement, the Partnership is obligated to reimburse the Managing General Partner or its affiliates for certain direct expenses and payroll expenses in connection with managing the Partnership. Payroll expenses are reimbursed at a factor of 1.75 times base salary. For the years ended December 31, ~~2010,~~2011 ~~2009~~ and ~~2008~~2010, the Partnership paid $~~168~~161,~~942,~~202 ~~$227,324~~ and $~~183~~168,~~880~~942, respectively, to the Managing General Partner or its affiliates as direct reimbursement of expenses incurred on behalf of the Partnership. In addition, certain employees of the Managing General Partner provided legal and tax accounting services to the Partnership. These are reimbursed comparable to third party service charges. For the years ended December 31, ~~2010,~~2011 ~~2009~~ and ~~2008~~2010, the Partnership paid $~~105~~75,~~737,~~755 ~~$72,555~~ and $45105,~~191~~737, respectively, to the Managing General Partner or its affiliates for these services. Such reimbursed expenses are included in the accompanying consolidated statements of operations as general and administrative expenses.

In accordance with the terms of the Partnership Agreement, the Partnership is obligated to pay the Managing General Partner an annual incentive management fee (Management Fee), after all other expenses of the Partnership are paid. The amount of the Management Fee shall not exceed 0.IV-25% of invested assets, as defined in the Partnership Agreement, and shall be payable from the Partnership's cash available for distribution, as defined in the Partnership Agreement, as of the end of each calendar year, as follows:

(i) First, on a monthly basis as an operating expense before any distributions to limited partners in an annual amount equal to $375,000; and

(ii) Second, after distributions to the limited partners in the amount of one percent of the gross proceeds of the offering, the balance of such 0.25% of invested assets.

For each of the years ended December 31, 2010, 2009 and 2008, the Partnership paid the Managing General Partner a Management Fee of $375,000.

IV-28

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. RELATED PARTY TRANSACTIONS - Continued

In accordance with the terms of the Partnership Agreement, the Partnership is obligated to pay the Managing General Partner an annual incentive management fee (Management Fee), after all other expenses of the Partnership are paid. The amount of the Management Fee shall not exceed 0.25% of invested assets, as defined in the Partnership Agreement, and shall be payable from the Partnership's cash available for distribution, as defined in the Partnership Agreement, as of the end of each calendar year, as follows:

(i)

First, on a monthly basis as an operating expense before any distributions to limited partners in an annual amount equal to $375,000; and

(ii)

Second, after distributions to the limited partners in the amount of one percent of the gross proceeds of the offering, the balance of such 0.25% of invested assets.

For each of the years ended December 31, 2011 and 2010, the Partnership paid the Managing General Partner a Management Fee of $375,000.

In accordance with the terms of the Partnership Agreement, the Managing General Partner and/or its affiliates may receive a fee of not more than two percent of the sale price of an investment in a Local Partnership or the property it owns, payable under certain conditions upon the sale of an investment in a Local Partnership or the property it owns. The payment of the fee is subject to certain restrictions, including the achievement of a certain level of sales proceeds and making certain minimum distributions to limited partners.

In accordance with the terms of the Partnership Agreement, in March 2010, the Managing General Partner was paid a disposition fee of $77,500 related to the sale of Hale Ohana, which was netted against the related gain on disposition of investment in partnerships.

In accordance with the terms of the Partnership Agreement, on October 13, 2012 a disposition fee of $70,000 was accrued, related to the sale of the Mary Allen West property, which was netted against the related loss on disposition of property.

4. PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS

All profits and losses prior to the first date on which Additional Limited Partners were admitted were allocated 98.49% to the Initial Limited Partner and 1.51% to the General Partners. Upon admission of the Special Limited Partner and the Additional Limited Partners, the interest of the Initial Limited Partner was reduced to 0.49%. The interest of the Additional Limited Partners is 97% and the interest of the Special Limited Partner is one percent. The net proceeds resulting from the liquidation of the Partnership or the Partnership's share of the net proceeds from any sale of a Local Partnership interest or sale or refinancing of the Local Partnership's rental properties which are not reinvested shall be distributed and applied as follows:

(i) to the payment of debts and liabilities of the Partnership (including all expenses of the Partnership incident to the sale or refinancing) other than loans or other debts and liabilities of the Partnership to any partner or any affiliates; such debts and liabilities, in the case of a nonIV-~~liquidating distribution, to be only those which are then required to be paid or, in the judgment of the Managing General Partner, required to be provided for;~~26

(ii) to the establishment of any reserves which the Managing General Partner deems reasonably necessary for contingent, unmatured or unforeseen liabilities or obligations of the Partnership;

(iii) except in the case of a refinancing, to each partner in an amount equal to the positive balance in his capital account as of the date of the sale, adjusted for operations and distributions to that date, but before allocation of any profits for tax purposes realized from such sale and allocated pursuant to the Partnership Agreement;

(iv) to the limited partners (A) an aggregate amount of proceeds from sale or refinancing and all prior sales or refinancings equal to their capital contributions, without reduction for prior cash distributions other than prior distributions of sale and refinancing proceeds, plus (B) an additional amount equal to a cumulative non-compounded six percent return on each limited partner's capital contribution, reduced, but not below zero, by (1) an annual amount equal to 50% of the losses for tax purposes plus tax credits allocated to such limited partner and (2) distributions of net cash flow to each limited partner, such return, losses for tax purposes and net cash flow distributions commencing on the first day of the month in which the capital contribution was made;

(v) to the repayment of any unrepaid loans theretofore made by any partner or any affiliate of the Partnership for Partnership obligations and to the payment of any unpaid amounts owing to the General Partners pursuant to the Partnership Agreement;

(vi) to the General Partners in the amount of their capital contributions;

IV-

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS - Continued

(vii) thereafter, for their services to the Partnership, in equal shares to certain general partners, (or their designees) an aggregate fee of one percent of the gross proceeds resulting from (A) such sale (if the proceeds are from a sale rather than a refinancing) and (B) any prior sales from which such one percent fee was not paid to the General Partners or their designees; and

(i)		to the payment of debts and liabilities of the Partnership (including all expenses of the Partnership incident to the sale or refinancing) other than loans or other debts and liabilities of the Partnership to any partner or any affiliates; such debts and liabilities, in the case of a non-liquidating distribution, to be only those which are then required to be paid or, in the judgment of the Managing General Partner, required to be provided for;
(ii)		to the establishment of any reserves which the Managing General Partner deems reasonably necessary for contingent, unmatured or unforeseen liabilities or obligations of the Partnership;
(iii)		except in the case of a refinancing, to each partner in an amount equal to the positive balance in his capital account as of the date of the sale, adjusted for operations and distributions to that date, but before allocation of any profits for tax purposes realized from such sale and allocated pursuant to the Partnership Agreement;
(iv)		to the limited partners (A) an aggregate amount of proceeds from sale or refinancing and all prior sales or refinancings equal to their capital contributions, without reduction for prior cash distributions other than prior distributions of sale and refinancing proceeds, plus (B) an additional amount equal to a cumulative non-compounded six percent return on each limited partner's capital contribution, reduced, but not below zero, by (1) an annual amount equal to 50% of the losses for tax purposes plus tax credits allocated to such limited partner and (2) distributions of net cash flow to each limited partner, such return, losses for tax purposes and net cash flow distributions commencing on the first day of the month in which the capital contribution was made;
(v)		to the repayment of any unrepaid loans theretofore made by any partner or any affiliate of the Partnership for Partnership obligations and to the payment of any unpaid amounts owing to the General Partners pursuant to the Partnership Agreement;
(vi)		to the General Partners in the amount of their capital contributions;
(vii)		thereafter, for their services to the Partnership, in equal shares to certain general partners, (or their designees) an aggregate fee of one percent of the gross proceeds resulting from (A) such sale (if the proceeds are from a sale rather than a refinancing) and (B) any prior sales from which such one percent fee was not paid to the General Partners or their designees; and
(viii)		the remainder, 12% in the aggregate to the General Partners (or their assignees), 3% to the Special Limited Partner and 85% in the aggregate to the Initial Limited Partner and the Additional Limited Partners (or their assignees) in accordance with their respective partner interests.

(viii) the remainder, 12% in the aggregate to the General Partners (or their assignees), 3% to the Special Limited Partner and 85% in the aggregate to the Initial Limited Partner and the Additional Limited Partners (or their assignees) in accordance with their respective partner interests.

Fees payable to certain general partners (or their designees) under (vii) above, together with all other property disposition fees and any other commissions or fees payable upon the sale of apartment properties, shall not in the aggregate exceed the lesser of the competitive rate or six percent of the sale price of the apartment properties.

The Managing General Partner and/or its affiliates may receive a fee of not more than two percent of the sale price of an investment in a Local Partnership or the property it owns, payable under certain conditions upon the sale of an investment in a Local Partnership or the property it owns. The payment of the fee is subject to certain restrictions, including the achievement of a certain level of sale proceeds and making certain minimum distributions to limited partners.

IV-27

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS - Continued

Pursuant to the Partnership Agreement, all cash available for distribution, as defined, shall be distributed, not less frequently than annually, 97% to the Additional Limited Partners, one percent to the Special Limited Partner, 0.49% to the Initial Limited Partner and 1.51% in the aggregate to the General Partners after payment of the Management Fee (see Note 3), as specified in the Partnership Agreement.

On July 30, 2010, the Partnership paid a cash distribution of $2,200,110 ($30 per Unit) to the Limited Partners who were holders of record as of July 1, 2010.

OnAs ~~May~~defined ~~17,~~in ~~2009,~~ the Partnership ~~declared~~Agreement, aafter ~~cash~~the ~~distribution~~payment of ~~$1,857,597~~distributions ~~($25~~as ~~per~~described ~~Unit)~~in to the ~~Limited~~previous ~~Partners~~paragraphs, ~~who~~after ~~were~~the ~~holders~~establishment of ~~record~~any asreserves ofdeemed ~~May~~necessary ~~17,~~by ~~2009,~~the ofManaging ~~which,~~General inPartner ~~June~~and ~~2009,~~after ~~$1,268,386~~payment ~~was~~of ~~paid~~the toManagement Fee, the ~~Limited~~Partnership ~~Partners. From~~had ~~the~~no remaining cash available for distribution ~~amount,~~for inthe ~~April~~years ~~2009,~~ended ~~$590~~December 31,~~097~~ ~~was~~2011 ~~paid~~and to2010. The ~~the~~Managing ~~State~~General ofPartner ~~New~~currently ~~Jersey~~intends ~~for~~to ~~non-resident~~retain ~~withholding~~all ~~tax.~~of Nothe ~~distribution~~Partnership's ~~was~~remaining ~~paid~~undistributed incash ~~the~~for ~~year~~operating ~~2008~~cash reserves.

As defined in the Partnership Agreement, after the payment of distributions as described in the previous paragraphs, after the establishment of any reserves deemed necessary by the Managing General Partner and after payment of the Management Fee, the Partnership had no remaining cash available for distribution for the years ended December 31, 2010, 2009 and 20085. ~~The~~ RECONCILIATION ~~Managing~~OF ~~General~~THE ~~Partner currently intends to retain all of the Partnership~~PARTNERSHIP'sS ~~remaining~~FINANCIAL ~~undistributed cash for operating cash reserves.~~STATEMENT

NET INCOME TO TAXABLE INCOME

For federal income tax purposes, the Partnership reports on a basis whereby: (i) certain expenses are amortized rather than expensed when incurred; (ii) certain costs are amortized over a shorter period for tax purposes, as permitted by the Internal Revenue Code and underlying regulations and (iii) certain costs are amortized over a longer period for tax purposes. The Partnership records its share of losses from its investments in limited partnerships for federal income tax purposes as reported on the Local Partnerships' federal income tax returns (see Note 2.f.), including losses in excess of related investment amounts. These returns are subject to examination and, therefore, possible adjustment by the IRS.

A reconciliation of the Partnership's financial statement net income to taxable income follows.

	For the years ended
	December 31,
	2011			2010

Financial statement net income	$	1,561,677		$	7,263,153

Adjustments:
Difference between financial statement
net income and taxable income related
to the Partnership's equity in the
Local Partnerships' income or losses		(501,310	)		350,128

Costs amortized over a shorter period
for income tax purposes		3,284			3,477

Difference between taxable interest
expense and financial statement
interest expense		99,399			216,987

Differences between financial statement
gain (loss) and tax gain (loss) from
the sale or transfer of properties		8,914,488			1,898,943

Taxable income	$	10,077,538		$	9,732,688

IV-28

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. RECONCILIATION OF THE PARTNERSHIP'S FINANCIAL STATEMENT NET INCOME TO TAXABLE INCOME

For federal income tax purposes, the Partnership reports on a basis whereby: (i) certain expenses are amortized rather than expensed when incurred; (ii) certain costs are amortized over a shorter period for tax purposes, as permitted by the Internal Revenue Code and underlying regulations and (iii) certain costs are amortized over a longer period for tax purposes. The Partnership records its share of losses from its investments in limited partnerships for federal income tax purposes as reported on the Local Partnerships' federal income tax returns (see Note 2.e.), including losses in excess of related investment amounts. These returns are subject to examination and, therefore, possible adjustment by the IRS.

A reconciliation of the Partnership's financial statement net income to taxable income follows.

	For the years ended
	December 31,
	2010		2009		2008
Financial statement net income	$	7,263,153	$	8,028,279	$	26,484,709
Adjustments:
Difference between financial statement
net income and taxable income related
to the Partnership's equity in the
Local Partnerships' income or losses		350,128		543,642		1,324,040
Costs amortized over a shorter period
for income tax purposes		3,477		29,630		8,182
Difference between taxable interest
income and financial statement
interest income		216,987		198,389		313,098
Differences between financial statement
gain (loss) and tax gain (loss) from
the sale or transfer of properties		1,898,943		1,797,414		1,670,469
Taxable income	$	9,732,688	$	10,597,354	$	29,800,498

6. CASH CONCENTRATION RISK

Financial instruments that potentially subject the Partnership to concentrations of risk consist primarily of cash. The Partnership maintains ~~two~~four cash accounts with ~~the~~one ~~same~~ bank. As of December 31, ~~2010~~2011, the uninsured portion of the cash balance was $0.

#7. SIGNIFICANT ~~# #~~SUBSIDIARIES

~~IV-30~~The following Local Partnership invested in by the Partnership represents more than 20% of the Partnership’s total assets or equity as of December 31, 2011 and 2010 or net income (loss) for the years then ended. The following financial information represents the performance of this Local Partnership for the years ended December 31, 2011 and 2010.

Mary Allen West Tower	2011	2010

Total Assets	$4,897,901	$2,417,128
Total Liabilities	$ 10,993	$ 193,214
Revenue	$3,073,333	$1,013,179
Net Income	$2,636,098	$ 425,335

IV-29

Filing Compare · CAPITAL REALTY INVESTORS IV LIMITED PARTNERSHIP