American Affordable Housing Ii Limited Partnership 10-Q 2007 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period endedSeptember 30, 2006 or

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

      For the transition period from _______ to _______

Commission file number        0-17696

AMERICAN AFFORDABLE HOUSING II LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)

Massachusetts	04-2992309
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

One Boston Place, Suite 2100, Boston, Massachusetts  02108
(Address of principal executive offices)           (Zip Code)

Registrant's telephone number, including area code(617)624-8900

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 [ ] No [ X ]

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

Large accelerated filer[ ] Accelerated filer[ ] Non-accelerated filer[ X ]

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

Yes [ ] No [ X ]

AMERICAN AFFORDABLE HOUSING II LIMITED PARTNERSHIP

QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2006

TABLE OF CONTENTS

FOR THE QUARTER ENDED september 30, 2006

Balance_Sheets*

Statements_of_Operations 4

Changes_in_Partners_Capital 6

Statements_of_Cash_Flows 7

Notes_to_Financial_Statements 8

Note A Organization 8

Note B Accounting and Financial Reporting Policies 8

Note C Related Party Transactions 9

Note D Investments in Opertating Partnerships 9

Combined_Statements_of_Operations 10

NOTE_E_TAXABLE_LOSS 11

Liquidity 12

Capital_Resources 12

Results_of_Operations 13

Quantitative_and_Qualitative_Disclosure 23

Controls_and_Procedures 23

Part_II_Other_Information 24

Signatures 25

American Affordable Housing II Limited Partnership

BALANCE SHEETS

		September 30, 2006 (Unaudited)	March 31, 2006 (Audited)
ASSETS
INVESTMENTS IN OPERATING
	PARTNERSHIPS (Note D)	$  -	$  -
Cash and cash equivalents		253,420	197,409
Other assets		20,000	-
		$  273,420	$  197,409
LIABILITIES AND PARTNERS' DEFICIT
LIABILITIES
Accounts payable		$  9,000	$  -
Accounts payable affiliates		6,918,916	6,816,453
		6,927,916	6,816,453
PARTNERS' DEFICIT
Limited Partners
	Units of limited partnership  interest, $1,000 stated value per unit; issued and outstanding, 26,501 units (Note A)	(6,365,929)	(6,330,832)
General Partners		(288,567)	(288,212)
		(6,654,496)	(6,619,044)
		$  273,420	$  197,409

The accompanying notes are an integral part of this statement

American Affordable Housing II Limited Partnership

STATEMENTS OF OPERATIONS

Three Months EndedSeptember 30,
(Unaudited)

		2006	2005
Income
	Interest income	$    742	$    280
	Other income	21,784	91
		22,526	371
Share of income (loss) from Operating Partnerships (Note D)		50,250	-
Expenses
	Professional fees	16,187	15,188
	General and administrative expenses	965	2,035
	Asset management fees (Note C)	38,138	48,842
		55,290	66,065
NET INCOME (LOSS)		$ 17,486	$ (65,694)
Net income (loss) allocated to general partners		$  175	$  (657)
Net income (loss) allocated limited partners		$ 17,311	$ (65,037)
Net income (loss) per unit of limited partnership interest		$        0.7	$        (2.5)

The accompanying notes are an integral part of this statement

American Affordable Housing II Limited Partnership

STATEMENTS OF OPERATIONS

Six Months Ended September 30,
(Unaudited)

		2006	2005
Income
	Interest income	$    939	$    605
	Other income	21,785	91
		22,724	696
Share of income (loss) from Operating Partnerships (Note D)		50,250	-
Expenses
	Professional fees	17,836	24,856
	General and administrative expenses	2,860	4,925
	Asset management fees (Note C)	87,730	83,872
		108,426	113,653
NET INCOME (LOSS)		$ (35,452)	$ (112,957)
Net income (loss) allocated to general partners		$  (355)	$  (1,130)
Net income (loss) allocated limited partners		$ (35,097)	$ (111,827)
Net income (loss) per unit of limited partnership interest		$        (1.3)	$       (4.2)

The accompanying notes are an integral part of this statement

American Affordable Housing II Limited Partnership

STATEMENTS OF CHANGES IN PARTNERS' DEFICIT

Six Months Ended September 30,
(Unaudited)

	Assignees	General Partner	Total
Partners' Deficit  April 1, 2006	$ (6,330,832)	$(288,212)	$(6,619,044)
Distributions	-	-	-
Net loss	(35,097)	(355)	(35,452)
Partners' Deficit   September 30, 2006	$(6,365,929)	$(288,567)	$(6,654,496)

The accompanying notes are an integral part of this statement

American Affordable Housing II Limited Partnership

STATEMENTS OF CASH FLOWS

Six Months Ended September 30,
(Unaudited)

			2006	2005
Cash flows from operating activities:
	Net Income (Loss)		$   (35,452)	$   (112,957)
	Adjustments:
		Distributions from Operating Partnerships	-	-
		Share of (Income) Loss from Operating Partnerships	(50,250)	-
		Changes in assets and liabilities:
		Decrease (Increase) in other assets	(20,000)	(12,500)
		Increase (Decrease) in accounts payable and accrued expenses	111,463	(80,987)
		Net cash provided by (used in) operating activities	5,761	(206,444)
	Cash flows from investing activities:
		Proceeds from the sale of Operating Partnerships	50,250	368,821
		Net cash provided by (used in) investing activities	50,250	368,821
	Cash flows from financing activities:
		Distribution to Partners	-	(106,373)
		Net cash provided by (used in) financing activities	-	(106,373)
		INCREASE (DECREASE) IN CASH	56,011	56,004
Cash and cash equivalents, beginning			197,409	79,567
Cash and cash equivalents, ending			$    253,420	$     135,571

The accompanying notes are an integral part of this statement

American Affordable Housing II Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2006
(Unaudited)

NOTE A - ORGANIZATION

American Affordable Housing II Limited Partnership ("Partnership") was formed under the laws of The Commonwealth of Massachusetts on May 13, 1987, for the purpose of acquiring, holding, and disposing of limited
partnership interests in operating partnerships which were to acquire, develop, rehabilitate, operate and own newly constructed, existing or rehabilitated low-income apartment complexes. Effective as of June 1, 2001 there was a restructuring, and as a result, the Partnership's general partner was reorganized as follows. The General Partner of the Partnership continues to be Boston Capital Associates Limited Partnership, a Massachusetts limited partnership. The general partner of the Partnerships General Partner is BCA Associates Limited Partnership, a Massachusetts limited partnership, whose sole general partner is C&M Management, Inc., a Massachusetts corporation and whose limited partners are Herbert F. Collins and John P. Manning. Mr. Manning is the principal of Boston Capital Partners, Inc.

Pursuant to the Securities Act of 1933, the Partnership filed a Form S-11 Registration Statement with the Securities and Exchange Commission, effective December 21, 1987, which covered the offering (the "Public Offering") of the Partnership's units of limited partner interest, as well as the units of limited partner interest offered by American Affordable Housing I, III, IV, and V Limited Partnerships (together with the Partnership, the
"Partnerships"). The Partnerships registered 50,000 units of limited partner interest at $1,000 each unit for sale to the public. The Partnership sold 26,501 units of limited partner interest, representing $26,501,000 of capital contributions.

NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES

The condensed financial statements included herein as of September 30, 2006 and for the six months then ended have been prepared by the Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The Registrant's accounting and financial reporting policies are in conformity with generally accepted accounting principles and include adjustments in interim periods considered necessary for a fair presentation of the results of operations. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed financial statements are read in conjunction with the financial statements and the notes thereto included in the Registrant's Annual Report Statement on Form 10-K.

The accompanying financial statements reflect the Partnership's results of operations for an interim period and are not necessarily indicative of the results of operations for the fiscal year ending March 31, 2007.

American Affordable Housing II Limited Partnership

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 2006

(Unaudited)

NOTE C - RELATED PARTY TRANSACTIONS

An annual asset management fee based on 0.5 percent of the aggregate cost of all apartment complexes owned by the Operating Partnerships has been accrued as payable to Boston Capital Asset Management Limited Partnership. The annual asset management fee accrued for the quarters ended September 30, 2006 and 2005 was $50,925 and $50,925, respectively. Total asset management fees accrued as of September 30, 2006 were $6,619,598.

During the quarters ended September 30, 2006 and 2005 affiliates of the Partnerships General Partner did not advance any money to the Partnership to pay operating expenses of the Partnership, or to make advances and/or loans to Operating Partnerships. Total advances for these costs at September 30, 2006 were $261,667. These and any additional advances will be repaid, without interest, from available cash flow or the proceeds of sales or refinancing of the Partnership's interests in Operating Partnerships.

The Partnership also accrued various affiliate administrative expenses including travel, printing, salaries, postage, and overhead allocations. The amounts accrued during the quarters ended September 30, 2006 and 2005 were $613 and $405, respectively. Total accruals at September 30, 2006 were $37,651.

NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS

At September 30, 2006 and 2005, the Partnership had limited partnership equity interests in 18 and 27 Operating Partnerships respectively, each of which owned an apartment complex.

Under the terms of the Partnership's investment in each Operating Partnership, the Partnership was required to make capital contributions to the Operating Partnerships. These contributions were payable in installments
upon each Operating Partnership achieving specified levels of construction and/or operations. At September 30, 2006 and 2005, all such capital contributions had been paid to the Operating Partnerships.

The Partnership's fiscal year ends March 31st of each year, while all the Operating Partnerships' fiscal years are the calendar year. Pursuant to the provisions of each Operating Partnership Agreement, financial results for
each of the Operating Partnerships are provided to the Partnership within 45 days after the close of each Operating Partnership's quarterly period. Accordingly, the current financial results available for the Operating Partnerships are for the six months ended June 30, 2006.

American Affordable Housing II Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2006
(Unaudited)

COMBINED SUMMARIZED STATEMENTS OF OPERATIONS

NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued)

The unaudited combined statements of operations of the Operating

Partnerships for the Six Months ended June 30, 2006 and 2005 are as follows:

	2006	2005
Revenues
Rental income	$ 2,609,041	$ 3,391,939
Interest and other	77,579	86,559
	2,686,620	3,478,498
Expenses
Interest expense	444,391	942,620
Depreciation and amortization	636,762	873,383
Operating expenses	1,936,598	2,306,525
	3,017,751	4,122,528
NET LOSS	$   (331,131)	$   (644,030)
Net loss allocation to American   Affordable Housing II Limited   Partnership*	$ (327,820)	$ (637,590)
Net loss allocated to other    partners	$ (3,311)	$ (6,440)

*Amounts include $327,820 and $637,590 for 2006 and 2005, respectively, of loss not recognized under the equity method of accounting.

The Partnership accounts for its investments using the equity method of accounting. Under the equity method of accounting, the Partnership adjusts its investment cost for its share of each Operating Partnership's results of
operations and for any distributions received or accrued. However, the Partnership recognizes individual operating losses only to the extent of capital contributions. Excess losses are suspended for use in future years to
offset excess income.

American Affordable Housing II Limited Partnership

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

September 30, 2006

(Unaudited)

NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (CONTINUED)

At September 30, 2006 and 2005, the partnership has limited partnership equity interests in 18 and 27 operating limited partnerships, respectively, which own apartment complexes. During the quarters ended September 30, 2006 and 2005, 8 and 0, respectively, of the operating limited partnerships were sold. The dispositions resulted in cash proceeds to the partnership of $50,250, all of which had been received at September 30, 2006, and a gain on the disposal of the assets of $50,250 for the quarter ended September 30, 2006.

NOTE E - TAXABLE LOSS

The Partnership's taxable loss for the year ended December 31, 2006 is expected to differ from its loss for financial reporting purposes. This is primarily due to accounting differences in depreciation incurred by the Operating Partnerships and also differences between the equity method of accounting and IRS accounting methods. No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the partners individually.

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

Liquidity

The Partnership's primary source of funds was the proceeds of its Public Offering. Other sources of liquidity have included (i) interest earned on working capital reserves, and (ii) cash distributions from operations of the
Operating Partnerships in which the Partnership has invested. Both of these sources of liquidity are available to meet the obligations of the Partnership.

The Partnership is currently accruing the annual asset management fee. Asset management fees accrued during the quarters ended September 30, 2006 and 2005 were $50,925 and $50,925 respectively, and total asset management fees accrued as of September 30, 2006 were $6,619,598. Pursuant to the Partnership Agreement, these liabilities will be deferred until the Partnership receives sales or refinancing proceeds from Operating Partnerships, which will be used to satisfy these liabilities.

The Partnership has recorded $6,918,916 as payable to affiliates. This represents advances to pay third party operating expenses of the Partnership, advances and/or loans to Operating Partnerships, accrued asset management fees, and accrued overhead allocations. These and any future advances or accruals will be paid, without interest, from available cash flow, reporting fees, or the proceeds of sales or refinancing of the Partnership's interest in Operating Partnerships.

Cash flow and reporting fees will be added to the Partnership's working capital and will be available to meet future third party obligations of the Partnership. The Partnership is currently pursuing, and will continue to aggressively pursue, available cash flow and reporting fees and anticipates that the amount collected will be sufficient to cover future third party operating expenses.

Capital Resources

The Partnership received $26,501,000 in subscriptions for Units (at $1,000 per Unit) during the period February 2, 1988 to December 21, 1988 pursuant to the Public Offering, resulting in net proceeds available for investment in
Operating Partnerships (after payment of acquisition fees and expenses and funding of a reserve) of $18,550,700.

As of September 30, 2006, the Partnership had committed to investments requiring cash payments of $18,613,793, all of which has been paid. At September 30, 2006, the Partnership held $253,420, which is comprised of working capital. Since the Partnership has completed funding of all investments, it anticipates that there should be no significant need for capital resources in the future.

Results of Operations

As of September 30, 2006 and 2005 the Partnership held, respectively limited partnership interests in 18 and 27 Operating Partnerships. In each instance the Apartment Complex owned by the applicable Operating Partnership is eligible for the federal housing tax credit. Initial occupancy of a unit in each Apartment Complex which complied with the minimum set-aside test (i.e., initial occupancy by tenants with incomes equal to no more than a certain percentage of area median income) and the rent restriction test (i.e., gross rent charged tenants does not exceed 30% of the applicable income standards) is referred to hereinafter as "Qualified Occupancy." Each of the Operating Partnerships and each of the respective Apartment Complexes are described more fully in the Prospectus or applicable report on Form 8-K. The General Partner of the Partnership believes that there is adequate casualty insurance on the properties.

As of September 30, 2006 and 2005 the Qualified Occupancy of the Operating Partnership's was 100%. The Partnership had a total of 18 properties at September 30, 2006, all of which were at 100% Qualified Occupancy.

During the quarters ended September 30, 2006 and 2005, the Partnership received $12,787 and $2,083, respectively, of reporting fees from the Operating Partnerships.

The Partnership incurred an annual asset management fee to Boston Capital Asset Management Limited Partnership in an amount equal to 0.5% of the aggregate cost of the apartment complexes owned by the Operating Partnerships, less the amount of various partnership management and reporting fees paid by the Operating Partnerships. The annual asset management fee incurred, net of reporting fees received, during the quarters ended September 30, 2006 and 2005 was $38,138 and $48,842, respectively.

Kingsley Park Associates Limited Partnership (Kingsley Park Apartments) is a 312-unit project located in Essex, Maryland. In June 2004 the Investment General Partner received $25,000 for the sale of its interest in the Operating Partnership to the Operating General Partner. The terms of the sale also provided that the Operating General Partner assumes the property's outstanding mortgage. Annual losses generated by the Operating Partnership, which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Partnership's investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the investment of $25,000 has been recorded as of December 31, 2004.

Riverplace Apartments is a 100 unit community located in Holyoke MA. The Investment General Partner received $25,000 from the Operating General Partner as payment for its interest in the Operating Partnership. The terms of the sale also provided that the Operating General Partner assumes the property's outstanding mortgage. The Amended Partnership Agreement transferring all of the investment partner interest in Riverplace Apartments was executed and delivered to the Operating General Partner on August 31, 2004. The proceeds of $25,000 were paid to BCAMLP for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $20,000 represents the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal costs; $5,000 represents partial reimbursement for outstanding advances and asset management fees. Annual l osses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. The Investment balance of Riverplace Apartments was not equal to the sale proceeds received; so the partnership recorded a loss on the sale of the asset of $551,290 as of December 31, 2004.

In December 2004, the Investment Partnership sold its interest in Blairview Associates to the Operating General Partner for his assumption of the outstanding mortgage balance of $1,399,892 and proceeds to the Investment Partnership of $6,383. The Investment Partnership proceeds actually represented a partial payment of outstanding reporting fees due to an affiliate of the Investment Partnership and have not been recorded as proceeds from the sale of the Operating Partnership. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the Investment Partnership's investment in the Operating Partnership to zero. Accordingly, no gain or loss on the sale of the Operating Partnership has been recorded.

In November 2004, the Investment Partnership sold its interest in 300 Shawmut Avenue Limited Partnership to the Operating General Partner for his assumption of the outstanding mortgage balance of $892,949 and proceeds to the Investment Partnership of $1. The Investment Partnership proceeds actually represented a partial payment of outstanding reporting fees due to an affiliate of the Investment Partnership and have not been recorded as proceeds from the sale of the Operating Partnership. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the Investment Partnership's investment in the Operating Partnership to zero. Accordingly, no gain or loss on the sale of the Operating Partnership has been recorded.

In December 2004, the Investment Partnership sold its interest in Bloomfield Associates Limited Partnership to the Operating General Partner for his assumption of the outstanding mortgage balance of $359,727 and proceeds to the Investment Partnership of $10,851. Of the total Investment Partnership proceeds received, $5,000 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. The remaining proceeds of $5,792 were paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $908 represented the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal costs; and $4,884 represented partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which wer e applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $5,684 as of December 31, 2004. In the prior year $108 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In December 2004, the Investment Partnership sold its interest in Garden City Family Housing to the Operating General Partner for his assumption of the outstanding mortgage balance of $374,253 and proceeds to the Investment Partnership of $11,228. Of the total Investment Partnership proceeds received, $5,000 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. The remaining proceeds of $6,228 were paid to BCAMLP for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $112 represented a fee for overseeing and managing the disposition of the property; $5,316 represented partial reimbursement for outstanding advances and asset management fees; and $800 represented the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal costs. Annual losses gener ated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $6,116 as of December 31, 2004. In the prior year $112 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In December 2004, the Investment Partnership sold its interest in Marionville III Family Housing to the Operating General Partner for his assumption of the outstanding mortgage balance of $189,239 and proceeds to the Investment Partnership of $5,677. Of the total Investment Partnership proceeds received, $4,820 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. The remaining proceeds of $857 were paid to BCAMLP for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $57 fee for overseeing and managing the disposition of the property; and $800 represents the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal costs. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Op erating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $800 as of December 31, 2004. In the prior year $57 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In December 2004, the Investment Partnership sold its interest in Nebraska City Senior, A Limited Partnership to the Operating General Partner for his assumption of the outstanding mortgage balance of $408,854 and proceeds to the Investment Partnership of $12,266. Of the total Investment Partnership proceeds received, $5,000 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. The remaining proceeds of $7,266 were paid to BCAMLP for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $923 represented the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal costs; and $6,343 represented partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Inve stment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $7,143 as of December 31, 2004. In the prior year $123 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In December 2004, the Investment Partnership sold its interest in Fredericktown Associates II, A Limited Partnership to the Operating General Partner for his assumption of the outstanding mortgage balance of $361,691 and proceeds to the Investment Partnership of $10,851. Of the total Investment Partnership proceeds received, $5,000 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. The remaining proceeds of $5,851 were paid to BCAMLP for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $909 represents the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal costs; $4,942 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Inve stment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $5,742 as of December 31, 2004. In the prior year $109 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In March 2005, the Investment Partnership sold its interest in Brewton, Limited to a non-affiliated entity for its assumption of the outstanding mortgage balance of $930,939 and proceeds to the Investment Partnership of $37,238. Of the total Investment Partnership proceeds, which were received in April 2005, $11,200 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. Of the remaining proceeds, the net distribution to investors in the amount of $8,124 was paid during the third quarter of 2005. This represents a per BAC distribution of $0.31. The total return to the investors was distributed based on the number of BACS held by each investor. The remaining proceeds of $17,914 was paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $8,921 represents the reimbursement of overhead and expenses incurred for over seeing and managing the disposition of the property, including salary reimbursements and third party legal and mailing costs; and $8,993 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $17,117 as of March 31, 2005. In the prior year $3,350 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In March 2005, the Investment Partnership sold its interest in Pine Ridge, Limited to a non-affiliated entity for its assumption of the outstanding mortgage balance of $1,446,550 and proceeds to the Investment Partnership of $57,862. Of the total Investment Partnership proceeds, which were received in April 2005, $17,640 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. Of the remaining proceeds, the net distribution to investors in the amount of $17,564 was paid during the third quarter of 2005. This represents a per BAC distribution of $0.66. The total return to the investor was distributed based on the number of BACS held by each investor. The remaining proceeds of $22,658 was paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $8,921 represents the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal and mailing costs; and $13,737 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $17,564 as of March 31, 2005. In the prior year $3,350 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In March 2005, the Investment Partnership sold its interest in Pine Terrace III, Ltd., to a non-affiliated entity for its assumption of the outstanding mortgage balance of $1,168,688 and proceeds to the Investment Partnership of $46,748. Of the total Investment Partnership proceeds, which were received in April 2005, $6,545 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. Of the remaining proceeds, the net distribution to investors in the amount of $12,477 was paid during the third quarter of 2005. This represents a per BAC distribution of $0.47. The total return to the investor was distributed based on the number of BACS held by each investor. The remaining proceeds of $27,726 was paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $8,921 represents the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal and mailing costs; and $18,805 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $31,282 as of March 31, 2005. In the prior year $3,350 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In March 2005, the Investment Partnership sold its interest in Springfield Limited to a non-affiliated entity for its assumption of the outstanding mortgage balance of $1,405,218 and proceeds to the Investment Partnership of $56,209. Of the total Investment Partnership proceeds, which were received in April 2005, $13,200 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. Of the remaining proceeds, the net distribution to investors in the amount of $16,808 was paid during the third quarter of 2005. This represents a per BAC distribution of $0.63. The total return to the investor was distributed based on the number of BACS held by each investor. The remaining proceeds of $26,201 was paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $8,921 represents the reimbursement of overhead and expenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal and mailing costs; and $17,280 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $34,088 as of March 31, 2005. In the prior year $3,350 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In March 2005, the Investment Partnership sold its interest in Village Chase of Zephyrhills, Limited to a non-affiliated entity for its assumption of the outstanding mortgage balance of $1,459,961 and proceeds to the Investment Partnership of $58,398. Of the total Investment Partnership proceeds, which were received in April 2005, $9,620 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. Of the remaining proceeds, the net distribution to investors in the amount of $17,809 was paid during the third quarter of 2005. This represents a per BAC distribution of $0.67. The total return to the investors was distributed based on the number of BACS held by each investor. The remaining proceeds of $30,969 was paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $8,922 represents the reimbursement of overhead and expe nses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal and mailing costs; and $22,047 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $39,856 as of March 31, 2005. In the prior year $3,350 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In March 2005, the Investment Partnership sold its interest in Village Walk of Zephyrhills, Limited to a non-affiliated entity for its assumption of the outstanding mortgage balance of $1,366,461 and proceeds to the Investment Partnership of $54,658. Of the total Investment Partnership proceeds, which were received in April 2005, $7,020 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. Of the remaining proceeds, the net distribution to investors in the amount of $16,097 was paid during the third quarter of 2005. This represents a per BAC distribution of $0.61. The total return to the investors was distributed based on the number of BACS held by each investor. The remaining proceeds of $31,451 was paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $8,922 represents the reimbursement of overhead and e xpenses incurred for overseeing and managing the disposition of the property, including salary reimbursements and third party legal and mailing costs; and $22,619 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $38,716 as of March 31, 2005. In the prior year $3,350 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In March 2005, the Investment Partnership sold its interest in Wildwood Villas, Limited to a non-affiliated entity for its assumption of the outstanding mortgage balance of $1,442,689 and proceeds to the Investment Partnership of $57,708. Of the total Investment Partnership proceeds, which were received in April 2005, $13,860 represented payment of outstanding reporting fees due to an affiliate of the Investment Partnership. Of the remaining proceeds, the net distribution to investors in the amount of $17,495 was paid during the third quarter of 2005. This represents a per BAC distribution of $0.66. The total return to the investors was distributed based on the number of BACS held by each investor. The remaining proceeds of $26,355 was paid to BCAMLP or other related entities for fees and expenses related to the sale and partial reimbursement of amounts payable to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $8,972 represents the reimbursement of overhead and expenses incurr ed for overseeing and managing the disposition of the property, including salary reimbursements and third party legal and mailing costs; and $17,433 represents partial reimbursement for outstanding advances and asset management fees. Annual losses generated by the Operating Partnership which were applied against the Investment Partnership's investment in the Operating Partnership in accordance with the equity method of accounting had previously reduced the investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership of the proceeds from the sale, net of the overhead and expense reimbursement, has been recorded in the amount of $34,926 as of March 31, 2005. In the prior year $3,350 of the sales proceeds were refunded to BCAMLP to pay accrued Asset Management Fees.

In 2003, American Affordable Housing II and BCTC Fund I - Series 3 (the "Investment Limited Partnerships") negotiated the sale of their Investment Limited Partner interest in Paige Hall, a Minnesota Limited Partnership, to the Operating General Partner for the assumption of the outstanding mortgage balance of approximately $2,591,339 and proceeds to the Investment Limited Partnerships of $150,000. The sale closed on December 19, 2005. Of the total

proceeds, $20,000 is for the payment of outstanding reporting fees, and $130,000 will be proceeds for the sale of the Investment Limited Partnerships' interest. In the 10-Q filed for the quarter ended December 31, 2005, it was estimated that of the total proceeds, $27,753 and $22,247, for AAH II and Series 3, respectively, would be distributed to the investors. This represented a per unit distribution of $9.987 for AAH II and a per BAC distribution of $.008 for Series 3. The total return to the investors would have been distributed based on the number of Units and BACs held by each investor. The remaining proceeds of $80,000 were paid to BCAMLP for fees and expenses related to the sale and partial reimbursement for amounts owed to affiliates. The breakdown of the amount paid to BCAMLP is as follows: $10,000 represents the reimbursement of expenses incurred in connection with the disposition of the property, which includes salary reimbursement, mailing cost and third party legal fees; and $70,000 repr esents payment of outstanding Asset Management Fees due to BCAMLP. It has now been decided that the reimbursement related to the disposition of $27,753 and $22,247, for AAH II and Series 3, respectively, will not be paid, and that these amounts originally anticipated to be returned to Investors will be added back to the Investment Limited Partners' respective working capital reservesdue to the fact that the Prospectus of the Fund requires that the proceeds be utilized in this manner.The monies returned to working capital reserves will be available to pay obligations of the Investment Limited Partnership. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $66,607 and $53,393 for AAH II and Series 3, respectively, was realized in the quarter ended December 31, 2005.

Lovington Housing Associates L.P. (Southview Place Apartments) is a 48 unit property located in Lovington, New Mexico which completed its final year of compliance in 2004. The 2005 audit shows that the property generated $45,851 in cash, after allocation for the funding of the replacement reserve account. Rental revenue increased $20,000 and operating expenses have stabilized at $3,238 per unit, on target with the state averages. Occupancy remained strong throughout 2005, averaging 95%. Occupancy averaged 97% through 2006 and the property is on track to generate similar cash in 2006 as it did in 2005. Insurance proceeds to repair the roof in the amount of $62,074 have been received. Efforts to obtain a rehab loan in order to make some badly needed capital improvements have been halted. With the compliance period expired, the Operating General Partner has elected instead to pursue a resyndication, the proceeds of which would be used in part to rehab the property and in part to purchase the Investment Ge neral Partner's interest in the Partnership. With the current strong occupancy, the property will operate above breakeven and be able to start paying down accrued fees and payables. The property's mortgage, taxes, and insurance payments are current.

In August 2006, the Partnership transferred its interest in Harbor Hill Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $1,182,147 and cash proceeds to the Investment Limited Partner of $7,886. Of the total proceeds, $1,199 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $6,687 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' inve stment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $6,687, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Partnership transferred its interest in Bowdoinham Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $1,236,422 and cash proceeds to the Investment Limited Partner of $7,885. Of the remaining proceeds $1,198 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $6,687 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $6,687, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Partnership transferred its interest in Deer Crossing Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $1,145,547 and cash proceeds to the Investment Limited Partner of $12,869. Of the proceeds received $5,250 represents reporting fees due to an affiliate of the Investment Partnership and the balance represent proceeds from the sale. Of the remaining proceeds $1,158 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $6,461 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by e ach investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $6,461, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Partnership transferred its interest in Maple Tree Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $1,199,207 and cash proceeds to the Investment Limited Partner of $14,215. Of the proceeds received $6,466 represents reporting fees due to an affiliate of the Investment Partnership and the balance represent proceeds from the sale. Of the remaining proceeds $1,177 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $6,572 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $6,572, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Partnership transferred its interest in Perramond Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $1,145,673 and cash proceeds to the Investment Limited Partner of $9,423. Of the proceeds received $1,864 represents reporting fees due to an affiliate of the Investment Partnership and the balance represent proceeds from the sale. Of the remaining proceeds $1,148 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $6,411 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each i nvestor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $6,411, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Partnership transferred its interest in Sara Pepper Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $611,131 and cash proceeds to the Investment Limited Partner of $3,905. Of the remaining proceeds $594 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $3,311 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' invest ment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $3,311, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Partnership transferred its interest in Silver Pines Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $1,336,624 and cash proceeds to the Investment Limited Partner of $8,827. Of the remaining proceeds $1,340 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $7,487 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' i nvestment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $7,487, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Partnership transferred its interest in Wilder Associates, LP to an entity affiliated with the operating General Partner for its assumption of the outstanding mortgage balance of approximately $1,176,206 and cash proceeds to the Investment Limited Partner of $16,024. Of the proceeds received $8,204 represents reporting fees due to an affiliate of the Investment Partnership and the balance represent proceeds from the sale. Of the remaining proceeds $1,186 was paid to BCAMLP for expenses related to the sale, which includes but is not limited to third party legal costs. The remaining proceeds of $6,634 will be returned to cash reserves. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each inv estor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the Investment Limited Partnerships' investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the Investment Limited Partnerships' investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Investment Limited Partner interest of $6,634, respectively, was realized in the quarter ended September 30, 2006.

In August 2006, the Operating General Partner of Platteville Apartments, A Limited Partnership entered into an agreement to sell the property and the transaction is anticipated to close in the first quarter 2007. The sales price for Platteville Apartments is $611,691, which includes the outstanding mortgage balance of approximately $540,537 and proceeds to the Investment Partnership of $25,000. It is anticipated that $7,500 will be paid to BCAMLP for expenses incurred, which includes third party legal costs. The remaining proceeds from the sale of $17,500 will be returned to cash reserves held by AAH II. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution.

In August 2006, the Operating General Partner of Kersey Apartments, A Limited Partnership entered into an agreement to sell the property and the transaction is anticipated to close in the first quarter 2007. The sales price for Kersey Apartments is $1,353,356, which includes the outstanding mortgage balance of approximately $1,178,907 and proceeds to the Investment Partnership of $82,141. It is anticipated that $7,500 will be paid to BCAMLP for expenses incurred, which includes third party legal costs. The remaining proceeds from the sale of $74,641 will be returned to cash reserves held by AAH II. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the Investment Partnership. After all outstanding obligations of the Investment Partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution.

Critical Accounting Policies and Estimates

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires the Partnership to make certain estimates and assumptions. A summary of significant accounting policies is provided in Note 1 to the financial statements. The following section is a summary of some aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of the Partnership's financial condition and results of operations. The Partnership believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the financial statements.

The Partnership is required to assess potential impairments to its long-lived assets, which are primarily investments in limited partnerships. The Partnership accounts for its investment in limited partnerships in accordance with the equity method of accounting since the Partnership does not control the operations of the Operating Limited Partnership's.

If the book value of the Partnership's investment in an Operating Partnership exceeds the estimated value derived by management, which generally consists of the remaining future low-income housing credits allocable to the Partnership and the estimated residual value to the Partnership, the Partnership reduces its investment the such Operating Limited Partnership and includes the reduction in equity in loss of investment of limited partnerships.

As of March 31, 2004, the Partnership adopted FASB Interpretation No. 46 - Revised ("FIN46R"), "Consolidation of Variable Interest Entities." FIN 46R 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. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it absorbs the majority of the entity's expected losses, the majority of the expected returns, or both.

Based on the guidance of FIN 46R, the Operating Limited Partnerships in which the Partnership invests in meet the definition of a VIE. However, management does not consolidate the Partnership's interests in these VIEs under FIN 46R, as it is not considered to be the primary beneficiary. The Partnership currently records the amount of its investment in these partnerships as an asset in the balance sheet, recognizes its share of partnership income or losses in the statement of operations, and discloses how it accounts for material types of these investments in the financial statements.

The Partnership's balance in investment in Operating Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, 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 and their guarantee against credit recapture.

Item 3	Quantitative and Qualitative Disclosure About Market Risk
	Not Applicable

Item 4	Controls & Procedures
	(a)	Controls and Procedures
		As of the end of the period covered by this report, the Partnership's General Partner, under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer of C&M Management, Inc. carried out an evaluation of the effectiveness of the Partership's "disclosure controls and procedures" as defined in the Securities Exchange Act of 1934 Rules 13a-15 and 15d-15. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that as of the end of the period covered by this report, the Partnership's disclosure controls and procedures were adequate and effective in timely alerting them to material information relating to the Partnership required to be included in the Partnership's periodic SEC filings.
	(b)	Changes in Internal Controls
		There were no changes in the Partnership's internal control over financial reporting that occurred during the quarter ended September 30, 2006 that materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings
	None
Item 1A.	Risk Factors
	Not Applicable
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	None
Item 3.	Defaults upon Senior Securities
	None
Item 4.	Submission of Matters to a Vote of Security  Holders
	None
Item 5.	Other Information
	None
Item 6.	Exhibits
	(a)Exhibits
		31.a Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of John P. Manning, Principal Executive Officer, filed herein
		31.b Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of Marc N. Teal, Principal Financial Officer, filed herein
		32.a Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of John P. Manning, Principal Executive Officer, filed herein
		32.b Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Marc N. Teal, Principal Financial Officer, filed herein

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.

	American Affordable Housing II
	Limited Partnership
	By:	Boston Capital Associates Limited
		Partnership, General Partner
		By:	BCA Associates Limited Partnership,
			General Partner
		By:	C&M Management Inc.,
			General Partner
Date: January 23, 2007		By:	/s/ John P. Manning
			John P. Manning

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

DATE	SIGNATURE	TITLE
January 23, 2007	/s/ John P. Manning	Director, President
	John P. Manning	(Principal Executive
		Officer), C&M
		Management Inc;

DATE	SIGNATURE	TITLE
January 23, 2007	/s/ Marc N. Teal	Senior Vice President, Chief Financial Officer
	Marc N. Teal	(Principal Accounting and Financial Officer)
		C&M Management Inc.