UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant: [X]
Filed by a Party other than the Registrant: [ ]

Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
ss.240.14a-11(c) or ss.240.14a-12

Commission File Number: 333-11625
--------------------------
CAPITAL ALLIANCE INCOME TRUST LTD.,
A REAL ESTATE INVESTMENT TRUST

- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 94-3240473
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

50 California Street
Suite 2020
San Francisco, California 94111
------------------------- -----
(Address of principal executive office) (zip code)

(415) 288-9575
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: (2)
Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction: (5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.: (3) Filing Party:
(4) Date Filed:

[GRAPHIC OMITTED]

CAPITAL ALLIANCE INCOME TRUST LTD.,
A REAL ESTATE INVESTMENT TRUST

NOTICE OF ANNUAL MEETING,
PROXY STATEMENT AND PROXY

FOR

2003 ANNUAL MEETING OF SHAREHOLDERS

YEAR ENDING DECEMBER 31, 2002

JUNE 27, 2003

[THIS PAGE INTENTIONALLY LEFT BLANK]

Capital Alliance Income Trust Ltd.,
A Real Estate Investment Trust
- --------------------------------------------------------------------------------
50 California Street, Suite 2020 o San Francisco o California 94111
o 415/288-9575 o Fax: 415/288-9590

May 19, 2003

Dear Fellow Shareholders:

RE: Annual Meeting of Shareholders - Request for Proxies
----------------------------------------------------

You are cordially invited to attend the 2003 Annual Meeting of shareholders of
Capital Alliance Income Trust Ltd. (the "Corporation") which is scheduled for
10:00 a.m., June 27, 2003 and is to be held in the Corporation's offices at 50
California Street, Suite 2020, San Francisco, California, 94111. Enclosed is a
Notice to Shareholders of Annual Meeting, a Proxy Statement describing the
business to be transacted, a form of proxy for your use in voting at the
meeting, and the Corporation's Annual Report.

At the Annual Meeting you will be asked (i) to elect two Class I Directors of
the Corporation; (ii) to approve an Amendment of the Certificate of
Incorporation to increase the Corporation's authorized common and preferred
capital by increasing the number of authorized common and preferred shares;
(iii) to approve the selection of Novogradac & Company LLP as the independent
auditors for the Corporation for the year 2003, and (iv) to act on such other
business as may properly come before the meeting or any adjournment thereof.

YOUR VOTE IS IMPORTANT

It is important that you complete, date, sign and promptly return your proxy in
the enclosed envelope, whether or not you plan to attend the meeting. If you
attend the meeting and wish to withdraw your proxy, you may vote in person and
your proxy will be withdrawn.

Your prompt response would be most appreciated.

Very truly yours,

Thomas B. Swartz
Chairman and Chief Executive Officer

CAPITAL ALLIANCE INCOME TRUST LTD.,
A Real Estate Investment Trust
A Delaware Corporation
- --------------------------------------------------------------------------------

NOTICE TO SHAREHOLDERS OF
ANNUAL MEETING TO BE HELD ON JUNE 27, 2003

PLEASE TAKE NOTICE that the 2003 Annual Meeting of shareholders ("Annual
Meeting") of Capital Alliance Income Trust Ltd., A Real Estate Investment Trust,
a Delaware corporation (the "Corporation"), will be held on June 27, 2003 at
10:00 a.m., local time, at 50 California Street, Suite 2020, San Francisco,
California 94111, to consider and vote on the following matters:

1. Election of two Class I Directors of the Corporation to serve until the
third annual meeting of the Corporation's shareholders following their
election and until the election and qualification of their respective
successors;

2. Amendment of the Certificate of Incorporation to increase the
Corporation's authorized common and preferred capital by increasing the
number of authorized common and preferred shares;

3. Approval of the selection by the Board of Directors of Novogradac &
Company LLP to be appointed as independent auditors of the Corporation
for the year ending December 31, 2003;

4. Such other business as may properly come before the Annual Meeting or
any postponements or adjournments thereof.

The Corporation's Annual Report to Shareholders for the year ended December 31,
2002 accompanies this notice.

Only shareholders of record at the close of business on April 8, 2003, the
record date of the Annual Meeting, will be entitled to notice of, and to vote
at, the Annual Meeting or any postponements or adjournments thereof. A majority
of the outstanding shares of the Corporation entitled to vote must be
represented at the Annual Meeting in order to constitute a quorum. Whether or
not you plan to be present, please complete, date, sign and return the enclosed
proxy.

You may revoke your proxy at any time before it is voted by filing with the
Corporation a written revocation or a duly executed proxy bearing a later date.
If you are present at the Annual Meeting and vote in person, your proxy will not
be used.

We look forward to seeing you at the Annual Meeting.

BY ORDER OF THE CORPORATION,

Jennifer S. Austin, Corporate Secretary

San Francisco, California
May 19, 2003

WHETHER OF NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE

Table of Contents
_______________________________________

INFORMATION CONCERNING SOLICITATION AND VOTING.................................1
General....................................................................1
Voting Rights and Outstanding shares.......................................1
Revocability of Proxies....................................................2

GENERAL TRUST INFORMATION......................................................2
Management.................................................................2
Board Committees...........................................................3
Board and Committee Meetings...............................................3
Executive Officers.........................................................4
Stock Holdings of Principal Stockholders, Directors and Management.........5
Compensation of Directors..................................................6
Executive Compensation.....................................................6
Certain Relationships and Related Transactions.............................6

PROPOSAL ONE
ELECTION OF DIRECTORS.........................................................10
General...................................................................10
Nominees for Election as Class I Directors for Term Expiring in 2006......10
Directors Continuing In Office............................................11

PROPOSAL TWO
AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON AND PREFERRED CAPITAL....................................11

PROPOSAL THREE
APPROVAL OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANT.....................13

STOCKHOLDER PROPOSALS AND NOMINATIONS.........................................13

MISCELLANEOUS.................................................................14

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934...................14

AUDIT COMMITTEE REPORT........................................................15

INCORPORATION OF INFORMATION BY REFERENCE.....................................15

OTHER BUSINESS................................................................16

APPENDIX "A"..................................................................17
AUDIT COMMITTEE CHARTER....................................................17

iii

[THIS PAGE INTENTIONALLY LEFT BLANK]

Capital Alliance Income Trust Ltd.,
A Real Estate Investment Trust
A Delaware Corporation
- --------------------------------------------------------------------------------

PROXY STATEMENT

INFORMATION CONCERNING SOLICITATION AND VOTING

General

The enclosed proxy (the "Proxy") is being solicited from the
stockholders of Capital Alliance Income Trust Ltd., A Real Estate Investment
Trust, a Delaware corporation (the "Corporation"), on behalf of the
Corporation's Board of Directors (the "Board") for use at the Annual Meeting of
the Corporation's shareholders to be held at the Corporation's offices, 50
California Street, Suite 2020, San Francisco, California 94111 at 10:00 a.m.,
local time, on June 27, 2003, and at any postponements or adjournments thereof
(the "Annual Meeting") for the purposes set forth herein. The Corporation's
principal executive offices are located at 50 California Street, Suite 2020, San
Francisco, California 94111.

The Corporation's 2003 Annual Report, including the Corporation's 2002
Annual Report on Form 10-KSB and audited financial statements for calendar year
2002 are being forwarded to each shareholder of record as of April 8, 2003,
together with this Proxy Statement.

The Corporation is mailing this Proxy Statement, the accompanying Notice
To Shareholders of Annual Meeting and the Proxy on or about May 19, 2003 to all
shareholders entitled to notice of, and to vote at, the Annual Meeting.

The cost of this solicitation of proxies will be borne by the
Corporation. Solicitations will be made by mail. In addition, the officers and
regularly engaged employees of Capital Alliance Advisors, Inc., the
Corporation's manager (the "Manager") may, in a limited number of instances,
solicit proxies personally or by telephone. The Corporation will reimburse
banks, brokerage firms, other custodians, nominees and fiduciaries for
reasonable expenses incurred in sending proxy materials to beneficial owners of
stock.

Voting Rights and Outstanding Shares

Only shareholders of record at the close of business on April 8, 2003
(the "Record Date"), are entitled to notice of, and to vote at, the Annual
Meeting. At the close of business on the Record Date, there were issued and
outstanding and entitled to vote 423,219 shares of the Corporation's Common
Stock, par value $.01 per share ("Common Stock") and 210,644 shares of the
Corporation's Series "A" Preferred Stock, par value $.01 per share ("Series "A"
Preferred Stock") (individually, "Stock", and collectively, the "Stock").

The Corporation holds as treasury stock 71,942 shares of Common Stock
and 3,176 shares of Series "A" Preferred Stock. Treasury shares may not vote.

The presence at the Annual Meeting in person or by proxy of shareholders
entitled to cast a majority of all the votes entitled to be cast at the Annual
Meeting is necessary to constitute a quorum for the transaction of business.
Each outstanding share of Stock is entitled to one vote on each matter to be
voted upon at the Annual Meeting.

If there are insufficient shares of Stock present to constitute a quorum
or insufficient affirmative votes to approve any matter presented for approval,
the Annual Meeting may be postponed or adjourned one or more times to permit for
solicitation of proxies. For each matter presented for approval, each
stockholder is entitled to one vote for each share of Stock held. Directors are
elected by plurality vote. A majority of the votes cast at a meeting of
stockholders duly called and at which a quorum is present will be sufficient to
approve any other matter which may properly come before the meeting, unless more
than a majority of votes cast is required by statute or by the bylaws of the
Corporation.

Shares of Stock represented by properly executed and returned Proxies,
unless revoked, will be voted at the Annual Meeting in accordance with the
instructions thereon. If a properly executed and returned Proxy contains no
instructions, it will be voted: (i) for the election to the Board of the persons
specified on the Proxy; (ii) for an Amendment of the Certificate of
Incorporation to increase the Corporation's authorized common and preferred
capital by increasing the number of authorized common and preferred shares;
(iii) for approval of the selection of Novogradac & Company LLP as the
independent auditors for the Corporation for 2003, and (iv) in the discretion of
the proxy holders as to any other matter that properly may come before the
Annual Meeting. The Corporation's directors do not know of any matter that will
be presented for consideration at the Annual Meeting other than the proposals
described in this Proxy Statement.

Revocability of Proxies

Any shareholder giving a Proxy pursuant to this solicitation has the
power to revoke that Proxy at any time before the shares to which it relates are
voted either (i) by filing with the Corporation, at its principal executive
offices, written notice of revocation or a duly executed Proxy bearing a later
date, or (ii) by attending the Annual Meeting, withdrawing the Proxy, and voting
in person.

GENERAL CORPORATION INFORMATION
Management

The Board, which currently consists of the six individuals listed below,
directs the management of the Corporation's business and affairs. Directors
Blomberg, Looper and Brooks are Independent Directors (i.e., are not officers,
full-time employees or members of the immediate family of officers or full-time
employees).

The Corporation's current directors (the "Directors") and executive
officers and their respective positions are as follows:

Name Position
---- --------
Directors:
Thomas B. Swartz.......Class I Director, Chairman of the Board and
Chief Executive Officer
Harvey Blomberg........Class I Director
Stanley C. Brooks......Class II Director
Dennis R. Konczal......Class II Director, President and Chief
Operating Officer
Richard J. Wrensen.....Class III Director, Executive Vice-President and
Chief Financial Officer
Donald R. Looper.......Class III Director

Name Position
---- --------
Officers:
Thomas B Swartz.........Chairman of the Board and Chief Executive Officer
Dennis R. Konczal.......President and Chief Operating Officer
Richard J. Wrensen......Executive Vice-President and Chief Financial
Officer
William W. Aubrey II....Senior Vice President of Manager
Jennifer S. Austin......Corporate Secretary

Board Committees

As is discussed below, the Board has two standing committees: an Audit
Committee and an Executive Committee. It has no nominating or compensation
committee.

Executive Committee. The Executive Committee is empowered to exercise
any of the Board's powers over the Corporation's business affairs (including the
declaration of dividends) except those powers specifically reserved to the full
Board, its Audit Committee or to the shareholders. The Executive Committee
consists of Messrs. Blomberg, Konczal, Swartz and Wrensen.

Audit Committee. The Board has adopted a written charter for its Audit
Committee, a copy of which is attached as Appendix "A".

The Audit Committee makes recommendations concerning the annual
appointment of the Corporation's public accountants and reviews the arrangements
for and the scope of the audit conducted by those accountants. This committee
(i) reviews the Corporation's accounting functions and operations, (ii)
considers the adequacy and effectiveness of the system of accounting controls,
including any proposed corrective actions, (iii) reviews and monitors the
Corporation's policies regarding business ethics and conflicts of interest, and
(iv) discusses with management and the independent accountants the Corporation's
draft annual financial statements and key accounting and reporting matters. The
members of the Audit Committee are independent (as independence is defined in
Section 121(A) of the American Stock Exchange listing standards).

The Audit Committee has reviewed and discussed the audited financial
statements with management and has discussed with the Corporations' auditors the
matters required to be discussed by SAS 61. The Audit Committee has received the
written disclosure and the letter from the independent accountants required by
Independence Standards Board Standard No. 1 and has discussed with the
independent accountants its independence. Based on the foregoing reviews and
discussions, the Audit Committee has recommended to the Board that the audited
financial statements be included in the Corporation's Annual Report on Form
10-KSB.

The Audit Committee consists of Messrs. Blomberg (Chairman), Brooks and
Looper, all of whom are independent directors within the meaning of ss. 121(a)
of the listing standards of the American Stock Exchange.

Board and Committee Meetings

During 2002, the Board held four directors' meetings and acted by
unanimous written consent four times; the Executive Committee held no meetings
and acted by unanimous written consent one time; and the Audit Committee held
four meetings. Each Director attended all of the 2002 Board meetings (either in
person or by telephonic conference calls).

Executive Officers

The business experience of each of the Corporation's executive officers
is set forth below.

Thomas B. Swartz, age 71, has served as Chairman and Chief Executive
Officer of the Corporation since its formation in 1995 and of the Corporation's
predecessors since their formation in 1991 and 1994. As a Class I Director, his
term expires in 2003 and he is nominated for reelection at the 2003 Annual
Meeting. Mr. Swartz has also served as Chairman and Chief Executive Officer of
Capital Alliance Advisors, Inc., the Corporation's Manager, since its formation
in 1989 and of Sierra Capital Companies which he founded in 1980 and which
sponsored and advised six publicly-held equity real estate investment trusts.
From 1989 to 1990, he served as President of the National Association of Real
Estate Investment Trusts and as a Member of its Board of Governors from 1983 to
1993. Prior to founding Sierra Capital Companies, Inc., Mr. Swartz was a partner
in the San Francisco law firm of Bronson, Bronson & McKinnon from 1960 to 1980.
He graduated from Yale University in 1954, and from Boalt School of Law of the
University of California in 1959. He was an officer in the U.S. Navy from 1954
to 1959.

Dennis R. Konczal, age 52, has served as President and Chief Operating
Officer of the Corporation since its formation in 1995 and of the Corporation's
predecessors since their formation in 1991 and 1994. As a Class II Director, his
term expires in 2004. Mr. Konczal has also served as President and Chief
Operating Officer of Capital Alliance Advisors, Inc., the Corporation's Manager,
since 1989, and of the Sierra Capital Companies since 1984. Prior to joining
Sierra Capital Companies, Mr. Konczal was President and Chief Operating Officer
of Granada Management Corporation and related companies, an agribusiness
concern, from 1981 to 1984. He is a Licensed Principal of the NASD and graduated
in 1972 with a B.S. degree in Agricultural Economics from Michigan State
University.

Richard J. Wrensen, age 47, has served as Executive Vice-President and
Chief Financial Officer of the Corporation and of its Manager, Capital Alliance
Advisors, Inc., since December 1997. As a Class III Director, his term expires
in 2005. He has served in a similar capacity with Sierra Capital Companies and
its affiliates. Prior to joining the Manager and the Corporation, Mr. Wrensen
was Senior Vice-President of Finance and Chief Financial Officer with SNK Realty
Group, a Japanese merchant builder, during 1997 and from 1987 to 1997 was
Vice-President-Finance of Mattison and Shidler, a national real estate
investment firm. From 1979 through 1987, Mr. Wrensen held financial positions
with several real estate management and development firms. After an accountancy
position with Coopers & Lybrand from 1978 to 1979, Mr. Wrensen became a
Certified Public Accountant in 1979. He graduated in 1985 from Hass School of
Business Administration of the University of California, Berkeley with a Masters
of Business Administration and received his B.S. Accounting degree from the
University of Florida in 1978.

William W. Aubrey II, age 43, has served as Senior Vice-President of
Capital Alliance Advisors, Inc., the Corporation's Manager, from 1998 to date.
Mr. Aubrey has also served as Executive Vice-President of an affiliate of Sierra
Capital Companies since 1995. From 1990 to 1995, Mr. Aubrey held the positions
of Senior Vice-President; Vice-President and Regional Supervisor at Citizens
Thrift and Loan Association (responsible for overall supervision of regional
production and operations; specialized in non-conforming, sub-prime residential
secured loans); from 1988 to 1990, Branch Manager, First Fidelity Thrift and
Loan (negotiated and underwrote real estate secured construction and equity
loans); Vice President, and from 1984 to 1988, Topa Thrift and Loan Association
(established loan brokerage and mortgage banking relationships). He received his
B.S, Finance, La Roche College, Pittsburg, PA in 1983.

Jennifer S. Austin, age 40, has served as the Secretary of the
Corporation since March 2003 and as the Corporate Secretary, Office Manager, and
Executive Assistant of Capital Alliance Advisors, Inc. 2002 to date; Executive
Assistant, Assistant Operations Manager, Oceanic Society Expeditions (2001-2002,
1993-1998), Retail Operations Manager, America True, America's Cup Challenge
2000 (1998-2000); Employee Benefits Coordinator, Westin Hotel, San Francisco
Airport (1987-1993); Area Manager, Great America Theme Park (1980-1986); BS,
Travel/Tourism Management, San Jose State University, San Jose, CA (1987).

Stock Holdings of Principal Stockholders, Directors and Management

The following table sets forth certain information regarding beneficial
ownership of the Corporation's Common and Preferred Stock as of March 15, 2003
by (1) each person that beneficially owns more than five percent of the
Corporation's Common and Preferred Stock, (2) each Director, (3) the
Corporation's executive officers, and (4) all Directors and executive officers
as a group.

Unless otherwise indicated in the footnotes to the table, the beneficial
owners named have, to the knowledge of the Corporation, sole voting and
investment power with respect to the shares beneficially owned, subject to
community property laws where applicable.

Number of shares Percentage of shares
of Stock of Stock
Beneficially Owned Beneficially Owned
------------------ ------------------

Name of Beneficial Owner Common Preferred Common Preferred
- ------------------------ ------ --------- ------ ---------

Thomas B. Swartz (1)(4).................. 0 1,335 * *
Dennis R. Konczal (2)(4)................. 18,332 984 4.3% *
Richard J. Wrensen (3)(4)................ 55,170 1,555 13.0% *
William W. Aubrey II (5)................. 2,500 0 * 0
Stanley C. Brooks (6).................... 0 0 0 0
Harvey Blomberg (7)...................... 0 0 0 0
Donald R. Looper........................ 0 0 0 0
Jennifer S. Austin....................... 0 0 0 0
All directors and executive officers
as a group (7 persons) (8)............. 101,620 7,535 24.1% 3.6%
Thomas Morford (9)....................... 0 16,344 0 7.7%

* Represents less than 1% of outstanding shares.

- ----------

(1) Mr. Swartz has unexercised options to purchase 55,687 shares of Common
Stock. Mr. Swartz's wife owns 633 shares of Series "A" Preferred Stock,
in which Mr. Swartz claims no beneficial interest.

(2) Mr. Konczal has unexercised options to purchase 38,124 shares of Common
Stock.

(3) Mr. Wrensen has unexercised options to purchase 29,827 shares of Common
Stock.

Mr. Wrensen's wife owns 20,400 shares of Common Stock and 2,709 Series
"A" Preferred shares as of March 15, 2003, in which Mr. Wrensen claims

no beneficial interest. Such holdings represent 4.7% of the outstanding
Common shares and 1.3% of the outstanding Preferred shares.

(4) Capital Alliance Advisors, Inc., the Corporation's Manager, owns
beneficially 25,618 shares of Common Stock and 3,661 shares of Series
"A" Preferred shares as of March 31, 2003, representing 6.0% of the
outstanding Common shares and 1.7% of the outstanding Series "A"
Preferred shares. Messrs. Swartz, Konczal and Wrensen are officers and
directors of the Manager and collectively own all of the outstanding
Common shares of the Manager. The Manager has unexercised options to
purchase 9,189 shares of Common Stock.

(5) Mr. Aubrey has unexercised options to purchase 9,050 shares of Common
Stock.

(6) Mr. Brooks has unexercised options to purchase 12,375 shares of Common
Stock.

(7) Mr. Blomberg has unexercised options to purchase 12,375 shares of Common
Stock.

(8) This total includes the Common and Preferred shares owned by Capital
Alliance Advisors.

(9) Mr. Morford is a private investor.

Compensation of Directors

Each Independent Director receives an annual fee of $10,000, a $500 fee
for each board and committee meeting attended in person, and $300 for each board
and committee meeting held telephonically together with reimbursement of
expenses incurred in attending those meetings. In 2002 Messrs. Brooks, Blomberg
and Looper each received $10,000 as a Director's fee. During 2002, total
committee and meeting fees for Mr. Brooks, Mr. Blomberg and Mr. Looper were
$3,300, $3,800 and $3,300, respectively. Messrs. Blomberg and Brooks are
participants in CAIT's Incentive Stock Option Plan of 1998 and each of them
holds options to purchase 12,375 shares of Common Stock underlying the options.
Independent Directors receive reasonable reimbursement of expenses incurred in
attending board or committee meetings. Directors who are affiliates of the
Manager do not receive board or committee meeting fees but do receive reasonable
reimbursement of expenses incurred in attending those meetings.

Executive Compensation

The Corporation has no employees. All officers of the Corporation are
employees of Capital Alliance Advisors, Inc., the Corporation's Manager, and
receive no executive compensation directly from the Corporation.

Certain Relationships and Related Transactions

Arrangements and Transactions with Capital Alliance Advisors, Inc. ("CAAI").
- ----------------------------------------------------------------------------

CAAI is the Manager of the Corporation and provides (a) management and
advisory services to the Corporation in accordance with the Management Agreement
and (b) mortgage origination and loan servicing services to the Corporation in
accordance with the Mortgage Origination and Servicing Agreement. As previously
described, the Corporation will utilize the mortgage banking experience,
management expertise and resources of CAAI in conducting its Mortgage Investment
and its Mortgage Conduit Businesses. In addition, three of the Directors and all
of the officers of the Corporation also serve as Directors and/or officers of

CAAI. The amounts paid by the Corporation to CAAI under the management and the
mortgage origination and servicing agreements for the year ended December 31,
2002 were $288,119 and $488,307, respectively.

CAAI owns all of the voting Common Stock and a 1% economic interest in
Capital Alliance Funding Corporation ("CAFC"), the Corporation's Mortgage
Conduit Subsidiary. The Corporation owns all of the non-voting Preferred Stock
representing 99% of the economic interest in CAFC. CAAI has the power to elect
all of the directors of CAFC and the ability to control the outcome of all
matters for which the consent of the holders of the Common Stock of such
subsidiary is required. CAAI and/or the officers and directors of CAFC who may
be officers and directors of the Corporation, are separately compensated for
their management services to the subsidiary and provide origination, financing
and administrative services to the subsidiary through separate management and
mortgage loan origination and servicing agreements and by an allocation of the
cost of such services. The amount paid to CAAI by CAFC for mortgage loan
administrative services under such agreements for the year ended December 31,
2002 was $44,474.

The Trustees, the Manager and their affiliates have fiduciary duties and
obligations which will require them to resolve any conflicts of interest by
exercising the utmost good faith and integrity. Additionally, the Bylaws provide
that the Manager must upon request by the Directors disclose any investments
which are within the purview of the Corporation's investment policies.

Messrs. Swartz, Konczal and Wrensen, officers and directors of CAAI are
also officers and directors of the Corporation. The officers and directors of
CAAI are also involved in other businesses which may generate profits or other
compensation. The Corporation will not share in such compensation. It is the
intention of the Corporation and CAAI that any agreements and transactions,
taken as a whole, between the Corporation, on the one hand, and CAAI or its
affiliates, on the other hand, are fair to both parties. However, there can be
no assurance that each of such agreements or transactions will be on terms at
least as favorable to the Corporation as could have been obtained from
unaffiliated third parties.

Sale and Purchase of Loans.
- ---------------------------

To provide a source of mortgage loans for the Corporation' Mortgage
Investment Business, CAFC, the Mortgage Conduit Subsidiary, offers to the
Corporation for purchase all non-conforming mortgage loans meeting the
Corporation's investment criteria and policies. Commitments to acquire loans
will obligate the Corporation to purchase such loans from CAFC upon the closing
and funding of the loans, pursuant to the terms and conditions specified in the
commitment. The Corporation accounts for the purchase of loans from CAFC on a
fair market value basis. When the Corporation computes the equity and earnings
or loss of CAFC, it will eliminate any inter-company profit.

Warehouse Financing Facilities.
- -------------------------------

The Corporation may, from time to time, provide secured
warehouse financing facilities to CAFC, its non-qualified subsidiary. At
December 31, 2002 it had $3,382,940 outstanding to CAFC (in which the
Corporation has a 99% economic interest) and had nothing outstanding to
Calliance Realty Fund, LLC (which is also managed by the Manager of the
Corporation), both affiliated mortgage banking companies.

Total Return Performance Graph - Inception of Trading on October 1, 1998 to
- ---------------------------------------------------------------------------
December 31, 2002.*
- -------------------

On October 1, 1998, trading in shares of the Corporation's Common Stock
began on the American Stock Exchange. The following graph and table compare the
cumulative total shareholder returns on the Common Stock for the period from
October 1, 1998 to December 31, 2002, with the cumulative total stockholder
return for the same period under the Dow Jones Industrial Index, Standard &
Poor's 500 Stock Index, NASDAQ (Total U.S.), and the NAREIT Mortgage Index
maintained by the National Association of Real Estate Investment Trusts, Inc.

CAPITAL ALLIANCE INCOME TRUST LTD.

(GRAPH OMITTED)

Period Ending
--------------------------------------------------------------------------
Index 10/01/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
- ---------------------------------------------------------------------------------------------------------------------

Capital Alliance Income Trust Ltd. 100.00 72.56 38.41 49.37 83.66 116.97
S&P 500 100.00 125.03 151.34 137.56 121.22 94.30
Dow Jones Industrial Average 100.00 120.29 150.63 141.34 131.30 109.29
SNL Home Equity Lenders Index 100.00 71.67 36.17 8.84 9.75 10.45
NAREIT Mortgage Index 100.00 45.84 30.61 35.50 62.95 82.52

- ----------

*Total return values for the Common Stock for those indices represent cumulative
total returns assuming (i) the investment of $100 in the Corporation's Common
Stock and in the securities covered by those indices on the commencement date of
the graph and (ii) the reinvestment of dividends. Corporation dividends paid in
January 2003 for the fourth quarter of 2002 are not included in the
calculations. The stockholder returns on the Corporation's Common Stock shown in
the above graph and table are not necessarily indicative of future performance.

Total Return Performance Graph - September 30, 2001 to December 31, 2002.*
- --------------------------------------------------------------------------

The following graph and table compare the cumulative total shareholder
returns on the Common Stock for the five-quarter period from, September 30, 2001
to December 31, 2002, with the cumulative total stockholder return for the same
period under the Dow Jones Industrial Index, Standard & Poor's 500 Stock Index,
NASDAQ (Total U.S.), and the NAREIT Mortgage Index maintained by the National
Association of Real Estate Investment Trusts, Inc.

CAPITAL ALLIANCE INCOME TRUST LTD.

(GRAPH OMITTED)

Period Ending
--------------------------------------------------------------------------
Index 09/30/01 12/31/01 03/31/02 06/30/02 09/30/02 12/31/02
- ---------------------------------------------------------------------------------------------------------------------

Capital Alliance Income Trust Ltd. 100.00 113.22 120.00 173.52 166.53 158.31
S&P 500 100.00 110.69 111.00 96.11 79.47 86.11
Dow Jones Industrial Average 100.00 113.27 117.59 104.47 85.81 94.28
SNL Home Equity Lenders Index 100.00 140.28 142.91 185.34 152.20 150.41
NAREIT Mortgage Index 100.00 113.74 119.32 147.33 135.28 149.09

- ----------

PROPOSAL ONE
------------
ELECTION OF DIRECTORS

General

The Bylaws of the Corporation provide for a variable Board of Directors
with a range between three and seven members. The Board of Directors currently
consists of six members. The Directors are divided into three classes. Each
class of Directors consists of two Directors, with each class serving for a
staggered three-year term. The Class I Directors are Messrs. Swartz and Blomberg
(whose terms expire in 2003) and who are nominated for reelection at this Annual
Meeting for a three-year term. The Class II Directors are Messrs. Brooks and
Konczal (whose terms expire in 2004). The Class III Directors are Messrs.
Wrensen and Looper (whose terms expire in 2005). Each director is elected to
serve until the next annual meeting of shareholders at which his Class stands
for reelection and until their successors are elected and qualified (typically a
3 year term). Each of the nominees for Class I, if elected, will serve for a
term expiring at the 2006 annual meeting of stockholders and until their
successors are elected and qualified. The Board currently has three Independent
Directors, Messrs. Brooks, Blomberg and Looper. The Board has nominated the
individuals named below to serve as Class I members of the Board. Messrs.
Konczal, Swartz and Wrensen do not qualify as Unaffiliated Directors.

The Corporation's Bylaws provide a procedure for shareholder nomination
of persons for election to the Board of Directors. Please see "Stockholder
Proposals and Nominations".

Thomas B. Swartz and Harvey Blomberg, the nominees listed below,
currently are Class I Directors whose present terms expire at the Annual
Meeting. The nominees have agreed to serve if elected, and management has no
reason to believe that the nominee will be unavailable to serve. Unless
otherwise instructed, the proxy holders will vote Proxies received by them in
favor of the election of the nominee named below. However, if the nominee
becomes unavailable for election for any reason, the shares represented by those
Proxies will be voted for any substitute nominee designated by the Directors.
Assuming that a quorum is present, a plurality of all the votes cast at the
Annual Meeting will be sufficient to elect a nominee as a Director. For purposes
of the election of directors, abstentions will not be counted as votes cast and
will have no effect on the result of the vote, although they will be counted in
determining the presence of a quorum.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW, AND,
IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, PROXIES SOLICITED IN CONNECTION
WITH THIS PROXY STATEMENT WILL BE SO VOTED.

The following presents information concerning the person nominated for
election as the Class III Directors of the Corporation and for those directors
whose terms will continue after the meeting:

Nominees for Election as Class I Directors for Term Expiring in 2006

Thomas B. Swartz. Biographical information for Mr. Swartz is set forth
in the section of this Proxy Statement entitled "General Corporation
Information: Executive Officers."

Harvey Blomberg, age 62; Class I Director since 1996; current term
expires 2003; Founder and principal, MRHB Real Estate (real estate management
company) (1988 to date); Regional Director, Connecticut Small Business
Development Center (1996 to date); Partner and Chief Financial Officer, Bay
Purveyors, Inc. (1976 to 1995); General Manager, Deerfield Communications

(1987 to 1990); Consultant to numerous companies (financial restructuring,
refinancing and marketing) (1989 to date). Renessler Polytechnic Institute, M.S.
Management, 1995; Hofstra University, M.B.A., 1985; B.S. Engineering, 1966.

Directors Continuing In Office

Stanley C. Brooks, age 53; Class II Director since 1996; current term
expires 2004; President and Chairman, Brookstreet Securities Corporation (1990
to date); Executive Vice-President, Toluca Pacific Securities Corporation (1987
to 1989); Senior Vice-President First Affiliated Securities (1983 to 1986);
Senior Vice-President, Private Ledger Financial Services (1976 to 1983); Member,
National Futures Association (1991 to date); Member, Securities Industry
Association (1995 to date); Member, Regional Investment Bankers Association
(1990 to date); Licensed Principal, NASD (1970 to date); California State
Polytechnic Institute, B.S. Business Administration, 1970. Mr. Brooks was
elected to the Board of Directors pursuant to the Underwriting Agreement between
the Corporation and Brookstreet Securities Corporation as the Managing
Broker-Dealer of the Corporation's public offering of its Common Stock.

Dennis R. Konczal. Biographical information for Mr. Konczal is set forth
in the section of this Proxy Statement entitled "General Corporation
Information: Executive Officers."

Richard J. Wrensen. Biographical information for Mr. Wrensen is set
forth in the section of this Proxy Statement entitled "General Corporation
Information: Executive Officers."

Donald R. Looper, age 50; Class III Director since March 2001; current
term expires 2005; Senior Partner of the Houston-based law firm of Looper, Reed,
& McGraw (1985 to date); Mr. Looper's legal practice has involved the
representation of both public and privately-owned corporations and the complex
structuring of substantial financings involving mortgage financings of real
estate and international business transactions. University of Texas, B.A.
degree, 1974; Master of Professional Accounting (specialization in Tax
Accounting), 1976; J.D. degree in Law, University of Houston, 1979. Admitted to
practice law in Colorado (1979) and Texas (1981).

PROPOSAL TWO
------------
AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED
COMMON AND PREFERRED CAPITAL

The Board of Directors, in order to facilitate its strategy for the
growth of the Corporation's capital base and a further increase in shareholder
value, proposes that the Corporation's Certificate of Incorporation be amended
to increase the Corporation's authorized capital from 2,130,000 shares to
3,600,000 shares (consisting of 2,000,000 Common shares and 1,600,000 Preferred
shares). Section 4.1 of the Corporation's Certificate of Incorporation would be
amended as follows:

"4.1 Capitalization. This Corporation is authorized to issue 3,600,000
shares and shall have two classes of shares designated respectively
"Common Stock" and "Preferred Stock," and referred to either as Common
Stock or Common shares and Preferred Stock or Preferred shares,
respectively. The number of shares of Common Stock is 2,000,000, with a
par value of $.01 per Share, and the number of shares of Preferred
Stock is 1,600,000, with a par value of $.01 per Share. Preferred
shares may be issued from time to time in one or more series. The first
series of Preferred Stock shall (a) be designated as "Series A
Preferred"; (b) consist of 230,000 shares with a par value of $.01 per
Share; (c) be entitled to dividends as provided in Section 4.3(a); (d)
be entitled to receive, on liquidation, dissolution, or winding up of
the Corporation, the amount, and subject to the conditions, provided in

Section 4.3(b); and (e) be entitled to all other rights, preferences
and privileges, and be subject to all such restrictions, as are in this
Article IV granted to, or imposed upon, the shares of Series A
Preferred Stock. Except as to Series A Preferred Stock, the Board of
Directors is hereby authorized, except as to matters fixed as to
Preferred shares in this Article IV: (a) to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed
upon any wholly unissued series and, within the limitations or
restrictions stated in any resolution of the Board of Directors
originally fixing the number of shares constituting any series; (b) to
increase or decrease (but not below the number of shares of any such
series then outstanding), the number of shares of any such series after
the issue of shares of that series; and (c) to determine the
designation of any series and to fix the number of shares of any
series."

While the Board has previously sought and received shareholder
authorization to both increase (in 1997) and decrease (2001) the Corporation's
authorized capital (in order to reduce franchise taxes payable to the State of
Delaware), it has now determined that the Corporation must increase its capital
base in order to grow and achieve an increase in shareholder value. It has
determined that there is a lack of necessary liquidity in the Corporation's
outstanding Common shares as a result of the small number of Common shares
available in the public markets, the resulting low volume in the trading of
those shares, and their trading below their book value. Although debt is a
financing option, the Board is of the opinion that more permanent equity capital
and more cash flow are necessary to make additional debt available to the
Corporation.

Accordingly, your Board of Directors has retained an investment banker
to advise it regarding several alternative initiatives, including (1) a public
offering of a new series of junior Preferred Stock, (2) the conversion, at the
shareholder's option, of existing and new Preferred shares to Common Stock, and
(3) the leveraging of such additional permanent capital. Such initiatives, your
Board of Directors believes, would enable the Corporation to better take
advantage of the current interest market, improve the cash flow of the
Corporation and achieve the market visibility and liquidity required to enhance
the shareholder value of the Corporation's shareholders.

Further authorization for the issuance of additional Common or
Preferred shares will not be solicited prior to issuance of any new series of
Preferred Stock. The pricing and the establishment of the rights, preferences,
dividend rates and other characteristics of any new Preferred or Common shares
cannot be stated at this time, but will be determined by the Board of Directors
in connection with the public or other offering of Preferred or Common shares
authorized pursuant to this proposal. The increased authorization of Common
shares is primarily to make a sufficient number of Common shares available for
the conversion of Preferred shares that are convertible into Common shares. The
rights, preferences, dividend rates and other characteristics of any new series
of Preferred Stock may be established by a resolution of the Board of Directors
and the filing of a Certificate of Designations with the Delaware Secretary of
State. The financial statements of the Corporation included in the Corporation's
Annual Report on Form 10-KSB for the year ended December 31, 2002 are
incorporated herein by reference.

After careful consideration, your Board of Directors has unanimously
approved the foregoing amendment described in these materials, and has concluded
that it is in the best interests of the Corporation and its shareholders. The
Board of Directors reserves the right to cancel at any time the proposed
amendment of the Certificate of Incorporation of the Corporation and/or any
planned public offering of a new series of Preferred stock. For purposes of the
vote on this proposal, abstentions will not be counted as votes cast and will
have no effect on the result of the vote, although they will be counted in
determining the presence of a quorum.

PROPOSAL THREE
--------------
APPROVAL OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANT

Novogradac & Company LLP has provided independent public accounting
services to the Corporation since its inception in 1996 and to its predecessors
since 1992. The Board has recommended to the shareholders that they approve the
selection of Novogradac & Company LLP to examine the Corporation's financial
statements for the year ending December 31, 2003. If the shareholders do not
approve the selection of Novogradac & Company LLP as the Corporation's
independent public accountant, or if circumstances arise that make the
continuation of Novogradac & Company LLP as the Corporation's independent public
accountant impossible or inappropriate for the year ending December 31, 2002,
that selection will be reconsidered by the Audit Committee and the Board. A
representative of Novogradac & Company LLP is expected to be present at the
Annual Meeting to respond to appropriate questions and to make a statement if
he/she so desires. As required by the Sarbanes-Oxley Act of 2002, Novogradac &
Company LLP has appointed new primary and review partners for the Corporation's
audit.

Assuming that a quorum is present, the affirmative vote of a majority
of all the votes cast at the Annual Meeting is necessary for approval of the
selection of Novogradac & Company LLP as the Corporation's independent auditors
for the fiscal year ending December 31, 2003. The Audit Committee has considered
whether the services included under All Other Fees is compatible with
maintaining the principal accountant's independence. Audit Fees. The aggregate
fees billed for professional services rendered for the audit of the
Corporation's annual financial statements for 2002 and for reviews of financial
statements included in the Corporation's Form 10-Q for that fiscal year totaled
$37,000. All Other Fees. The aggregate fees billed by Novogradac & Company LLP
for 2002 for services other than audit services were $4,900. For purposes of the
vote on this proposal, abstentions will not be counted as votes cast and will
have no effect on the result of the vote, although they will be counted in
determining the presence of a quorum.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS TWO AND THREE
AND, IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, PROXIES SOLICITED
IN CONNECTION WITH THIS PROXY STATEMENT WILL BE SO VOTED.

STOCKHOLDER PROPOSALS AND NOMINATIONS

The Bylaws of the Corporation provide a procedure for shareholder
proposals and shareholder nominations of persons for election to the Board of
Directors. That Procedure provides that any shareholder intending to present a
proposal or nomination for election of one or more Directors at the Annual
Meeting must deliver a written notice to the Corporation's Secretary at the
Corporation's principal executive offices by personal delivery, registered mail,
or telegraphic or facsimile transmission and be actually received by the
Secretary of the Corporation on a date in the current year which corresponds to
a date at least one-hundred twenty (120) days before the date on which the
Corporation first mailed its proxy materials for the prior year's annual meeting
of shareholders.

Any such notice of a stockholder proposal from a shareholder to the
Corporation's Secretary must set forth as to each matter such shareholder
proposes to bring before the meeting (i) a reasonably detailed description of
the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting, (ii) the name and the business and
residence address of the shareholder proposing such business, (iii) the class
and number of shares of stock of the Corporation which are owned by such

shareholder, (iv) any material interest of such shareholder in such business;
and (v) any other information that is required to be provided by such
shareholder pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder. If the shareholder's notice to the
Corporation's Secretary proposes to nominate one or more individuals for
election or reelection as Director, that notice must set forth (a) the name and
address of the shareholder who intends to make the nomination and of the Person
or Persons to be nominated; (b) a representation that the shareholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
Person or Persons specified in the notice; (c) a description of all arrangements
or understandings between the shareholder and each nominee and any other Person
or Persons (naming such Person or Persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (d) such other information
regarding each nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities Exchange Act of 1934, as amended, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (d) the consent of each
nominee to serve as a Director if so elected.

If the shareholder's notice to the Secretary proposes to bring other
business before the meeting, that notice must include a brief description of (i)
that business, (ii) the reasons for conducting that business at the meeting, and
(iii) any material interest in that business held by that shareholder (and by
the beneficial owner, if any, on whose behalf the proposal is made). If a
shareholder proposal or nomination is not made in accordance with the procedure
set forth above, the Chairman of the Annual Meeting shall (i) determine and
declare at the Annual Meeting that the proposed business or nomination was not
properly brought before the Annual Meeting in accordance with the procedures set
forth in the Bylaws and (ii) direct that the business not be transacted or that
the defective nomination be disregarded.

MISCELLANEOUS

The proxy statement and the accompanying Proxy are being solicited by
the order of the Directors, and all costs related to this solicitation will be
borne by the Corporation. Proxies may be solicited by mail, telephone, or
telegram or in person. The Manager of the Corporation will request banks,
brokerage houses, and other institutions, nominees, or fiduciaries that hold
shares in their names to forward the solicitation materials to the beneficial
owners thereof, and the Corporation will reimburse those persons for their
reasonable expenses in so forwarding these materials. Directors and officers and
regular employees of the Corporation's Manager may, without additional
compensation, solicit Proxies by telephone or telegram or in person.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934

Section 16(a) of the Securities Act of 1934 requires the Corporation's
Directors and executive officers, and persons who own more than ten percent of a
registered class of the Corporation's securities to file with the Commission
initial reports of ownership and reports of changes in ownership of the Common
Stock and other equity securities of the Corporation. Officers, Directors and
greater than ten percent stockholders are required by the Commission's
regulations to furnish the Corporation with copies of all Section 16(a) forms
they file.

To the best of the Corporation's knowledge, all Section 16(a) filing
requirements applicable to its Officers and Directors have been satisfied by
such persons for the fiscal year which ended December 31, 2002 and the period
ending March 31, 2002.

AUDIT COMMITTEE REPORT
Composition

The Audit Committee of the Board of Directors was elected in its
current composition on March 21, 2002 and is composed of three independent
directors, as required by American Stock Exchange ("AMEX") rules. The Committee
operates under a written charter adopted by the Board of Directors, a copy of
which is attached as Appendix "A". The members of the Audit Committee are Harvey
Blomberg (Chairman), Stanley C. Brooks and Donald R. Looper.

Responsibilities

The responsibilities of the Audit Committee include assisting the Board
of Directors in selecting an accounting firm to be engaged as the Corporation's
independent accountants. Management is responsible for the Corporation's
internal controls and financial reporting process. The independent accountants
are responsible for performing an independent audit of the Corporation's
financial statements in accordance with generally accepted auditing standards
and for issuing a report thereon. The Audit Committee's responsibility is to
assist the Board in overseeing these processes and the Corporation's internal
audit activities. The charter of the Audit Committee will be revised during 2003
to incorporate matters which are being proposed by the American Stock Exchange
for inclusion in the Corporation's Listing Agreement as a result of new rules of
the Securities Exchange Commission and provisions of the Sarbanes-Oxley Act of
2002.

Review with Management and Independent Accountants

The Audit Committee is required to meet and hold discussions with
management and the independent accountants and has done so on at least two
occasions. The Audit Committee has reviewed and discussed the audited financial
statements with management and has discussed with the independent auditors the
matters required by SAS61. The Audit Committee has received the written
disclosures and letter from the independent accountants required by Independence
Standards Board Standard No. 1, and has discussed with the independent
accountant, the independent accountant's independence. Messrs. Harvey Blomberg
(Chairman), Stanley C. Brooks and Donald L. Looper comprise the Trust's Audit
Committee.

Management has represented to the Audit Committee that the Corporation's
financial statements were prepared in accordance with accounting principles
generally accepted in the United States.

Summary

Based upon the representations of management, and the report by the
independent accountants to management, the audited financial statements were
approved by the Audit Committee for inclusion in the Corporation's Annual Report
on Form 10-KSB for the year ended December 31, 2002, as filed with the
Securities and Exchange Commission.

This report is submitted by the Audit Committee: Harvey Blomberg
(Chairman), Stanley C. Brooks, and Donald R. Looper.

INCORPORATION OF INFORMATION BY REFERENCE

The information contained under (a) Financial Statements and (b)
Supplementary Financial Information, (c) Management's Discussion and Analysis or
Plan of Operation, (d) Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure, and (e) Quantitative and Qualitative
Disclosure of Market Risk contained in the Corporation's Annual Report Form

10-KSB (a copy of which is contained in the Annual Report accompanying this
Proxy Statement) are incorporated herein by reference.

OTHER BUSINESS

At this date, management knows of no other matters proposed to be
brought before the Annual Meeting. If any other business should properly come
before the Annual Meeting for shareholder action, the named proxies will vote
the shares represented by the Proxies in accordance with their best judgment.

BY ORDER OF THE DIRECTORS,

Jennifer S. Austin, Corporate Secretary
San Francisco, California
May 19, 2003

APPENDIX "A"
AUDIT COMMITTEE CHARTER

The Audit Committee ("Committee") of the Board of Directors ("the Board") of
Capital Alliance Income Trust Ltd. ("the Company"), will have the oversight
responsibility, authority and specific duties as described below.

Composition: The Committee will be comprised of three or more directors as
determined by the Board. The members of the Committee will meet the independence
and experience requirements of the American Stock Exchange (AMEX). The members
of the Committee will be elected annually at the organizational meeting of the
full Board held following the Annual Meeting of shareholders and will be listed
in the annual report to shareholders. One of the members of the Committee will
be elected Committee Chair by the Board.

Responsibility: The Committee is a part of the Board. Its primary function is to
assist the Board in fulfilling its oversight responsibilities with respect to
(i) the annual financial information to be provided to shareholders and the
Securities and Exchange Commission (SEC); (ii) the system of internal controls
that management has established; and (iii) the external audit process. In
addition, the Committee provides an avenue for communication between the
independent accountants, financial management and the Board. The Committee
should have a clear understanding with the independent accountants that they
must maintain an open and transparent relationship with the Committee, and that
the ultimate accountability of the independent accountants is to the Board and
the Committee. The Committee will make regular reports to the Board concerning
its activities.

While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Company's business conduct guidelines.

Authority: Subject to the prior approval of the Board, the Committee is granted
the authority to investigate any matter or activity involving financial
accounting and financial reporting, as well as the internal controls of the
Company. In that regard, the Committee will have the authority to approve the
retention of external professionals to render advice and counsel in such
matters. All employees will be directed to cooperate with respect thereto as
requested by members of the Committee.

Meetings: The Committee is to meet at least four times annually and as many
additional times as the Committee deems necessary. Content of the agenda for
each meeting should be cleared by the Committee Chair. The Committee is to meet
in separate executive sessions with he Chief Financial Officer and independent
accountants at least once each year and at other times when considered
appropriate.

Attendance: Committee members will strive to be present at all meetings. All
Committee meetings and meetings with external professionals retained by the
Committee shall be noticed to and shall include one or more of the senior
management (CEO, COO and CFO) of the Company. As necessary or desirable, the
Committee Chair may request that other members of management and representatives
of the independent accountants be present at Committee meetings.

Specific Duties: In carrying out its oversight responsibilities, the Committee
will:

1. Review and reassess the adequacy of this charter annually and recommend any
proposed changes to the Board for approval. This should be done in
compliance with applicable AMEX Audit Committee Requirements.

2. Review with the Company's management and independent accountants the
Company's accounting and financial reporting controls. Obtain annually in
writing from the accountants their letter as to the adequacy of such
controls.

3. Review with the Company's management and independent accountant's
significant accounting and reporting principles, practices and procedures
applied by the Company in preparing its financial statements. Discuss with
the independent accountants their judgments about the quality, not just the
acceptability, of the Company's accounting principles used in financial
reporting.

4. Review the scope and general extent of the independent accountants' annual
audit. The Committee's review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent accountants should confirm to the Committee that no limitations
have been placed on the scope or nature of their audit procedures. The
Committee will review annually with management the fee arrangement with the
independent accountants.

5. Inquire as to the independence of the independent accountants and obtain
from the independent accountants, at least annually, a formal written
statement delineating all relationships between the independent accountants
and the Company as contemplated by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees.

6. Have a predetermined arrangement with the independent accountants that they
will advise the Committee through its Chair and management of the Company
of any matters identified through procedures followed for interim quarterly
financial statements, and that such notification as required under
standards for communication with Audit Committees is to be made prior to
the related press release or, if not practicable, prior to filing forms
10-Q. Also receive a written confirmation provided by the independent
accountants at the end of each of the first three quarters of the year that
they have nothing to report to the Committee, if that is the case, or the
written enumeration of required reporting issues.

7. At the completion of the annual audit, review with management and the
independent accountants the following: o The annual financial statements
and related footnotes and financial information to be included in the
Company's annual report to shareholders and on Form 10-KSB.

o Results of the audit of the financial statements and the related report
thereon and, if applicable, a report on changes during the year in accounting
principles and their application.

o Significant changes to the audit plan, if any, and any serious disputes
or difficulties with management encountered during the audit. Inquire about the
cooperation received by the independent accountants during their audit,
including access to all requested records, data and information. Inquire of the
independent accountants whether there have been any disagreements with
management which, if not satisfactorily resolved, would have caused them to
issue a nonstandard report on the Company's financial statements.

o Other communications as required to be communicated by the independent
accountants by Statement of Auditing Standards (SAS) 61 as amended by SAS 90
relating to the conduct of the audit. Further, receive a written communication
provided by the independent accountants concerning their judgment about the
quality of the Company's accounting principles, as outlined in SAS 61 as amended

by SAS 90, and that they concur with management's representation concerning
audit adjustments. If deemed appropriate after such review and discussion,
recommend to the Board that the financial statements be included in the
Company's annual report on Form 10-KSB.

8. After preparation by management and review by independent accountants,
approve the report required under SEC rules to be included in the Company's
annual proxy statement. The charter is to be published as an appendix to the
proxy statement every three years.

9. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also, elicit the comments of management
regarding the responsiveness of the accountants to the Company's needs.

10. Meet with management and the independent accountants to discuss any relevant
significant recommendations that the independent accountants may have,
particularly those characterized as "material" or "serious". Typically, such
recommendations will be presented by the independent accountants in the form of
a Letter of Comments and Recommendations to the Committee. The Committee should
review responses of management to the Letter of Comments and Recommendations
from the independent accountants and receive follow-up reports on action taken
concerning the aforementioned recommendations.

11. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.

12. Review with management and the independent accountants the methods used to
establish and monitor the Company's policies with respect to the unethical or
illegal activities by Company employees that may have a material impact on the
financial statements.

13. Generally as part of the review of the annual financial statements, receive
an oral report(s), at least annually, from the Company's general counsel
concerning legal and regulatory matters that may have a material impact on the
financial statements.

14. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to audit Committee related rules of the AMEX, Statements on Auditing
Standards and other accounting, legal and regulatory provisions.

Capital Alliance Income Trust Ltd.
- --------------------------------------------------------------------------------
50 California Street, Suite 2020 o San Francisco, California 94111 o Tel:
415/288-9575 o Fax: 415/288-9590

THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
CAPITAL ALLIANCE INCOME TRUST LTD.

PROXY FOR ANNUAL MEETING
JUNE 27, 2003

The undersigned, as record owner of the securities of Capital Alliance Income
Trust Ltd., A Real Estate Investment Trust, a Delaware corporation
("Corporation"), described below, hereby revokes any previous proxies and
appoints Dennis R. Konczal and Richard J. Wrensen, with power of substitution
and revocation and for and in the name of the undersigned, to vote and otherwise
represent all of the shares of the undersigned at the meeting and any
adjournment thereof, with the same effect as if the undersigned were present and
voting the shares. The shares represented by this proxy shall be voted in the
following manner:

1. PROPOSAL ONE: ELECTION OF DIRECTORS
For the election of the following persons as Directors of the Corporation
to serve until the third annual meeting of shareholders following his
election and until his respective successor shall be elected and qualify:

( )FOR Thomas B. Swartz ( )FOR Harvey Blomberg

(Instructions to shareholder: If authority to vote for director is being
withheld, strike-out the above clause (1) in its entirety and write "Authority
Withheld" in the margin. If authority to vote for any one director is being
withheld, strike-out the name of the director as to which authority is
withheld.)

2. PROPOSAL TWO: AMENDMENT OF CERTIFICATE OF INCORPORATION (INCREASE IN
AUTHORIZED CAPITAL AND CREATION OF A NEW SERIES OF PREFERRED STOCK)

( ) FOR ( ) AGAINST ( )ABSTAIN - approval of an Amendment of the
Certificate of Incorporation to increase the Trust's authorized common and
preferred capital by increasing the number of authorized common and
preferred shares.

3. PROPOSAL FOUR: ELECTION OF AUDITORS

( ) FOR ( ) AGAINST ( )ABSTAIN - approval of recommendation of the
Board of Directors that Novogradac & Company LLP be appointed as
independent auditors of the Corporation for the year ended December 31,
2003; and

4. PROPOSAL FIVE: OTHER ACTION

( ) FOR ( ) AGAINST ( )ABSTAIN - other business that may properly
come before the Annual Meeting or any postponements or adjournments
thereof.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED ABOVE.
IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR ITEM 2 AND 3 LISTED ABOVE AND, UNLESS ITEM 4 IS LINED OUT, AS THE
PROXY DEEMS ADVISABLE, ON ANY OTHER PROPER BUSINESS IN PROPOSAL 4 THAT MAY COME
BEFORE THE MEETING.

Dated: 2003.
--------------------- --------------------------------------
(SIGN EXACTLY AS NAME APPEARS ON YOUR
ACCOUNT STATEMENT.)

No. of Class "A" Preferred Shares:
No. of Common Shares:
Shareholder of Record: