[X] Annual Report Pursuant to Section 13 or 15(d)

of the Securities and Exchange Act of 1934

For the fiscal year ended December 31, 2004

Commission File Number 33-4682

(Exact name of registrant as specified in its charter)

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

(Address of principal executive offices) Zip Code

Registrant's telephone number, including area code: (916) 353-0500

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Limited Partnership Units

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 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. X Yes No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No

As of December 31, 2004 the aggregate Limited Partnership Units held by nonaffiliates of the registrant was 23,030. There is no market for the Units.

Limited Partnership Agreement dated February 6, 1986, filed as Exhibit 3.3, and the Amendment to the Limited Partnership Agreement dated May 22, 1986 filed as Exhibit 3.4 to Registration Statement No. 33-4682 of Capital Builders Development Properties II, A California Limited Partnership, are hereby incorporated by reference into Part IV of this Form 10K.

When used in this annual report, the words "believes," "anticipates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected, including, but not limited to, those set forth in the sections entitled "Potential Factors Affecting Future Operating Results" and "Qualitative and Quantitative Disclosures About Market Risks" below. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the case hereof. The Partnership undertakes no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Capital Builders Development Properties II (the "Partnership") is a publicly held limited partnership organized under the provisions of the California Revised Limited Partnership Act pursuant to the Limited Partnership Agreement dated February 6, 1986, as amended (the "Agreement"). The Partnership commenced on May 22, 1986 and shall continue in full force and be effective until December 31, 2021 unless dissolved sooner by certain events as described in the Agreement. The Managing General Partner is Capital Builders, Inc., a California Corporation (CB). The Associate General Partner is the sole shareholder, President and Director of CB.

On October 6, 1986 the Partnership sold 2,407 Limited Partnership Units for a total of $1,203,500. From October 6, 1986, through May 21, 1988, the Partnership sold an additional 20,623 Units for a total of 23,030 Units. On May 21, 1988, the Partnership was closed to capital raising activity with a total of $11,515,000 proceeds raised from the offering. The General Partners have contributed capital in the amount of $1,000 to the Partnership for a 1% interest in the profits, losses, tax credits and distributions of the Partnership.

The Partnership is in the business of real estate development and is not a significant factor in its industry. The Partnership's investment properties are located near major urban areas and, accordingly, compete not only with similar properties in their immediate areas but with hundreds of properties throughout the urban areas. Such competition is primarily on the basis of locations, rents, services and amenities. In addition, the Partnership competes with significant numbers of individuals and organizations (including similar partnerships, real estate investment trusts and financial institutions) with respect to the purchase and sale of land, primarily on the basis of the prices and terms of such transactions.

The Partnership's business objective is to complete the lease-up of its existing light industrial and office buildings and eventually sell all of its properties. The primary investment objective of the Partnership is to realize capital appreciation from the sale of the Properties developed by it. A secondary investment objective is to generate cash from the leasing of Partnership Properties pending their sale for distribution to the Limited Partners. Since the Partnership has not sold all of its investment properties, it has not achieved its investment goals as yet. Although investor returns cannot be accurately determined until the investment properties are sold, due to the additional time required to lease up the investment properties, the decline in real estate values during the recession of the early 90's, and although the real estate market has shown recovery from that recession, it is anticipated that ultimate returns will be less than initially projected. Funds obtained by t he Partnership from the sale of Limited Partnership Units were used to acquire equity interest in one piece of land for development and a 40% equity interest in another for development in accordance with its investment objective.

On April 10, 1987, the Partnership entered into a joint venture called Capital Builders Roseville Venture ("JV") with Capital Builders Development Properties ("CBDP"), a California limited partnership. The Partnership and CBDP were affiliates as they had the same General Partner, but there were no direct transactions between the respective Partnerships. The Partnership contributed $900,000 resulting in a 40% interest in the profits, losses and cash distributions of the JV. CB, the Managing General Partner of the Partnership, had the same rights and obligations with respect to the JV's operations and management as it could exercise as Managing General Partner of the Partnership. The JV was dissolved as of May 1, 1997 when the Partnership purchased the remaining 60% interest in the JV.

The acquisition of the real estate is consistent with the Partnership objectives which are to acquire, develop, hold, maintain, lease, sell, or otherwise dispose of real property within the Western United States (including the states of California, Oregon, Washington, Arizona, Nevada, New Mexico, Utah, Colorado, Hawaii, and Alaska), including without limitation, the acquisition of undeveloped land for development and construction of research and development, light industrial, commercial/retail, or office buildings thereon, and the acquisition of partially completed commercial real property developments for completion of development.

Although the Associate General Partners, Officers, and Directors of the Managing General Partners are experienced in real property operation and management, they also may utilize independent advisors, agents, and workers, in addition to the Partnership employees, to assist them in the operation, leasing, maintenance and improvement of the Partnership's properties.

The Partnership has no full time employees but is managed by CB, the Managing General Partner.

We expect to file annual, quarterly and special reports, and other information with the SEC. Our SEC filings will be available to the public over the Internet at the SEC's website at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0300 for further information on the public reference rooms.

You may request a free copy of any of the above filings by writing or calling:

Capital Builders Development Properties II

c/o Capital Builders, Inc.

1130 Iron Point Road, Suite 170

Folsom, CA 95630

(916) 353-0500

The Partnership owned 100% equity interest in two properties, Highlands 80 Commerce Center ("H80") and Capital Professional Center ("CPC"). H80 is a three-phase development located in North Highlands, California. Phase I is a 109,083 square foot office/industrial project consisting of five multi-tenant buildings. Phase II consists of approximately 45,777 square feet of two, one-story light industrial/office space buildings and Phase III consists of one, 27,664 square foot, two-story office building. Phase III's building was placed into service during the first quarter of 2002. There are currently three leases signed for this building's space for a total of 8,577 square feet.

During the third quarter of 2002, the Highlands 80 Commerce Center ("H80") was listed for sale and categorized as discontinued operations. During the fourth quarter 2002, four out of the eight buildings listed were sold for cash amounts in excess of their book values. After payment of commissions and closing costs, the net sale proceeds were $8,525,041. These sales resulted in a recognized gain during 2002 of $4,240,907.

During the first quarter of 2003, the Partnership sold an additional Highlands 80 building. The Partnership received net proceeds of $1,758,370 after sales commissions and closing costs. The sales price exceeded the book value of the building.

The three remaining Highlands 80 buildings continue to be listed for sale. The listed sales prices exceed the book value of the buildings. Subsequent to December 31, 2004 the Partnership received an offer to purchase the three remaining H80 buildings for a cash price of $8,315,000. The Partnership is currently in the process of entering into a formal sales contract with the third party buyer and upon execution of the sales contract a $100,000 deposit is expected to be put down. The draft sales contract allows for a certain due diligence period to allow the buyer to further evaluate the purchase.

CPC was a 40,465 square foot office project, located in Roseville, California, consisting of two multi-tenant buildings which were completely developed and had achieved a stabilized occupancy. This project was placed under contract for sale during the fourth quarter 2002 and was classified as discontinued operations at such time. During the first quarter of 2003, the property was sold for a cash amount in excess of its book value. After payment of commissions and closing costs, the net sale proceeds were $7,649,350.

The sales of the Highlands 80 building and the Capital Professional Center project resulted in a recognized gain during 2003 of $4,508,980.

The Partnership's remaining investment properties are located in major urban areas and, therefore, must compete with properties of greater and lesser quality. Such competition is based primarily on rent, location, services and amenities. The properties are suitable for their current and anticipated use.

On June 15, 2004, the Partnership entered into a settlement agreement with three of its associate general partners, James F. Elder, Michael C. Elder, and David L. Nelson (collectively, the "Claimants"). In April 2002, the Claimants, through counsel, asserted an interest in the proceeds from the sale of properties by the Partnership pursuant to the Partnership Agreement. Under the Partnership Agreement, the General Partners of the Partnership are entitled, from the proceeds of the sale or refinancing of the Partnership's properties, to a deferred acquisition fee if certain tests are met. Claimants asserted that, as associate general partners of the Partnership, they were entitled to this fee. CBI, as Managing General Partner of the Partnership, disputed the claim.

The settlement was the result of some two years of negotiations between CBI and the Claimants. Pursuant to the terms of the settlement agreement, the Partnership will pay the Claimants, from "Cash From Sales or Refinancing," $15,000 each, or $45,000 in total, after the Limited Partners of the Partnership have received cumulative distributions of Cash From Sales or Refinancing equal to their capital contributions to the Partnership. As of December 31, 2004, the Partnership had made an aggregate of $4,999,997 in distributions of Cash From Sales Or Refinancing to the Limited Partners of the Partnership, representing 43.4% of the Limited Partners' capital contributions to the Partnership. No payment will be made to the Claimants unless and until the Limited Partners have received Cash From Sales or Refinancing equal to their remaining capital contributions, and thus such settlement amount has not been accrued for as of December 31, 2004. In return for this payment, the Cla imants will release the Partnership from any further claim arising from their interest in the Partnership as Associate General Partners.

CBI entered into the settlement, for and on behalf of the Partnership, to avoid the costs of litigating the dispute in court, and because the question of the claimants' right to a deferred acquisition fee, under the terms of the Partnership Agreement, involves complex calculations. Under the terms of the settlement, neither the Partnership nor CBI acknowledges any wrongdoing.

As part of the settlement, Michael J. Metzger, President of CBI and an associate general partner of the Partnership, has disclaimed any interest either personally or for CBI to any deferred acquisition fee from the Partnership.

NONE

There is no public trading market for the Partnership's Limited Partnership Units and it is not anticipated that a public trading market will develop. Furthermore, the Partnership Agreement prohibits Limited Partners from transferring Limited Partnership Interests if such transfers would result in the dissolution of the Partnership for tax purposes under Section 708 of the Internal Revenue Code.

As of December 31, 2004, there were 1,480 holders and 23,030 Limited Partnership Units outstanding.

The following constitutes a summary of selected financial data for the following periods (000's omitted except net income (loss) per Limited Partnership Unit):

(See ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA)

During the month of July 2002, the Highlands 80 project (8 individual buildings) was listed for sale, and during the month of October 2002 the CPC project (two individual buildings) was listed for sale, which resulted in all real estate assets of the Partnership being listed for sale during the year ended December 31, 2002.

In accordance with the Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (FAS 144), the current year results from the operations and financial position of the entire entity have been classified as discontinued operations as the Partnership had listed all assets for sale before December 31, 2002 and the Partnership had met all of the other criteria of long-lived assets to be disposed of by sale. Additionally, all prior periods have been stated as if the entire entity had been a discontinued operation. Depreciation was ceased on all buildings or project when the buildings or project was listed for sale in accordance with FAS 144.

As of December 31, 2004, all buildings owned by the Partnership had been sold with the exception of three H80 buildings. The three remaining H80 buildings continue to be listed for sale and continue to meet the held for sale criteria in FAS 144 and are classified as held for sale and as discontinued operations. Although the unsold buildings have been held for sale in excess of one year, the delay in sale is outside of Management's control and Management remains committed to its plan to sell the buildings as evidenced by the buildings being continuously listed for sale.

The three remaining H80 buildings have had offers well in excess of their book values; however, Management had not accepted these offers as of December 31, 2004 as Management feels the buildings can achieve a higher price than what had been offered.

Management anticipates the remaining three H80 buildings will be sold by the end of the second or third quarter of 2005. Subsequent to December 31, 2004 the Partnership received an offer to purchase the three remaining H80 buildings for a cash price of $8,315,000. The Partnership is currently in the process of entering into a formal sales contract with the third party buyer and upon execution of the sales contract a $100,000 deposit is expected to be put down. The draft sales contract allows for a certain due diligence period to allow the buyer to further evaluate the purchase.

The Partnership commenced operations on May 22, 1986 upon the sale of the minimum number of Limited Partnership Units. The Partnership's initial source of cash was from the sale of Limited Partnership Units. Through the offering of Units, the Partnership raised $11,515,000 (represented by 23,030 Limited Partnership Units). Cash generated from the sale of Limited Partnership Units was used to acquire land and for the development of a mixed use commercial project and a 40% interest in a commercial office project. In May 1997, the remaining 60% interest in the project was acquired.

The Partnership's primary current sources of cash are from cash balances, property rental income and proceeds from the partial sale of its assets. As of December 31, 2004, the Partnership had $937,180 in unrestricted cash. It is the Partnership's intention to utilize existing cash balances for continued leasing operations (tenant improvements and leasing commissions) at Highlands 80.

During the year ended December 31, 2004, the Partnership made $205,355 in improvements for its Highlands 80 property. These improvements consisted of tenant improvements in Highlands 80 Phase III (a 27,664 sq. foot office building). The Partnership funded these costs with proceeds from rental operations ($37,623) and cash reserves.

The Partnership may continue to incur improvement costs as the Highlands 80 Phase III building is leased. The total projected tenant improvement costs that may be incurred during 2005 are estimated to be $535,000. These costs will be funded with continued proceeds from rental operations and cash reserves.

During the year ended December 31, 2004, the Partnership paid $34,394 in management fees to its Managing General Partner. Management fees are classified on the Statements of Operations as an Operating Expense. The General Partner is currently charging 5% of collected revenue.

The Partnership's ability to maintain or improve cash flow is dependent upon its ability to maintain and improve the occupancy of its investment properties. Management believes the Partnership's financial resources should be adequate to meet 2005's obligations and no adverse change in liquidity is foreseen. The Partnership's properties' current market values are in excess of their carrying values.

The Partnership's discussion and analysis of its financial condition and results of operations are based upon the Partnership's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires Partnership Management to make estimates and judgments that effect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Partnership Management evaluates its estimates, including those related to long lived assets, accounts receivable, deferred revenue, and contingencies and litigation. Partnership Management bases its estimates on current information, historical experience and or various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recognition of revenue that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Partnership believes the following critical accounting policy affects its more significant judgments and estimates used in the preparation of its financial statements:

Valuation of Investment Property (Long-Lived Assets):

Investment property is evaluated for impairment on a continual basis based on the property's occupancy levels, annual cash flows, and projected cash flows based on the rental market and other factors including prospective new tenants.

Classification as Discontinued Operations:

All real estate assets of the Partnership had been listed for sale during the years ended December 31, 2004, 2003 and 2002.

In accordance with the Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (FAS 144), the current year results from the operations and financial position of the entire entity have been classified as discontinued operations as the Partnership had listed all assets for sale before December 31, 2002 and the Partnership had met all of the other criteria of long-lived assets to be disposed of by sale. Additionally, all prior periods have been stated as if the entire entity had been a discontinued operation. Depreciation was ceased on all buildings or project when the buildings or project was listed for sale in accordance with FAS 144.

All real estate assets of the Partnership had been listed for sale during the years ended December 31, 2004 and 2003. In accordance with the Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (FAS 144), the current year results from the operations and financial position of the entire entity have been classified as discontinued operations. Additionally, all prior periods have been stated as if the entire entity had been a discontinued operation. Depreciation was ceased on all buildings or project when the buildings or project was listed for sale in accordance with FAS 144.

During the year ended December 31, 2004 as compared to December 31, 2003, the Partnership's total revenues increased by $19,241 (2.7%), while its expenses decreased by $107,793 (14.6%), resulting in an increase in net income from discontinued operations to $90,491.

The primary reason for the increase in revenue is due to annual rent increases for renewed leases and an increase in the occupied space at the Highlands 80 remaining buildings.

The decrease in total expenses is primarily due to the Partnership maintaining ownership of Capital Professional Center and one additional Highlands 80 building during the first quarter of 2003. The expenses for the operations of these buildings were therefore included in the 2003 Statements of Operations.

The Partnership has three remaining Highlands 80 buildings listed for sale. These remaining buildings represent 34% (based on square footage) of the Partnerships pre-sale holdings. These buildings at their current combined occupancy of 75% as of December 31, 2004 are producing a positive cash flow.

During the year ended December 31, 2003 as compared to December 31, 2002, the Partnership's total revenues decreased by $1,804,570 (72%), while its expenses decreased by $2,019,091 (73.2%), resulting in a decrease in net loss from discontinued operations by $214,521 (85.4%).

The primary reason for the decrease in revenue, expenses and operating loss is due to the Partnership selling portions of its properties.

During the fourth quarter 2002, the Partnership sold four out of the eight Highlands 80 buildings. During the first quarter of 2003, the Partnership sold an additional Highlands 80 building and its entire Capital Professional Center project, leaving the Partnership with only three remaining Highlands 80 buildings.

The properties sold during 2003 netted the Partnership $9,407,720 in cash proceeds after commissions and closing costs. The sale of these buildings also resulted in gain recognition of $4,508,980 for the year ended December 31, 2003.

The Partnership does not have a material market risk due to financial instruments held by the Partnership.

The Partners
Capital Builders Development Properties II:

We have audited the accompanying balance sheets of Capital Builders Development Properties II, a California Limited Partnership, as of December 31, 2004 and 2003, and the related statements of operations, partners' equity and cash flows for each of the years in the three-year period ended December 31, 2004. In connection with our audits of the financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These financial statements and financial statement schedule are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Capital Builders Development Properties II as of December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2004 in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP

Sacramento, California
February 25, 2005

PART 1 - FINANCIAL INFORMATION

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows:

The financial statements of Capital Builders Development Properties II (The "Partnership") are prepared on the accrual basis of accounting and therefore revenue is recorded as earned and costs and expenses are recorded as incurred.

During July 2002, the Highlands 80 ("H80") buildings (8 individual buildings) were listed for sale, along with the Capital Professional Center project ("CPC") (two individual buildings). This resulted in all real estate assets of the Partnership being listed for sale during the years ended December 31, 2004, 2003 and 2002. As discussed in Note 3, five of the eight H80 buildings and CPC have been sold as of the quarter ended March 31, 2003, leaving three H80 buildings unsold as of December 31, 2004.

In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (FAS 144), the current year results from the operations and financial position of the entire entity, as well as all other periods presented, have been classified as discontinued operations as the Partnership had listed all assets for sale before December 31, 2002 and the Partnership had met all of the other criteria of long-lived assets to be disposed of by sale. Depreciation was ceased on all buildings or project when the buildings or project were listed for sale in accordance with FAS 144.

Additionally, in accordance with FAS 144, all unsold buildings were evaluated for impairment. No impairment adjustments were required.

As of December 31, 2004 all buildings owned by the Partnership had been sold with the exception of three H80 buildings. The three remaining H80 buildings continue to be listed for sale and continue to meet the held for sale criteria in FAS 144 and are classified as held for sale and as discontinued operations. Although the unsold buildings have been held for sale in excess of one year, the delay in sale is outside of Management's control and Management remains committed to its plan to sell the buildings as evidenced by the buildings being continuously listed for sale. Subsequent to December 31, 2004 the Partnership received an offer to purchase the three remaining H80 buildings for a cash price of $8,315,000. See Note 8 for further discussion.

Management has not and will not adopt a strategy for dissolving the Partnership until such time as a majority of the Partnership's properties have been sold, sales contracts for the balance of the properties are pending, and the General Partner approves such a plan.

Capital Builders Development Properties II, a California Limited Partnership, is owned under the laws of the State of California. The Managing General Partner is Capital Builders, Inc., a California corporation (CB).

The Partnership is in the business of real estate development and is not a significant factor in its industry. The Partnership's investment properties are located near major urban areas and, accordingly, compete not only with similar properties in their immediate areas but with hundreds of properties throughout the urban areas. Such competition is primarily on the basis of locations, rents, services and amenities. In addition, the Partnership competes with significant numbers of individuals and organizations (including similar companies, real estate investment trusts and financial institutions) with respect to the purchase and sale of land, primarily on the basis of the prices and terms of such transactions.

Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

The Partnership's investment property consists of commercial land, buildings and leasehold improvements that are carried net of accumulated depreciation. Depreciation was provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives of three to forty years. The straight-line method of depreciation was followed for financial reporting purposes. Depreciation and amortization was ceased when the corresponding real estate assets were listed for sale.

Lease commissions are costs associated with obtaining leases with terms in excess of one year. The Partnership capitalizes these costs and amortizes them on a straight line basis over their related lease term.

The Partnership has no provision for income taxes since all income or losses are reported separately on the individual Partners' tax returns.

Rental income is recognized on a straight-line basis over the life of the lease, which may differ from the scheduled rental payments.

Gains from building sales are recognized using the full accrual method when title has passed to the buyer, the collectibility of the sales price is reasonably assured, the required minimum cash down payment has been received, and the Partnership has no continuing involvement with the property. When a sale does not meet the requirements for full profit recognition, the sale or a portion of the profit thereon is deferred until such requirements are met using the deposit, installment, or cost recovery methods, as appropriate under the circumstances.

The allowance for doubtful accounts is based upon analysis of possible losses from trade receivables. The allowance for doubtful accounts was $360 as of December 31, 2004 and December 31, 2003. The provision for losses during the years ended December 31, 2004 and December 31, 2003 was $-0-.

The net income per Limited Partnership Unit is computed based on the weighted average number of Units outstanding of 23,030 during the years ended December 31, 2004, 2003 and 2002.

For purposes of the statement of cash flows, the Partnership considers all short-term investments with a maturity, at date of purchase, of three months or less to be cash equivalents.

The preparation of financial statements requires Partnership Management to make estimates and judgments that effect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Partnership Management evaluates its estimates, including those related to long lived assets, accounts receivable, and contingencies and litigation. Partnership Management bases its estimates on current information, historical experience and or various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recognition of revenue that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Managing General Partner (Capital Builders, Inc.) and the Associate General Partners are entitled to reimbursement of expenses incurred on behalf of the Partnership and certain fees from the Partnership. These fees include: a portion of the sales commissions payable by the Partnership with respect to the sale of the Partnership Units; an acquisition fee of up to 12.5% of gross proceeds from the sale of the Partnership Units; a property management fee up to 6% of gross rental revenues realized by the Partnership with respect to its properties; a subordinated real estate commission of up to 3% of the gross sales price of the properties; and a subordinated 25% share of the Partnership's distributions of cash from sales or refinancing. The property management fee currently being charged is 5% of gross rental revenues collected. None of the 3% subordinated real estate commission was earned or paid.

All acquisition fees and expenses, all underwriting commissions, and all offering and organizational expenses which can be paid are limited to 20% of the gross proceeds from sales of Partnership Units provided the Partnership incurs no borrowing to develop its properties. However, these fees may increase to a maximum of 33% of the gross offering proceeds based upon the total acquisition and development costs, including borrowings. Since the formation of the Partnership, 27.5% of these fees were paid to the Partnership's related parties, leaving a remaining maximum of 5.5% ($633,325) of the gross offering proceeds.

The General Partners had previously agreed to reduce their future General Partner participation in proceeds from sales by an amount equal to the loss on the abandonment of option fees in 1988 ($110,000) and interest on the amount at a rate equal to that of the borrowed funds rate as determined by construction or permanent funds utilized by the Partnership.

On June 15, 2004, the Partnership entered into a settlement agreement with three of its Associate General Partners to pay a maximum of $45,000 ($15,000 each) only after the Limited Partners of the Partnership have received cumulative distributions of cash from sales or refinancing equal to their capital contributions to the Partnership (see Item 3., Legal Proceedings, for further disclosure). No payment will be made to the Claimants unless and until the Limited Partners have received Cash From Sales or Refinancing equal to their remaining capital contributions and thus such settlement amount has not been accrued for as of December 31, 2004.

The total management fees paid to the Managing General Partner were $34,394, $33,929 and $125,320 for the years ended December 31, 2004, 2003 and 2002, respectively, while total reimbursement of expenses was $251,408, $267,989 and $288,229, respectively.

Management fees are classified on the Statements of Operations as an Operating Expense. Reimbursement of expenses is primarily for investor services, preparation of SEC filings, audit coordination and other Partnership management functions. Expense reimbursements are classified as Operating Expenses and General and Administrative expenses on the Statements of Operations.

In accordance with the Partnership Agreement, the General Partner may hire outside consultants or perform the necessary accounting, reporting and investor service functions internally, and pass through the associated costs. It has been determined by the General Partner that if outside consultants were to perform these functions, the related costs would be substantially higher to the Partnership.

The components of the investment property account at December 31 are as follows:

During the fourth quarter of 2002, the Partnership sold four out of the eight Highlands 80 buildings. The Partnership received net proceeds of $8,525,041 after commissions and closing costs. The sale of these buildings resulted in a gain recognition of $4,240,907. In conjunction with these sales, tenant security deposits were assumed by the buyers while the Partnership retained ownership of the accounts receivable.

During January 2003, the Partnership sold an additional Highlands 80 building and CPC. The Partnership received net proceeds of $9,407,720 after commissions and closing costs. The sale of these assets resulted in gain recognition of $4,508,980 during the quarter ended March 31, 2003. In conjunction with these sales, tenant security deposits were assumed by the buyers while the Partnership retained ownership of the accounts receivable. There were no additional sales during 2004.

The Partnership leases its property under long term noncancelable operating leases to various tenants. The facilities are leased through agreements for rents based on the square footage leased. Minimum annual base rental payments under these leases for the full years ending December 31 are as follows:

A reconciliation of the net loss as reflected on the accompanying Statements of Operations to that reflected on the Federal income tax return for the years ended December 31 is as follows:

The Partnership is involved in litigation arising in the normal course of its business. In the opinion of management, the Partnership's recovery or liability if any, under any pending litigation would not materially affect its financial condition or results of operations.

Subsequent to December 31, 2004 the Partnership received an offer to purchase the three remaining H80 buildings for a cash price of $8,315,000. The Partnership is currently in the process of entering into a formal sales contract with the third party buyer and upon execution of the sales contract a $100,000 deposit is expected to be put down. The draft sales contract allows for a certain due diligence period to allow the buyer to further evaluate the purchase.

NONE

1. Disclosure Controls and Procedures

The undersigned principal executive officer and principal financial officer of Capital Builders Development Properties II conclude that Capital Builders Development Properties II's disclosure controls and procedures are effective as of December 31, 2004 based on their evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rule 15d-15.

2. Changes in Internal Control over Financial Reporting

The Partnership has no directors. The Partnership is managed by Capital Builders, Inc. ("CB"), the Managing General Partner. The following are the names and other information relating to the Managing General Partner. No expiration date has been set for the term during which the Managing General Partner is to serve.

The Partnership is being managed by CB, the Managing General Partner. CB is a California corporation organized in May 1978. CB relocated on October 8, 1999 and moved its executive offices to 1130 Iron Point Road, Suite 170, Folsom, California 95630 (telephone number 916-353-0500). To date, CB has organized ten partnerships to engage in commercial real estate development. As the General Partner, CB may be responsible for certain liabilities that a partnership it manages is unable to pay.

The Partnership is governed, pursuant to the terms and provisions of its Partnership Agreement, by its general partner, Capital Builders, Inc. ("CB"). The business of CB, in turn, is supervised by its board of directors, consisting of those persons identified below. One of the four members of the board of directors of CB is an officer of CB and therefore is not "independent" as defined by the rules of the SEC. The board of directors of CB oversees the accounting and financial reporting processes of the Partnership and the audits of the financial statements of the Partnership.

The officers, directors, and key personnel of CB are as follows:

Michael J. Metzger, President and Director

Mark J. Leggio, Director

Ellen Wilcox, Director

Andrew Gianulias, Director

Michael J. Metzger: Mr. Metzger is responsible for the general management of CB. Mr. Metzger assumed responsibility for the management of CB in December 1986. He was formerly the Executive Vice President of The Elder-Nelson Company (EN) and its subsidiary, the Elder-Nelson Equities Corporation - affiliated companies which provided underwriting and administrative services to CB. Prior to joining EN in 1977, Mr. Metzger was Partner/General Manager for two years in his family's real estate contracting, development and syndication business. Mr. Metzger has also had five years of experience in manufacturing management and served as an Army Officer for four years. Mr. Metzger holds a B.S. degree in Business and Industrial Management and a California Real Estate Broker's License.

Ellen Wilcox: Ellen Wilcox is a Registered Investment Advisor, the current Owner/Manager of Wealth Management Associates of America and the former Owner/Manager of Wilcox Financial Services. She is licensed in General Securities and Insurance through Linsco/Private Ledger, a NASD Registered Broker/Dealer. As an Investment Advisor and Broker, Ms. Wilcox provides a full range of investment products and services to individuals and small business owners. She has been actively providing such services since 1986. Ms. Wilcox teaches classes on retirement planning, investment strategies, and basic money management. She is a popular speaker and lecturer on financial topics, has authored many published articles, and has appeared on several radio shows.

Mark J. Leggio: Mark Leggio is the Owner of Mark J. Leggio, CPA. He provides tax accounting and business consultation services to a wide variety of small and mid-size businesses. From 1978 to 1995 he worked for KPMG LLP and was a partner when he left. Mr. Leggio holds a Bachelor of Science degree in Accounting from the University of Southern California, where he graduated cum laude.

Andrew Gianulias: Andrew Gianulias is a Real Estate Investor, specializing in development and investment of commercial/retail real estate. Mr. Gianulias also has a background as a real estate attorney and received his Juris Doctor from the University of California School of Law, Berkeley. He has been a member of the State Bar of California for over 37 years and a member of the International Conference of Shopping Centers (ICSC) for two years. Mr. Gianulias is also a licensed Real Estate Broker.

CB has in place an employee handbook that includes standards of employee conduct and that specifies prohibited conduct. The employee handbook is considered by CB satisfactory for the conduct of its business, including the management of the Partnership. However, the employee handbook does not qualify as a "code of ethics" within the meaning of Item 406 of the SEC's Regulation S-K.

The board of directors of CB does not have an audit committee; rather, the board itself oversees the accounting and financial reporting processes of the Partnership and the audits of the financial statements of the Partnership. Mr. Metzger, President and director of CB, and Ken Buckler, Chief Financial Officer of CB, in turn, on behalf of CB, oversee the establishment and implementation of CB's financial and reporting controls and procedures and the audits of the financial statements of the Partnership. While director Leggio may have the qualifications of an "audit committee financial expert" within the meaning of the SEC's Regulation S-K (Item 401(h)), because Mr. Leggio is not involved in the direct review of the audit of the financial statements of the Partnership, the board of CB has not designated Mr. Leggio as the board's "audit committee financial expert."

The Partnership does not have any officers or employees and, therefore, does not pay compensation to such persons. The Partnership's business is conducted by the Managing General Partner which is entitled under Article IV of the Partnership Agreement to receive underwriting commissions, acquisition fees, property management fees, subordinated real estate commission, share of distribution and an interest in the Partnership. The Managing General Partner's fees totaled $34,394 in 2004, consisting entirely of property management fees which are calculated as 5% of gross rental revenues collected.

In addition to the fees described above, the General Partner is entitled to reimbursement for out of pocket expenses incurred on behalf of the Partnership. Such expenses aggregated $251,408 in 2004.

The Managing General Partner contributed $1,000 to the Partnership Capital accounts, however, no securities were issued in respect thereof. No person is known to the Partnership to own beneficially more than 5% of the Units.

The Partnership agreement (see Part IV, Item 14(a)(4) Exhibits) which was executed in 1985, authorized the compensation set forth below to be paid to the Managing General Partner and to affiliates of the Managing General Partner.

During the year ended December 31, 2004, the Managing General Partner and/or its affiliate received $251,408 for reimbursement of administrative services and $34,394 for property management and administrative fees.

Summarized below is the aggregate amount of various professional fees billed by our principal accountants with respect to our last two fiscal years:

Audit fees were for the audits of the Partnership's annual financial statements, review of the financial statements included in the Partnership's quarterly reports on Form 10-Q, and other assistance required to complete the year-end audits.

Tax fees were for services rendered related to tax compliance and reporting.

All other fees were rendered for review of specific sections of the Partnership agreement as it relates to allocation of proceeds from the sale of properties.

It is the Board's policy to review and pre-approve the scope, terms, and related fees of all auditing services and permitted non-audit services provided by the auditors.

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

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Michael J. Metzger, President

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Date

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

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Michael J. Metzger

Associate General Partner;

President and Director of Capital Builders, Inc. ("CB")

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Date

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Kenneth L. Buckler

Chief Financial Officer of CB

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Date

The Partnership has not sent an annual report or proxy statements to the Limited Partners and does not intend to send a proxy statement to the Limited Partners. The Partnership will send the Limited Partners an annual report and will furnish the Commission with copies of the annual report on or before April 30, 2005.