UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]  Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2003
or

[ ]  Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ___________to _____________

Commission File #0-18431


Inland Land Appreciation Fund, L.P.
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code:  630-218-8000

N/A
(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No    

Indicate by a checkmark whether the registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2)    Yes     No  X 

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Balance Sheets

June 30, 2003 and December 31, 2002
(unaudited)

Assets

See accompanying notes to financial statements.

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Balance Sheets
(continued)

June 30, 2003 and December 31, 2002
(unaudited)

Liabilities and Partners' Capital

See accompanying notes to financial statements.

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Statements of Operations

For the three and six months ended June 30, 2003 and 2002
(unaudited)

See accompanying notes to financial statements.

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Statements of Operations

For the three and six months ended June 30, 2003 and 2002
(unaudited)

See accompanying notes to financial statements

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Statements of Cash Flows

For the six months ended June 30, 2003 and 2002
(unaudited)

See accompanying notes to financial statements.

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Notes to Financial Statements

June 30, 2003
(unaudited)

Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2002, which are included in the Partnership's 2002 annual report, as certain footnote disclosures which would duplicate those contained in such audited financial statements have been omitted from this report.

(1)  Organization and Basis of Accounting

Inland Land Appreciation Fund, L.P. (the "Partnership") was formed in October 1987, pursuant to the Delaware Revised Uniform Limited Partnership Act, to invest in undeveloped land on an all-cash basis and realize appreciation of such land upon resale. On October 12, 1988, the Partnership commenced an offering of 10,000 (subject to increase to 30,000) limited partnership units or units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. Inland Real Estate Investment Corporation is our general partner. The offering terminated on October 6, 1989, after the Partnership had sold 30,000 units, at $1,000 per unit, not including the general partner or the initial limited partner. All of the holders of these units have been admitted as limited partners to the Partnership. The limited partners share in their portion of benefits of ownership of the real property investments according to the number of units held. As of June 30, 2003, the Partnership has repurchased a total of 407.75 units for $359,484 from various limited partners through the unit repurchase program. Under this program limited partners may under certain circumstances have their units repurchased for an amount equal to their original capital as reduced by distributions from net sale proceeds.

Except as described in footnote (b) to Note 3 of these notes, we use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

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

In the opinion of management, the financial statements contain all the adjustments necessary to present fairly the financial position and results of operations for the periods presented herein. Results of interim periods are not necessarily indicative of results to be expected for the year.

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

June 30, 2003
(unaudited)

On January 1, 2003, the Partnership adopted FASB Interpretation No. 45 ("FIN 45") "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The adoption of FIN 45 did not have a material effect on the Partnership's financial statements.

(2)  Transactions with Affiliates

The general partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the general partner and its affiliates relating to the administration of the Partnership. Such costs are included in professional services and general and administrative expenses to affiliates, of which $6,571 and $6,242 were unpaid as of June 30, 2003 and December 31, 2002, respectively.

An affiliate of the general partner performed marketing and advertising services for the Partnership and was reimbursed (as set forth under terms of the Partnership Agreement) for direct costs. Such costs of $5,842 and $7,736 have been incurred and are included in marketing expenses to affiliates for the six months ended June 30, 2003 and 2002, respectively, all of which was paid as of June 30, 2003 and December 31, 2002.

An affiliate of the general partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the Partnership Agreement) for salaries and direct costs. The affiliate did not recognize a profit on any project. Such costs are included in investments in land, of which $0 and $10,905 was unpaid as of June 30, 2003 and December 31, 2002, respectively.

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

(3)  Investments in Land and Improvements

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

(3) Investments in Land and Improvements (continued)

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

(3) Investments in Land and Improvements (continued)

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Notes to Financial Statements

June 30, 2003
(unaudited)

(3) Investments in Land and Improvements (continued)

1. Included in the purchase agreement of Parcel 5 was a condition that required the Partnership to buy an option to purchase an additional 243 acres immediately to the west of this parcel. The Partnership sold this option in 1990.
2. The Partnership purchased from two independent third parties, two sets of three contiguous parcels of land (Parcels 6, 7 and 8; and Parcels 9, 10 and 11). The general partner believes that the total value of this land will be maximized if it is treated and marketed to buyers as six separate parcels and closed the transactions as six separate purchases to facilitate this. Parcels 6, 7 and 8 will be treated as one parcel and Parcels 9, 10 and 11 will be treated as one parcel for purposes of computing parcel capital (as defined) and distributions to the limited partners.
3. Reconciliation of investments in land and improvements owned:

The Partnership has determined that all leases relating to the farm parcels are operating leases. Accordingly, rental income is reported when earned.

As of June 30, 2003, the Partnership had farm leases of generally one year in duration, for approximately 1,348 acres of the approximately 1,555 acres owned.

(5)  Mortgage Loans Receivable

Mortgage loans receivable are the result of sales of parcels, in whole or in part. The Partnership has recorded a deferred gain on these sales. The deferred gain will be recognized over the life of the related mortgage loan receivable as principal payments are received.

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INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)

Notes to Financial Statements

June 30, 2003
(unaudited)

(6)  Notes Payable to Affiliate

On December 31, 1998, the Partnership obtained a loan from the general partner in the amount of $2,493,750 solely collateralized by Parcel 5. During 2002, the general partner advanced an additional $12,234. The note accrues interest at a rate of prime plus .5% and has a maturity date which was extended to December 29, 2003. For the six months ended June 30, 2003, interest of $63,822 was capitalized. On June 20, 2003, the Partnership paid all principal and interest outstanding on this note.

On December 6, 2000, the Partnership obtained a loan from the general partner in the amount of $1,500,000 collateralized by Parcels 17, 18 and 22. During 2002, the general partner advanced an additional $15,000. The note accrues interest at a rate of prime plus .5% and has a maturity date of November 30, 2004. For the six months ended June 30, 2003, interest of $40,210 was capitalized. As of June 30, 2003, total interest of $189,490 remained unpaid.

On September 17, 2002, the Partnership obtained a loan from the general partner in the amount of $1,600,000, collateralized by Parcels 4, 6 and 7. The note accrues interest at a rate of prime plus .5% and has a maturity date of September 17, 2005. For the six months ended June 30, 2003, interest of $37,896 was capitalized. As of June 30, 2003, total interest of $57,962 remained unpaid.

On July 15, 2003, the Partnership sold an additional lot of Parcel 4 for approximately $260,000 and recorded a gain of approximately $7,000.

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

Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, the ability to obtain annexation and zoning approvals required to develop our properties; the approval of local governing bodies to develop our properties; successful lobbying of local "no growth" or limited development homeowner groups; adverse changes in real estate, financing and general economic or local conditions; eminent domain proceedings; changes in the environmental conditi ons or changes in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner.

Critical Accounting Policies

On December 12, 2001, the Securities and Exchange Commission issued Financial Reporting Release ("FRR") No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies." A critical accounting policy is one that would materially effect our operations or financial condition, and requires management to make estimates or judgements in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and mortgage loans receivable and revenue recognition. These judgements often result from the need to make estimates about the effect of matters that are inherently uncertain. The purpose of the FRR is to provide stockholders with an understanding of how management forms these policies. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America ("GAAP"). GAAP requires informatio n in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgements known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value. If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected capital expenditures and sales prices. The aforementioned factors are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole. Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property.

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Cost Allocation - We use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

Valuation of Mortgage Loans Receivable - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each mortgage loan receivable does not exceed its estimated fair value. If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

In determining the value of mortgage loans receivable, management considers projected sales proceeds available and expenses related to the property associated with the mortgage. Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.

The valuation and possible subsequent allowance for doubtful accounts is a significant estimate that can and does change based on management's continuous process of analyzing each mortgage loan receivable.

Revenue Recognition - We recognize income from the sale of land parcels in accordance with Statement of Financial Standards No. 66, "Accounting for Sales of Real Estate".

Liquidity and Capital Resources

On October 12, 1988, we commenced an offering of 10,000 (subject to increase to 30,000) limited partnership units or units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. On October 6, 1989, the offering terminated after we had sold 30,000 units at $1,000 per unit resulting in $30,000,000 in gross offering proceeds, which does not include the capital contribution made by the initial limited partner and the general partner. All of the holders of these units have been admitted as limited partners to our partnership. Our limited partners share in their portion of benefits of ownership of our real property investments according to the number of units held. As of June 30, 2003, we repurchased a total of 407.75 units for $359,484 from various limited partners through the unit repurchase program. Under this program limited partners may under certain circumstances have their units repurchased for an amount equal to their original capital as reduced by distributions from net s ale proceeds.

We used $25,187,069 of gross offering proceeds to purchase on an all-cash basis twenty-five parcels of undeveloped land and an option to purchase undeveloped land. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties. We purchased fourteen of the parcels during 1989 and eleven during 1990. As of June 30, 2003, we have had multiple sales transactions, through which we have disposed of approximately 1,547 acres of the approximately 3,102 acres originally owned, or approximately 50%. As of June 30, 2003, cumulative distributions to the limited partners have totaled $15,105,323 (which represents a return of original capital) and $153,743 to the general partner. Through June 30, 2003, we have used $16,836,989 of working capital reserve for rezoning and other activities. These amounts have been capitalized and are included in investments in land.

Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of June 30, 2003, we own, in whole or in part, fourteen of our twenty-five original parcels, the majority of which are leased to local farmers and are generating sufficient cash flow from farm leases to cover property taxes, insurance and other miscellaneous property expenses.

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At June 30, 2003, we had cash and cash equivalents of approximately $9,720,000, of which approximately $44,000 is reserved for the repurchase of units through the unit repurchase program. The remaining approximately $9,676,000 is available to be used for our costs and liabilities, cash distributions to partners and other costs and expenses associated with owning our land parcels. We plan to maximize our land sales effort in anticipation of rising land values.

We plan to enhance the value of our land through pre-development activities such as rezoning annexation and land planning. We have already been successful in, or are in the process of, pre-development activity on a majority of our land investments. Parcels 4, 6 and 7 have completed two phases of improvements for an industrial park and sites are being marketed. Parcel 16 has been zoned with development and sales marketing underway. Parcel 12 was annexed and zoned during 2002 and marketing has begun. Zoning discussions have begun on Parcel 12, 17, 18 and 22.

Transactions with Related Parties

Our general partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the general partner and its affiliates relating to our administration. Such costs are included in professional services and general and administrative expenses to affiliates, of which $6,571 and $6,242 were unpaid as of June 30, 2003 and December 31, 2002, respectively.

An affiliate of our general partner performed marketing and advertising services for us and was reimbursed for direct costs. Such costs of $5,842, and $7,736 have been incurred and are included in marketing expenses to affiliates for the six months ended June 30, 2003 and 2002, respectively, all of which was paid as of June 30, 2003 and December 31, 2002.

An affiliate of our general partner performed property upgrades, rezoning, annexation and other activities to prepare our parcels for sale and was reimbursed for salaries and direct costs. As we paid the affiliate its actual costs, the affiliate did not recognize a profit on any project. Such costs are included in investments in land, of which $0 and $10,905 was unpaid at June 30, 2003 and December 31, 2002, respectively.

On December 31, 1998, we obtained a loan from our general partner in the amount of $2,493,750 solely collateralized by Parcel 5. During 2002, our general partner advanced an additional $12,234. The note accrues interest at a rate of prime plus .5% and has a maturity date which was extended to December 29, 2003. For the six months ended June 30, 2003, interest of $63,822 was capitalized, all of which was unpaid as of March 31, 2003. On June 20, 2003, the Partnership paid all principal and interest outstanding on this note.

On December 6, 2000, we obtained a loan from our general partner in the amount of $1,500,000 collateralized by Parcels 17, 18 and 22. During 2002, our general partner advanced an additional $15,000. The note accrues interest at a rate of prime plus .5% and has a maturity date of November 30, 2004. For the six months ended June 30, 2003, interest of $40,210 was capitalized, all of which was unpaid as of June 30, 2003.

On September 17, 2002, we obtained a loan from our general partner in the amount of $1,600,000, collateralized by Parcels 4, 6 and 7. The note accrues interest at a rate of prime plus .5% and has a maturity date of September 17, 2005. For the six months ended June 30, 2003, interest of $37,896 was capitalized, all of which was unpaid as of June 30, 2003.

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Results of Operations

As of June 30, 2003, we owned fourteen parcels of land consisting of approximately 1,555 acres. Of the 1,555 acres owned, approximately 1,348 acres, or approximately 87%, were tillable and leased to local farmers and were generating sufficient cash flow to cover property taxes, insurance and other miscellaneous expenses for all parcels.

Income from the sale of investment in land and improvements of $12,142,690 and the cost of land sold of $3,798,442 for the six months ended June 30, 2003 was the result of the sale of the remaining 372 acres of Parcel 5 and 28 acres of Parcel 16. Income from the sale of investment in land and improvements of $181,703 and the cost of land sold of $97,803 for the six months ended June 30, 2002 was the result of the sale of approximately two acres of Parcel 4.

Rental income was $120,548, and $137,158 for the six months ended June 30, 2003 and 2002, respectively This decrease was due to fewer acres being farmed as a result of sales.

Professional services to affiliates were $14,535 and $21,646 for the six months ended June 30, 2003 and 2002, respectively. This decrease was due to a decrease in legal services partially offset by an increase in accounting fees.

Professional expenses to non-affiliates were $34,321 and $29,715 for the six months ended June 30, 2003 and 2002, respectively. This increase was due to an increase in legal and accounting services.

General and administrative expenses to Affiliates were $11,954 an $9,918 for the six months ended June 30, 2003 and 2002, respectively. This increase was due to an increase in investor services and data processing expenses.

Marketing expenses to non-affiliates were $21,531 and $76,824 for the six months ended June 30, 2003 and 2002, respectively. This decease was due to a decrease in marketing, advertising and travel expenses relating to marketing the land portfolio to prospective purchasers.

Land operating expenses to non-affiliates were $28,858 and $23,186 for the six months ended June 30, 2003 and 2002, respectively. This increase was due to an increase in real estate taxes.

We determined that the maximum value of Parcels 1, 15, 21 and 23 could be realized if the parcels were developed and sold as individual lots. However, if we developed and sold individual lots directly to buyers, we could be deemed a dealer of real estate and our limited partners could be subject to unrelated business taxable income. Therefore, we sold the parcels to a third party developer whereby a significant portion of the sales price was represented by notes receivable from the buyer. These transactions were deemed installment sales. The velocity of the developer's individual lot sales was slower than the developer originally projected and consequently, the developer's carrying costs were higher. As a result of the development's financial difficulties, the net sale proceeds available to us are lower than projected. As of December 31, 2002, we had recorded an allowance for doubtful accounts of $767,248 relating to the accrued interest receivable on mortgage loans resulting from the sale of these parcels. Through continued monitoring and reevaluation, we learned that the carrying costs to develop the parcels have increased due to delays in development and sales velocity and sales proceeds appear lower than originally forecasted. We had a meeting with management in early August 2003, where we reviewed recent forecasts on these parcels, and determined that the collectibility of these receivables was uncertain. As a result, management has elected to reserve an additional $2,302,787 of principal and accrued interest relating to the mortgages receivable as of June 30, 2003. The deferred gain of $242,368 relating to the mortgage loans receivable was also written off against bad debt expense as of June 30, 2003.

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Item 3: Quantitative and Qualitative Disclosures about Market Risks

Not Applicable.

Item 4: Controls and Procedures

Within 90 days prior to the filing date of this report, the General Partner conducted, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information that is required to be disclosed in the periodic reports that we must file with the Securities and Exchange Commission.

There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART II - Other Information

Items 1 through 5 are omitted because of the absence of conditions under which they are required.

Item 6: Exhibits and Reports on Form 8-K

(a)  Exhibits:

     31.1 Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer

     31.2 Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer

     32.1 Section 1350 Certification by Chief Executive Officer

     32.2 Section 1350 Certification by Chief Financial Officer

(b)  Reports on Form 8-K:

      None

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Pursuant to the requirements 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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