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

                            FORM 10-Q

(Mark One)

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

For the quarterly period ended     June 30,1997                               

                     OR

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

For the transition period from                
      to                       


Commission file number          0-11210      
 


         Krupp Realty Fund, Ltd.-III


          Massachusetts                      
     04-2763323
(State or other jurisdiction of              
        (IRS employer
incorporation or organization)               
     identification no.)

470 Atlantic Avenue, Boston, Massachusetts   
               02210
(Address of principal executive offices)     
                       (Zip Code)


               (617) 423-2233
  (Registrant's telephone number, including
area code)


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      

The total number of pages in this document is
10.
<PAGE>
       PART I.  FINANCIAL INFORMATION

Item 1.  CONSOLIDATED FINANCIAL STATEMENTS

This Form 10-Q contains forward-looking
statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. 
Actual results could differ materially from
those projected in the forward-looking
statements as a result of a number of factors,
including those identified herein.

          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

                   CONSOLIDATED BALANCE SHEETS
                                      

                             ASSETS

<TABLE>
<CAPTION>
                                           June 30, December 31,
                                             1997        1996    

Multi-family apartment complexes,
  less accumulated depreciation of
  <S>                                      <C>         <C>
  $19,221,732 and $18,281,640, respectively$11,026,066 $11,505,230
Cash and cash equivalents                    546,272       468,735
Replacement reserve escrow                   145,715       110,994 
Cash restricted for tenant security deposits 198,128       183,758
Prepaid expenses and other assets            504,008       603,090
Deferred expenses, net of accumulated       
  amortization of $190,026 and $167,081,                 
  respectively                               329,558       352,503

     Total assets                        $12,749,747   $13,224,310

                LIABILITIES AND PARTNERS' DEFICIT

Liabilities:                             
  Mortgage notes payable                 $19,313,199   $19,491,853
  Accrued expenses and other
     liabilities (Note 3)                    657,234       746,878
  
     Total liabilities                    19,970,433    20,238,731

Partners' deficit (Note 2):                          
  Investor Limited Partners
   (25,000 Units outstanding)             (5,997,755)  (5,801,804)
  Original Limited Partner                  (896,776)    (888,525)
  General Partners                          (326,155)    (324,092)

     Total Partners' deficit              (7,220,686)  (7,014,421)

  Total liabilities and
  Partners' deficit                      $12,749,747  $13,224,310 

</TABLE>









             The accompanying notes are an integral
         part of the consolidated financial statements.
<PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF OPERATIONS
                                     
<TABLE>
<CAPTION>
                        
            For the Three Months             For the Six Months
              Ended June 30,                 Ended June30,    
               1997      1996                 1997        1996   


Revenue:
 <S>        <C>        <C>                   <C>        <C>
 Rental     $1,815,168 $1,628,975            3,583,363  $3,252,859
Other income    17,346     15,668               27,162      31,744
Total revenue1,832,514  1,644,643            3,610,525   3,284,603
  
Expenses:
 Operating (Note 3)502,931 472,326            1,014,049    951,831
 Maintenance       170,715 140,079              260,767    215,202
 Real estate taxes 126,325 120,958              261,166    246,883
 General and administrative                
    (Note 3)        24,829  11,966               78,596     38,023
 Management fees
         (Note 3)   89,753  81,210              175,151    160,892
 Depreciation and
    amortization   490,834 450,027              963,037    892,807
 Interest          426,671 434,476              855,339    870,778
 
 Total expenses  1,832,058 1,711,042          3,608,105  3,376,416
  

Net income (loss)$     456 $ (66,399)        $    2,420 $  (91,813)

Allocation of net income
 (loss) (Note 2):

  Investor Limited Partner
   (25,000 Units
     outstanding)      $433 $(63,079)         $   2,299   $ (87,222)

  Per Unit of Investor
   Limited Partner
    Interest           $.02 $ (2.52)          $     .09   $   (3.49)

  Original Limited
   Partner             $19  $(2,656)         $       97   $   (3,673)

  General Partners     $ 4  $ (664)          $       24   $    (918)
 
</TABLE>













             The accompanying notes are an integral
         part of the consolidated financial statements.
<PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         

<TABLE>
<CAPTION>
    For the Six Months Ended
             June 30,       
       1997          1996   
Operating activities:
<S>                                       <C>        <C>
  Net income (loss)                       $   2,420  $  (91,813)
  Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
       Depreciation and amortization        963,037     892,807
       Interest earned on replacement reserve              
          escrow                             (3,774)       -
       Changes in assets and liabilities: 
          Decrease (increase) in cash restricted 
            for tenant security deposits    (14,370)     30,102 
          Decrease in prepaid expenses and
            other assets                     99,082      76,469 
          Decrease in accrued expenses and           
            other liabilities               (89,644)    (85,761)
  
            Net cash provided by operating
               activities                   956,751     821,804
  
Investing activities:
  Additions to fixed assets                (460,928)   (346,180)
  Deposits to replacement reserve escrow    (30,947)    (30,947)
  Withdrawals from replacement reserve escrow  -         10,708  
  Increase in other investments                -       (294,435)
  Increase in accounts payable related to fixed
     asset additions                           -            830

            Net cash used in investing
               activities                  (491,875)   (660,024)
          
Financing activities:
  Distributions                            (208,685)   (208,685)
  Principal payments on mortgage notes payable
                                          (178,654)    (163,369)

            Net cash used in financing 
               activities                  (387,339)   (372,054)
  
Net increase (decrease) in cash and 
   cash equivalents                          77,537    (210,274)
     
Cash and cash equivalents, beginning of period       
                                            468,735     654,696

Cash and cash equivalents, end of period  $ 546,272  $  444,422


</TABLE>







             The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     


(1)Accounting Policies

Certain information and footnote disclosures
normally included in financial statements
prepared in accordance with generally accepted
accounting principles have been condensed or
omitted in this report on Form 10-Q pursuant
to the Rules and Regulations of the Securities
and Exchange Commission.  In the opinion of
the General Partners of Krupp Realty Fund,
Ltd.-III and Subsidiary (the "Partnership"),
the disclosures contained in this report are
adequate to make the information presented not
misleading.  See Notes to Consolidated
Financial Statements included in the
Partnership's Annual Report on Form 10-K for
the year ended December 31, 1996 for
additional information relevant to significant
accounting policies followed by the
Partnership.

In the opinion of the General Partners of the
Partnership, the accompanying unaudited
consolidated financial statements reflect all
adjustments (consisting of only normal
recurring accruals) necessary to present
fairly the Partnership's consolidated
financial position as of June 30, 1997, its
results of operations for the three and six
months ended June 30, 1997 and 1996, and its
cash flows for six months ended June 30, 1997
and 1996.  Certain prior year balances have
been reclassified to conform with current year
consolidated financial statement presentation.

The results of operations for the three and
six months ended June 30, 1997 are not
necessarily indicative of the results which
may be expected for the full year.  See
Management's Discussion and Analysis of
Financial Condition and Results of Operations
included in this report. 

(2)Summary of Changes in Partners' Deficit

A summary of changes in Partners' deficit for
the six months ended June 30, 1997 is as
follows:
<TABLE>
<CAPTION>
                      Investor    Original               Total
                       Limited    Limited     General   Partners'
                        Partners   Partner    Partners   Deficit  

    Balance at
      <S>              <C>         <C>       <C>       <C>
      December 31, 1996$(5,801,804)$(888,525)$(324,092)$(7,014,421)

    Net income            2,299         97          24       2,420 


    Distributions        (198,250)   (8,348)   (2,087)   (208,685)
 
    Balance at 
      June 30, 1997   $(5,997,755)$(896,776)$(326,155)$(7,220,686)

</TABLE>









Continued
<PAGE>
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                     


(3)Related Party Transactions

Commencing with the date of acquisition of the
Partnership's properties, the Partnership
entered into agreements under which property
management fees are paid to an affiliate of
the General Partners for services as
management agent.  Such agreements provide for
management fees payable monthly at a rate of
5% of the gross receipts from the properties
under management.  These management agreements
were sold to BRI OP Limited Partnership, a
subsidiary of Berkshire Realty Company Inc., a
publicly traded real estate investment trust
and an affiliate of the General Partners, on
February 28, 1997.  The Partnership also
reimburses affiliates of the General Partners
for certain expenses incurred in connection
with the operation of the Partnership and its
properties including accounting, computer,
insurance, travel, legal and payroll; and with
the preparation and mailing of reports and
other communications to the Limited Partners.

Amounts accrued or paid to the General
Partners or their affiliates were as follows:

<TABLE>
<CAPTION>
               For the Three Months          For the Six Months
                  Ended June 30,                     Ended June 30, 
                 1997        1996                  1997      1996 


      Property management fees
<S>         <C>           <C>                     <C>      <C>
            $ 89,753      $ 81,210                $175,151 $160,892
   
      Expense reimbursements
            42,745    50,366              93,823          97,480

      Charged to operations
          $132,498  $131,576            $268,974       $ 258,322
</TABLE>
Expense reimbursements due to affiliates of
$3,258 is included in accrued expenses and
other liabilities at June 30, 1997.  
 <PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
                                     




Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OF FINANCIAL CONDITION AND RESULTS OF
         OPERATIONS

This Management's Discussion and Analysis of
Financial Condition and Results of Operations
contains forward-looking statements including
those concerning Management's expectations
regarding the future financial performance and
future events.  These forward-looking
statements involve significant risk and
uncertainties, including those described
herein.  Actual results may differ materially
from those anticipated by such forward-looking
statements.

Liquidity and Capital Resources

The Partnership's ability to generate cash
adequate to meet its needs is dependent
primarily upon the operations of its real
estate investments.  Such ability is also
dependent upon the future availability of bank
borrowings and the potential refinancing and
sale of the Partnership's remaining real
estate investments.  These sources of
liquidity will be used by the Partnership for
payment of expenses related to real estate
operations, capital expenditures, debt service
and expenses.  Cash Flow, if any, as
calculated under Section 8.2(a) of the
Partnership Agreement, will then be available
for distribution to the Partners.

The Partnership is planning to spend
approximately $1,083,000 for capital
improvements at its properties in 1997.  In
order to fund the improvements, the
Partnership will use its existing cash
reserves, reserves for replacement and cash
flow from operations.  The Partnership
believes that the improvements are necessary
to compete in the current marketplace. 
Renovations include the replacement of
countertops, carpeting, appliances, asphalt
repairs, and both interior and exterior
building improvements.

Cash Flow

Shown below, as required by the Partnership
Agreement, is the calculation of Cash Flow of
the Partnership for the six months ended June
30, 1997.  The General Partners provide the
information below to meet requirements of the
Partnership Agreement. However, Cash Flow
should not be considered by the reader as a
substitute to net income (loss), as an
indicator of the Partnership's operating
performance or to cash flows as a measure of
liquidity. 

                                            
<TABLE>
<CAPTION>
                                             
                       
                     Rounded to $1,000

 <S>                                           <C>
 Net income for tax purposes                   $ 149,000     

 Items not requiring (requiring) the use
  of operating funds:
   Tax basis depreciation and amortization       817,000 
   Principal payments on mortgage notes payable (179,000)
   Expenditures for capital improvements        (461,000)  
   Additions to working capital reserves        (117,000)

 Cash Flow                                     $ 209,000

</TABLE>



                            Continued
<PAGE>

          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
                                     




Operations

Cash Flow, as calculated by Section 8.2(a)of
the Partnership Agreement, before additions to
working capital reserves, increased during the
six months ended June 30, 1997, as compared to 
the six months ended June 30, 1996, as the 
increase in net income, plus depreciation and 
amortization, more than offset the increase in
capital improvements.

Rental revenue during the three and six months
ended June 30, 1997 as compared to the same
periods in 1996, increased as a result of
increased rental rates and average occupancy
rates at all of the Partnership's properties. 
Occupancy rates at Brookeville Apartments averaged 
98% and 95% for the six months ended June 30, 1997 
and June 30, 1996, respectively.  At Hannibal 
Grove Apartments ("Hannibal"), occupancy rates 
averaged 99% and 93% for the six months ended June
30, 1997 and June 30, 1996, respectively.  Occupancy 
rates at Dorsey's Forge Apartments ("Dorsey's") 
averaged 99% and 92% for the six months ended 
June 30, 1997 and June 30, 1996, respectively. 

During the six months ended June 30, 1997, as
compared to the six months ended June 30,
1996, total expenses increased, primarily due to
operating expenses maintenance, general and 
administrative and depreciation expenses.  
Operating expense increased due to an increase 
in advertising and leasing expenses which resulted 
in the higher occupancy rates discussed above.  
Maintenance expense increased as landscaping, 
parking lot repairs, and interior building repairs
were completed at the Partnership's properties.  
General and administrative expense increased as a
result of legal costs related to the unsolicited 
tendor offers made to purchase Partnership Units.
Depreciation expense increased in conjunction with 
capital improvement expenditures.  













<PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

                   PART II - OTHER INFORMATION
                                      




Item 1.Legal Proceedings
                      Response:  None

Item 2.Changes in Securities
                      Response:  None

Item 3.Defaults upon Senior Securities
                      Response:  None

Item 4.Submission of Matters to a Vote of
Security Holders
                      Response:  None

Item 5.Other Information
                      Response:  None

Item 6.Exhibits and Reports on Form 8-K
                      Response:  None


































                                <PAGE>
<PAGE>
SIGNATURE



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.



                           Krupp Realty Fund,
Ltd. - III    
                                             
  (Registrant)



                      BY:/s/Wayne H. Zarozny  
            
 Wayne H. Zarozny  
                                           
                      Treasurer and Chief
                      Accounting Officer of
                      The Krupp Corporation, 
                      a General Partner

<PAGE>

DATE: August 11, 1997