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


                                    FORM 10-K

(Mark One)

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

For the fiscal year ended March 31, 2007

                                       OR

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


                         COMMISSION FILE NUMBER 0-24650

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
             (Exact name of registrant as specified in its charter)


                    Delaware                                      13-3746339
------------------------------------------------             -------------------
(State or other jurisdiction of incorporation or               (I.R.S. Employer
                 organization)                               Identification No.)

     625 Madison Avenue, New York, New York                         10022
------------------------------------------------             -------------------
    (Address of principal executive offices)                      (Zip Code)


Registrant's telephone number, including area code (212) 317-5700

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

     None

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

     Limited Partnership Interests and Beneficial Assignment Certificates

     (Title of Class)

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

     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 check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

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

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

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

     The  approximate  aggregate book value of the voting and non-voting  common
equity held by  non-affiliates  of the  Registrant  as of September 30, 2006 was
$7,667,000, based on Limited Partner equity as of such date.


                       DOCUMENTS INCORPORATED BY REFERENCE

     None

<PAGE>


                                     PART I


Item 1.  Business

General
-------

Independence  Tax  Credit  Plus  L.P.  III  (the  "Partnership")  is  a  limited
partnership which was formed under the laws of the State of Delaware on December
23,  1993.  The  general  partner of the  Partnership  is  Related  Independence
Associates III L.P., a Delaware limited partnership (the "General Partner"). The
general  partner of the General Partner is Related  Independence  Associates III
Inc., a Delaware  corporation  ("RIAI III").  The ultimate parent of the General
Partner is Centerline  Holding Company  ("Centerline")  (which had been known as
CharterMac until April 2007).

On March 15, 2007,  Centerline  announced  the  retirement  of Alan P. Hirmes as
Chief Financial  Officer of Centerline.  Upon his  retirement,  he also resigned
from his  position as Director,  President,  Chief  Executive  Officer and Chief
Financial  Officer  of RIAI III.  Centerline  has named  Robert L. Levy as Chief
Financial  Officer and Andrew J. Weil as Chief Executive  Officer to replace Mr.
Hirmes.

On June 7, 1994, the Partnership commenced a public offering (the "Offering") of
Beneficial Assignment Certificates ("BACs") representing  assignments of limited
partnership  interests in the  Partnership  ("Limited  Partnership  Interests"),
managed by Related Equities  Corporation (the "Dealer  Manager"),  pursuant to a
prospectus dated June 7, 1994 (the "Prospectus").

As of the  termination  of the  offering  on May 9, 1995,  the  Partnership  had
received  $43,440,000 of gross  proceeds of the Offering (the "Gross  Proceeds")
from 2,810 investors ("BACs  holders").  (See Item 8, "Financial  Statements and
Supplementary Data," Note 1).

The  Partnership's   business  is  to  invest  in  other  partnerships   ("Local
Partnerships,"  "subsidiaries"  or "subsidiary  partnerships")  owning leveraged
apartment  complexes  ("Apartment  Complexes" or "Properties") that are eligible
for the low-income  housing tax credit ("Tax Credit")  enacted in the Tax Reform
Act of 1986, some of which may also be eligible for the historic  rehabilitation
tax credit ("Historic Tax Credit").  The Partnership's  investment in each Local
Partnership represents from 98.99% to 99.98%, other than two Local Partnerships.
The  Partnership's  investment in New Zion represents  42.39% of the partnership
interests  in the Local  Partnership  (the other  57.59% of limited  partnership
interests is owned by affiliates of the Partnership,  with the same management).
The  Partnership's   investment  in  Brannon  Group  represents  53.85%  of  the
partnership  interests  in the Local  Partnership  (the other  46.14% of limited
partnership  interests is owned by affiliates of the Partnership,  with the same
management).  As of March 31, 2007, the  Partnership  had acquired  interests in
twenty  Local  Partnerships.  As of March 31,  2007,  approximately  $35,051,000
(including   approximately  $2,953,000  classified  as  a  loan  repayable  from
sale/refinancing proceeds in accordance with the contribution agreement with one
Local Partnership and including acquisition fees of approximately $2,510,000) of
the net  proceeds of the Offering has been  invested in Local  Partnerships,  of
which approximately $135,000 remains to be contributed to the Local Partnerships
for  payment  by them  to the  original  sellers  of the  Properties  (including
approximately  $130,000  being held in escrow),  as certain  benchmarks  such as
occupancy  levels  must be  attained  prior to the  release of such  funds.  The
Partnership   does  not  intend  to  acquire   interests  in  additional   Local
Partnerships.

Investment Objectives/General Incentives
----------------------------------------

The Partnership was formed to invest in low-income  Apartment Complexes that are
eligible  for  the Tax  Credit  enacted  in the Tax  Reform  Act of  1986.  Some
Apartment  Complexes  may also be eligible for  Historic Tax Credits  ("Historic
Complexes" or  "Properties").  The investment  objectives of the Partnership are
described below.

1.  Entitle  qualified  BACs  holders  to Tax  Credits  over the  period  of the
Partnership's entitlement to claim Tax Credits (for each Property, generally ten
years from the date of investment or, if later,  the date the Property is leased
to qualified tenants; referred to herein as the "Credit Period") with respect to
each Apartment Complex.

2. Preserve and protect the Partnership's capital.

3.  Participate in any capital  appreciation  in the value of the Properties and
provide  distributions  of sale or refinancing  proceeds upon the disposition of
the Properties.

4. Allocate  passive losses to individual  BACs holders to offset passive income
that they may realize  from rental real  estate  investments  and other  passive
activities,  and allocate  passive  losses to  corporate  BACs holders to offset
business income.

One of the Partnership's  objectives is to entitle qualified BACs holders to Tax
Credits  over the Credit  Period.  Each of the Local  Partnerships  in which the
Partnership  has acquired an interest has been  allocated by the relevant  state
credit  agencies the authority to recognize Tax Credits during the Credit Period
provided  that the Local  Partnership  satisfies the rent  restriction,  minimum
set-aside and other requirements for recognition of the Tax Credits at all times
during such period.  Once a Local  Partnership  has become eligible to recognize
Tax Credits,  it may lose such eligibility and suffer an event of "recapture" if
its Property  fails to remain in  compliance  with the Tax Credit  requirements.
None of the Local Partnerships in which the Partnership has acquired an interest
has suffered an event of recapture.

Tax  Credits  with  respect to a given  Apartment  Complex are  available  for a
ten-year period that commences when the property is leased to qualified tenants.
However,  the annual Tax Credits  available  in the year in which the  Apartment
Complex is leased to qualified  tenants  must be prorated  based upon the months
remaining in the year. The amount of the annual Tax Credits not available in the
first year will be available in the eleventh year. Internal Revenue Code Section
42 regulates  the use of the Apartment  Complexes as to occupancy,  eligibility,
and unit gross rent, among other requirements.  Each Apartment Complex must meet
the provisions of these  regulations  during each of fifteen  consecutive  years
(the  "Compliance  Period") in order to remain qualified to receive the credits.
Certain  Apartment  Complexes  have extended  compliance  periods of up to fifty
years. The Partnership  generated  $3,164,434,  $4,614,216 and $5,580,448 in Tax
Credits during the years ending December 31, 2006, 2005 and 2004, respectively.

                                       2
<PAGE>

Tax Credits are attached to a Local  Partnership  for the ten-year Credit Period
and are  transferable  with the Property  during the  entirety of such  ten-year
period.  If trends in the real estate  market  warranted the sale of a Property,
the remaining Tax Credits would transfer to the new owner,  thereby adding value
to the Property on the market. However, such value declines each year and is not
included in the financial  statement  carrying  amount.  The Credit  Periods are
scheduled to expire at various times from December 31, 2004 through December 31,
2009 with  respect  to the Local  Partnerships  depending  upon when the  Credit
Period commenced.

A loss on  impairment of assets is recorded when  management  estimates  amounts
recoverable   through  future   operations  and  sale  of  the  Property  on  an
undiscounted  basis  are  below  depreciated  cost.  At that  time the  Property
investments  themselves are reduced to estimated fair value (generally using the
discounted cash flow valuation method).  Through March 31, 2007, the Partnership
has  recorded  approximately  $1,403,000  as a loss on  impairment  of assets or
reduction to estimated fair value for one Local Partnership.

While the value of the  remaining Tax Credits are a factor in  calculating  fair
value,  the expiration of the Credit Period,  in and of itself,  is not the only
factor in determining whether there is an impairment and generally does not have
any adverse impact on the fair value of the Local Partnerships.

There can be no  assurance  that the  Partnership  will  achieve its  investment
objectives as described above.

The  Partnership  is subject to the risks  incident to potential  losses arising
from the management and ownership of improved real estate.  The  Partnership can
also be affected by poor economic  conditions  generally;  however, no more than
35%  of the  Properties  are  located  in  any  single  state.  There  are  also
substantial  risks associated with owning  interests in properties,  as does the
Partnership,  which receive government  assistance,  for example the possibility
that Congress may not appropriate  funds to enable the Department of Housing and
Urban Development ("HUD") to make rental assistance payments. HUD also restricts
annual  cash  distributions  to  partners  based  on  operating  results  and  a
percentage of the owner's equity  contribution.  The Partnership  cannot sell or
substantially  liquidate its investments in subsidiary  partnerships  during the
period that the subsidy  agreements  are in existence  without  HUD's  approval.
Furthermore,  there may not be market demand for apartments at full market rents
when the rental assistance contracts expire.

Segments
--------

The Partnership operates in one segment, which is the investment in multi-family
residential  property.  Financial information about this segment is set forth in
Item 8 hereto.

Competition
-----------

The real estate  business is highly  competitive  and  substantially  all of the
Properties  acquired by the Partnership are expected to have active  competition
from similar  properties in their respective  vicinities.  In addition,  various
other limited  partnerships have, in the past, and may, in the future, be formed
by the General  Partner and/or its affiliates to engage in businesses  which may
be competitive with the Partnership.

Employees
---------

The Partnership does not have any direct  employees.  All services are performed
for the  Partnership  by the  General  Partner and its  affiliates.  The General
Partner receives compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partner and
certain  of  its  affiliates  for  expenses  incurred  in  connection  with  the
performance  by their  employees of services for the  Partnership  in accordance
with the  Partnership's  Amended and Restated  Agreement of Limited  Partnership
(the "Partnership Agreement").

Item 1A.  Risk Factors

The Partnership's  investment as a limited partner in the Local  Partnerships is
subject to the risks of potential  losses arising from  management and ownership
of improved real estate.  The Partnership's  investments also could be adversely
affected by poor economic  conditions  generally,  which could increase  vacancy
levels and rental payment defaults,  and by increased operating expenses, any or
all of which could threaten the financing  viability of one or more of the Local
Partnerships.

There also are  substantial  risks  associated  with the  operation of Apartment
Complexes   receiving   government   assistance.   These  include   governmental
regulations  concerning tenant eligibility,  which may make it more difficult to
rent apartments in the Apartment Complexes; difficulties in obtaining government
approval for rent  increases;  limitations on the percentage of income which low
and  moderate-income  tenants may pay as rent; the possibility that Congress may
not appropriate  funds to enable HUD to make the rental  assistance  payments it
has contracted to make; and that when the rental  assistance  contracts  expire,
there may not be market  demand for  apartments  at full market rents in a Local
Partnership's Apartment Complex.

Item 1B.  Unresolved Staff Comments

None

                                       3
<PAGE>

Item 2.  Properties

The Partnership is subject to the risks  incidental to potential  losses arising
from the management and ownership of improved real estate.  The  Partnership can
also be  affected  by poor  economic  conditions.  As of  March  31,  2007,  the
Partnership had acquired an interest in twenty Local Partnerships,  all of which
have been consolidated for accounting  purposes.  Except for the interest in New
Zion  Apartments,  L.P.  ("New  Zion") and the  Brannon  Group,  L.C.  ("Brannon
Group"),  the  Partnership's  investment  in each Local  Partnership  represents
98.99% or 99.98% of the  partnership  interests  in the Local  Partnership.  The
Partnership's  investment  in New  Zion  represents  42.39%  of the  partnership
interests  in the Local  Partnership  (the other  57.59% of limited  partnership
interests is owned by affiliates of the Partnership,  with the same management).
The  Partnership's   investment  in  Brannon  Group  represents  53.85%  of  the
partnership  interests  in the Local  Partnership  (the other  46.14% of limited
partnership  interests is owned by affiliates of the Partnership,  with the same
management).  Set forth below is a schedule of the Local Partnerships  including
certain information  concerning their respective Apartment Complexes (the "Local
Partnership Schedule").  Further information concerning these Local Partnerships
and their Properties,  including any encumbrances affecting the Properties,  may
be found in Schedule III to the financial statements which are included herein.

                                       4
<PAGE>

                           Local Partnership Schedule
                           --------------------------
<TABLE>
<CAPTION>

                                                                   % of Units Occupied at May 1,
            Name and Location                    ------------------------------------------------------------------
            (Number of Units)                    Date Acquired       2007      2006      2005      2004      2003
------------------------------------------------ ---------------  --------- --------- --------- --------- ---------
<S>                                               <C>               <C>       <C>       <C>       <C>       <C>
Edward Hotel Limited Partnership
 Los Angeles, CA (47)                             November 1994      87%       93%       94%       96%       91%

Pacific-East L.P.
 Brooklyn, NY (39)                                December 1994      92%       92%      100%      100%       98%

Overtown Development Group, Ltd.
 Miami, FL (65)                                   December 1994      85%       97%       83%       72%       82%

Sumpter Commons Associates, L.P.
 Brooklyn, NY (21)                                   April 1995     100%      100%      100%      100%      100%

Park Housing Limited Partnership
 Hartford, CT  (30)                                    May 1995      90%       97%       97%       97%       93%

Livingston Manor Urban Renewal Associates, L.P.
 New Brunswick, NJ (50)                               June 1995     100%      100%       96%      100%       98%

Jefferis Square Housing Partnership L.P.
 Chester, PA (36)                                     June 1995     100%      100%       97%      100%      100%

2301 First Avenue Limited Partnership
 New York, NY (92)                                  August 1995      99%       97%      100%       98%       99%

Lewis Street L.P.
 Buffalo, NY (32)                                  October 1995      88%      100%       88%       84%      100%

Savannah Park Housing Limited Partnership
 Washington, DC  (64)                              October 1995      97%       97%       95%       89%       75%

Brannon Group, L.C.
 Leisure City, FL (80)                            December 1995      98%       94%       94%       96%       96%

Mansion Court Phase II Venture
 Philadelphia, PA (19)                            December 1995      53%       74%       79%      100%       95%

Primm Place Partners, L.P.
 St. Louis, MI (128)                              December 1995      98%       97%       95%       99%       96%

BK-9-A Partners L.P.
 Brooklyn, NY (23)                                December 1995     100%       96%      100%      100%       96%

BK-10K Partners L.P.
 Brooklyn, NY (21)                                December 1995     100%      100%       96%      100%       95%

Aspen-Olive Associates
 Philadelphia, PA (22)                             October 1996      95%      100%      100%      100%      100%

West Mill Creek Associates III L.P.
 Philadelphia, PA (72)                             January 1997     100%       99%       99%       99%       99%

Universal Court Associates
 Philadelphia, PA (32)                               April 1997     100%      100%      100%       88%       97%

New Zion Apartments
 Shreveport, LA (100)                             November 1997     100%      100%       94%       96%       95%

Dreitzer House
 New York, NY (32)                                December 1997      99%      100%       95%      100%      100%
</TABLE>

All leases are  generally  for periods not greater  than one to two years and no
tenant occupies more than 10% of the total rentable square footage in any single
Apartment Complex.

                                       5
<PAGE>

Commercial  tenants (to which average  rental per square foot applies)  comprise
less than 5% of the rental  revenues of the  Partnership.  Maximum rents for the
residential units are determined annually by HUD and reflect increases/decreases
in  consumer  price  indices in various  geographic  areas.  Market  conditions,
however, determine the amount of rent actually charged.

Management  continuously  reviews  the  physical  state  of the  Properties  and
suggests to the respective  general partners of the Local  Partnerships  ("Local
General Partners") budget improvements which are generally funded from cash flow
from  operations  or  release  of  replacement  reserve  escrows  to the  extent
available.

Management  continuously  reviews the insurance  coverage of the  Properties and
believes such coverage is adequate.

See Item 1, Business,  above for the general competitive conditions to which the
Properties described above are subject.

Real estate taxes are calculated using rates and assessed valuations  determined
by the  township  or city in which the  Property  is  located.  Such  taxes have
approximated 1% of the aggregate cost of the Properties as shown in Schedule III
to the financial statements included herein.

In connection with investments in  development-stage  Apartment  Complexes,  the
General  Partner  generally  required  that the Local General  Partners  provide
completion guarantees and/or undertake to repurchase the Partnership's  interest
in the Local  Partnership if  construction or  rehabilitation  was not completed
substantially  on time or on  budget  ("Development  Deficit  Guarantees").  The
Development Deficit Guarantees generally also required the Local General Partner
to provide  any funds  necessary  to cover net  operating  deficits of the Local
Partnership  until such time as the  Apartment  Complex had achieved  break-even
operations.  The  General  Partner  generally  required  that the Local  General
Partners  undertake  an  obligation  to fund  operating  deficits  of the  Local
Partnership  (up to a stated  maximum  amount)  during a limited  period of time
(typically  three  to  five  years)  following  the  achievement  of  break-even
operations  ("Operating  Deficit  Guarantees").  As of March 31, 2007, the gross
amount of the Operating Deficit Guarantees aggregate  approximately  $5,487,000,
all of which have expired.  Management does not expect that expiration to have a
material  impact on liquidity,  based on prior years'  fundings.  Amounts funded
under such  agreements are treated as noninterest  bearing loans,  which will be
paid  only out of 50% of  available  cash flow or out of  available  net sale or
refinancing  proceeds.  In some instances,  the Local General Partners have been
required to undertake an obligation to comply with a Rent-Up Guaranty Agreement,
whereby  the Local  General  Partner  has  agreed to pay  liquidated  damages if
predetermined occupancy rates are not achieved.  These payments are made without
right  of  repayment.   In  cases  where  the  General  Partner  has  deemed  it
appropriate,  the  obligations of a Local General  Partner under the Development
Deficit,  Operating  Deficit  and/or  Rent-Up  Guarantees  have been  secured by
letters of credit and/or cash escrow deposits.

Tax  Credits  with  respect to a given  Apartment  Complex are  available  for a
ten-year period that commences when the property is leased to qualified tenants.
However,  the annual Tax Credits  available  in the year in which the  Apartment
Complex is leased must be prorated based upon the number of months  remaining in
the year.  The amount of the annual Tax Credit not  available  in the first year
will be  available in the  eleventh  year.  In certain  cases,  the  Partnership
acquired its interest in a Local  Partnership  after the Local  Partnership  had
placed its Apartment Complex in service.  In these cases, the Partnership may be
allocated Tax Credits only  beginning in the month  following the month in which
it acquired its  interest and Tax Credits  allocated in any prior period are not
available to the Partnership.

Item 3.  Legal Proceedings

None

Item 4.  Submission of Matters to a Vote of Security Holders

None

                                       6
<PAGE>

                                     PART II


Item 5. Market for Registrant's  Common Equity,  Related Security Holder Matters
and Issuer Purchases of Equity Securities

As of March 31, 2007, the Partnership had issued and outstanding  43,440 Limited
Partnership  Interests,  each representing a $1,000 capital  contribution to the
Partnership,  or an aggregate  capital  contribution of $43,440,000.  All of the
issued  and  outstanding  Limited  Partnership  Interests  have  been  issued to
Independence  Assignor Inc. (the "Assignor Limited Partner"),  which has in turn
issued 43,440 BACs to the purchasers  thereof for an aggregate purchase price of
$43,440,000.  Each BAC  represents  all of the economic and virtually all of the
ownership  rights  attributable  to a Limited  Partnership  Interest held by the
Assignor  Limited  Partner.  BACs  may be  converted  into  Limited  Partnership
Interests at no cost to the holder (other than the payment of transfer costs not
to  exceed  $100),  but  Limited  Partnership  Interests  so  acquired  are  not
thereafter convertible into BACs.

Neither  the  BACs nor the  Limited  Partnership  Interests  are  traded  on any
established  trading market. The Partnership does not intend to include the BACs
for  quotation  on NASDAQ or for  listing  on any  national  or  regional  stock
exchange or any other  established  securities  market.  The Revenue Act of 1987
contained  provisions  which have an adverse  impact on  investors  in "publicly
traded  partnerships."  Accordingly,  the General  Partner  has imposed  limited
restrictions  on the  transferability  of the BACs and the  Limited  Partnership
Interests in secondary market  transactions.  Implementation of the restrictions
should prevent a public trading market from developing and may adversely  affect
the ability of an investor to liquidate  his or her  investment  quickly.  It is
expected that these  procedures  will remain in effect until such time, if ever,
as further  revision of the Revenue  Act of 1987 may permit the  Partnership  to
lessen the scope of the restrictions.

As of May 25, 2007, the Partnership has approximately  2,557 registered  holders
of an aggregate of 43,440 BACs.

All  of  the  Partnership's  general  partnership  interests,   representing  an
aggregate capital contribution of $1,000, are held by the General Partner.

There are no material legal  restrictions  in the  Partnership  Agreement on the
ability of the Partnership to make distributions.  However,  the Partnership has
made no  distributions to the BACs holders as of March 31, 2007. The Partnership
does not anticipate  providing cash distributions to its BACs holders other than
from net refinancing or sales proceeds.


Transfer Procedures
-------------------
The Partnership  from time to time receives  requests by unit holders and others
to transfer BACs and/or Limited Partnership  Interests.  Such requests may occur
in connection  with tender  offers for the  Partnership's  units.  Such requests
implicate  the  Partnership's   policies  and  procedures  concerning  transfers
generally and tender offers in particular, which were adopted by the Partnership
pursuant to the terms of its Partnership  Agreement,  to ensure  compliance with
applicable  law,  avoid adverse tax  consequences  for the  Partnership  and its
investors, and preserve the Partnership's advantageous tax status.

In prior years,  the  Partnership  relied on the 5% safe harbor  established  by
Internal Revenue Service ("IRS")  regulations to avoid being  characterized as a
"publicly-traded  partnership"  that  is  taxed  as a  corporation.  The 5% safe
harbor,  however,  expired and is no longer  available  as of December 31, 2005.
Accordingly,  the  Partnership  now relies on a 2% safe  harbor  established  by
another  IRS  regulation  to avoid  being  characterized  as a  "publicly-traded
partnership" that is taxed as a corporation.

A brief  summary of certain of the  Partnership's  key  policies,  practices and
requirements with respect to transfers and tender offers is as follows:

     o    No transfer  (whether for  substitution,  assignment  or otherwise) is
          effective  or  binding  on the  Partnership  unless  and  until  it is
          approved by the General Partner.

     o    No transfer  will be approved  unless the  transferor  and  transferee
          submit complete and properly  executed forms of the  Partnership's own
          transfer  documentation.  The  Partnership  does not  accept  forms of
          transfer  documentation  other  than  its  own  and  does  not  accept
          signatures made by power of attorney in lieu of original signatures by
          each of the transferors and transferees.

     o    The  Partnership  will not approve  transfers  that in the  cumulative
          aggregate  for any tax year  exceed the IRS 2% safe  harbor,  unless a
          financially  responsible  person  provides  the  Partnership  and  its
          partners  with (i) an  indemnity  (in form and  substance  in all ways
          acceptable  to the  General  Partner)  for all  liability  (including,
          without  limitation,  any adverse tax  consequences)  arising  from or
          relating to exceeding  the 2% safe harbor and (ii) a legal opinion (in
          form and substance in all ways acceptable to the General Partner) that
          there will be no adverse tax  consequences  to the Partnership and its
          partners from exceeding the 2% safe harbor.

     o    In order to avoid  the  undesirable  situation  of one or more  tender
          offers  consuming the entire safe harbor  limitation  early in the tax
          year  and  leaving  the  Partnership's  remaining  investors  with  no
          liquidity  opportunity  for the rest of that tax year, the Partnership
          restricts the cumulative aggregate total of transfers made pursuant to
          all tender offers to 1.5% of its  outstanding  units in each tax year,
          unless a financially  responsible  person conducting such tender offer
          provides  the  Partnership  with an  acceptable  indemnity  and  legal
          opinion of the type described  above. At the end of each tax year, the
          General  Partner,  in its discretion,  may allow the cumulative  total
          number of transfers  (including those by tender offer) to reach the 2%
          safe harbor limit.

     o    The  Partnership  requires  that all  tender  offers  for its units be
          conducted in accordance  with all applicable  law  including,  without
          limitation, the federal securities laws.

The foregoing is solely a summary of the  Partnership's  policies,  requirements
and  practices  with  respect to  transfers  and tender  offers.  More  complete
information,  including  a copy  of  the  Partnership's  transfer  documentation
package, may be obtained from the Partnership.

                                       7
<PAGE>


Item 6. Selected Financial Data

The  information  set  forth  below  presents  selected  financial  data  of the
Partnership.  Additional  financial  information  is set  forth  in the  audited
financial statements in Item 8 hereof.
<TABLE>
<CAPTION>
                                                                Years Ended March 31,
                                    -----------------------------------------------------------------------------
           OPERATIONS                    2007            2006            2005             2004           2003
---------------------------------   -------------   -------------   --------------   -------------   ------------
<S>                                 <C>             <C>             <C>              <C>             <C>
Revenues                            $   7,434,044   $   7,238,487   $    7,021,653   $   6,719,811   $  6,408,871

Operating expenses                    (12,361,897)    (11,004,640)     (10,353,250)    (10,014,054)    (9,886,082)
                                    -------------   -------------   --------------   -------------   ------------

Net loss before minority interest      (4,927,853)     (3,766,153)      (3,331,597)     (3,294,243)    (3,477,211)

Minority interest in loss of
 subsidiary partnerships                  246,896         294,378           92,458         281,138        293,278
                                    -------------   -------------   --------------   -------------   ------------

Net loss                            $  (4,680,957)  $  (3,471,775)  $   (3,239,139)  $  (3,013,105)  $ (3,183,933)
                                    =============   =============   ==============   =============   ============

Net loss per weighted average BAC   $     (106.68)  $      (79.12)  $       (73.82)  $      (68.67)  $     (72.56)
                                    =============   =============   ==============   =============   ============

<CAPTION>
                                                                      March 31,
                                    -----------------------------------------------------------------------------
        FINANCIAL POSITION               2007            2006            2005             2004           2003
---------------------------------   -------------   -------------   --------------   -------------   ------------
<S>                                 <C>             <C>             <C>              <C>             <C>
Total assets                        $  65,211,163   $  69,137,318   $   71,114,696   $  73,610,412   $ 76,223,243
                                    =============   =============   ==============   =============   ============

Total liabilities                   $  60,631,085   $  59,556,355   $   56,498,597   $  55,499,430   $ 54,524,974
                                    =============   =============   ==============   =============   ============

Minority interest                   $     429,202   $     749,130   $    2,312,491   $   2,568,235   $  3,142,417
                                    =============   =============   ==============   =============   ============

Total partners' capital             $   4,150,876   $   8,831,833   $   12,303,608   $  15,542,747   $ 18,555,852
                                    =============   =============   ==============   =============   ============
</TABLE>

During the year ended March 31, 2007,  total assets  decreased  primarily due to
depreciation  and loss on impairment  of property.  During the years ended March
31, 2006, 2005, 2004 and 2003,  respectively,  total assets decreased  primarily
due to depreciation.

Cash Distributions
------------------

The  Partnership has made no  distributions  to the BACs holders as of March 31,
2007.

                                       8
<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Liquidity and Capital Resources
-------------------------------

The Partnership  received $43,440,000 in gross proceeds for BACs pursuant to the
Offering  resulting in net proceeds  available for  investment of  approximately
$35,000,000 after volume discounts,  payment of sales  commissions,  acquisition
fees and expenses,  organization  and offering  expenses and  establishment of a
working capital reserve.

As of March 31, 2007, the  Partnership  has invested  approximately  $35,051,000
(including   approximately   $2,953,000   classified  as  loans  repayable  from
sale/refinancing proceeds in accordance with the contribution agreement with one
Local   Partnership  and  not  including   acquisition   fees  of  approximately
$2,510,000) of the net proceeds of its Offering in twenty Local  Partnerships of
which approximately $135,000 remains to be contributed to the Local Partnerships
for payment by them to the original  sellers of the  Properties  (not  including
approximately  $130,000  being held in escrow)  as certain  benchmarks,  such as
occupancy  level,  must be  attained  prior to the  release  of the  funds.  The
Partnership does not intend to acquire  additional  Properties.  During the year
ended March 31,  2007,  the  Partnership  did not make any advances to the Local
Partnerships.   Although  the  Partnership  will  not  be  acquiring  additional
Properties,  the  Partnership  may be required to fund potential  purchase price
adjustments based on tax credit adjustor clauses.

Short-term
----------

The  Partnership's  primary source of funds is rental revenues,  which are fully
utilized at the Property level.

For the year ended March 31, 2007, cash and cash  equivalents of the Partnership
and  its  twenty   consolidated  Local  Partnerships   increased   approximately
($67,000).  This increase was due to net cash  provided by operating  activities
($931,000),  a decrease in cash held in escrow relating to investing  activities
($84,000)  and an  increase  in due to local  general  partners  and  affiliates
relating to financing activities ($27,000), which exceeded purchases of property
and  equipment  ($364,000),  a decrease  in due to local  general  partners  and
affiliates  relating to investing  activities  ($59,000),  repayment of mortgage
notes ($479,000) and a decrease in capitalization  of consolidated  subsidiaries
attributable to minority interest ($73,000). Included in adjustment to reconcile
the net loss to cash  provided  by  operating  activities  is  depreciation  and
amortization in the amount of approximately  $(2,689,000) and loss on impairment
of fixed assets of approximately $(1,043,000).

During the year ended March 31, 2007,  the  Partnership  received  approximately
$69,000 in distributions from operations of the Local  Partnerships.  Management
anticipates receiving  distributions from operations in the future, although not
to a level  sufficient  to  permit  providing  cash  distributions  to the  BACs
holders.  These  distributions will be set aside as working capital reserves and
although likely not sufficient to cover all Partnership  expenses,  will be used
to meet the operating expenses of the Partnership.

A working  capital reserve has been  established  from the  Partnership's  funds
available  for  investment,  which  includes  amounts  which may be required for
potential  purchase price adjustments  based on tax credit adjustor clauses.  At
March 31, 2007, approximately $9,000 of this reserve remained unused.

In connection with investments in  development-stage  Apartment  Complexes,  the
General  Partner  generally  required  that the Local General  Partners  provide
completion guarantees and/or undertake to repurchase the Partnership's  interest
in the Local  Partnership if  construction or  rehabilitation  was not completed
substantially  on time or on  budget  ("Development  Deficit  Guarantees").  The
Development Deficit Guarantees generally also required the Local General Partner
to provide  any funds  necessary  to cover net  operating  deficits of the Local
Partnership  until such time as the  Apartment  Complex had achieved  break-even
operations.  The  General  Partner  generally  required  that the Local  General
Partners  undertake  an  obligation  to fund  operating  deficits  of the  Local
Partnership  (up to a stated  maximum  amount)  during a limited  period of time
(typically  three  to  five  years)  following  the  achievement  of  break-even
operations  ("Operating  Deficit  Guarantees").  As of March 31, 2007, the gross
amount of the Operating Deficit Guarantees aggregate  approximately  $5,487,000,
all of which have expired.  Management does not expect that expiration to have a
material  impact on liquidity,  based on prior years'  fundings.  Amounts funded
under such  agreements are treated as noninterest  bearing loans,  which will be
paid  only out of 50% of  available  cash flow or out of  available  net sale or
refinancing  proceeds.  In some instances,  the Local General Partners have been
required to undertake an obligation to comply with a Rent-Up Guaranty Agreement,
whereby  the Local  General  Partner  has  agreed to pay  liquidated  damages if
predetermined occupancy rates are not achieved.  These payments are made without
right  of  repayment.   In  cases  where  the  General  Partner  has  deemed  it
appropriate,  the  obligations of a Local General  Partner under the Development
Deficit,  Operating  Deficit  and/or  Rent-Up  Guarantees  have been  secured by
letters of credit and/or cash escrow deposits.

The  Operating  Deficit  Guaranty  Agreements  were  negotiated  to protect  the
Partnership's interest in the Local Partnerships and to provide incentive to the
Local General Partners to generate positive cash flow.

Total expenses for the year ended March 31, 2007,  2006 and 2005,  respectively,
excluding depreciation and amortization,  interest, general and administrative -
related  parties and loss on  impairment of fixed  assets,  totaled  $5,616,460,
$5,567,576 and $5,105,929.

Accounts  payable  as of March 31,  2007 and 2006 were  $606,118  and  $645,217,
respectively.  Accounts payable are short term liabilities which are expected to
be paid  from  operating  cash  flows,  working  capital  balances  at the Local
Partnership level,  Local General Partner advances and in certain  circumstances
advances from the  Partnership.  Because the  provisions of the secondary  loans
defer the payment of accrued interest of the respective Local Partnerships,  the
Partnership  believes it (and the applicable Local  Partnerships) has sufficient
liquidity  and  ability  to  generate  cash and to meet  existing  and  known or
reasonably likely future cash requirements over both the short and long term.

Accrued  interest as of March 31, 2007 and 2006 was $8,592,177  and  $7,585,653,
respectively. Such amount represents the accrued interest on all mortgage loans,
which  include  primary  and  secondary  loans.  Certain  secondary  loans  have
provisions  such that  interest is accrued but not payable  until a future date.
The  Partnership  anticipates  the payment of accrued  interest on the secondary
loans (which make up the  majority of the accrued  interest  payable  amount and
which  have  been  accumulating  since  the  Partnership's   investment  in  the
respective  Local  Partnership)  will be made from future  refinancings or sales
proceeds  of  the  respective  Local  Partnerships.   In  addition,  each  Local
Partnership's mortgage notes are collateralized by the land and buildings of the
respective  Local   Partnership,   and  are  without  further  recourse  to  the
Partnership.

                                       9
<PAGE>

Partnership   management  fees  owed  to  the  General   Partner   amounting  to
approximately  $3,233,000 and $2,891,000 were accrued and unpaid as of March 31,
2007 and 2006,  respectively.  Without the General  Partner's  continued accrual
without payment of certain fees and expense reimbursements, the Partnership will
not be in a position to meet its obligations.  The General Partner has continued
allowing the accrual without payment of these amounts but is under no obligation
to continue to do so.

Long-term
---------

For discussion of contingencies affecting certain subsidiary  partnerships,  see
Results of Operations of Certain Local  Partnerships,  below.  Since the maximum
loss the Partnership would be liable for is its net investment in the respective
subsidiary  partnerships,  the resolution of the existing  contingencies  is not
anticipated  to impact  future  results of  operations,  liquidity  or financial
condition in a material way. However,  the Partnership's  loss of its investment
in a Local Partnership will eliminate the ability to generate future Tax Credits
from such Local  Partnership  and may also result in recapture of Tax Credits if
the investment is lost before the expiration of the Compliance Period.

Except as  described  above,  management  is not aware of any  trends or events,
commitments or uncertainties,  which have not otherwise been disclosed that will
or are likely to impact  liquidity in a material  way.  Management  believes the
only impact would be for laws that have not yet been  adopted.  The portfolio is
diversified by the location of the  Properties  around the United States so that
if one  area of the  country  is  experiencing  downturns  in the  economy,  the
remaining Properties in the portfolio may be experiencing upswings. However, the
geographic  diversification  of the portfolio may not protect  against a general
downturn in the national  economy.  The Partnership has invested the proceeds of
its Offering in twenty Local  Partnerships,  all of which have their Tax Credits
fully in place.  Tax  Credits  are  attached  to a Property  for a period of ten
years,  and are  transferable  with the  Property  during the  remainder  of the
ten-year  period.  If trends in the real estate  market  warranted the sale of a
Property,  the remaining Tax Credits  would  transfer to the new owner,  thereby
adding value to the Property on the market.  However,  such value  declines each
year and is not included in the financial  statement carrying amount. The Credit
Periods  have  expired with respect to certain  Local  Partnerships,  and,  with
respect to the others, are scheduled to expire at various times through December
31, 2009 depending upon when the Credit Period commenced. The Compliance Periods
will continue through December 31, 2014 with respect to the Properties depending
upon when the Credit Period commenced.

Tabular Disclosure of Contractual Obligations
---------------------------------------------

The following  table  summarizes the  Partnership's  commitments as of March 31,
2007 to make future  payments under its debt  agreements  and other  contractual
obligations.
<TABLE>
<CAPTION>
                                            Less than       1 - 3         3 -5        More than
                                Total         1 Year        Years         Years        5 Years
                             -----------   -----------   -----------   -----------   -----------
<S>                          <C>           <C>           <C>           <C>           <C>
Mortgage notes payable (a)   $43,529,500   $   534,370   $ 1,986,967   $ 3,338,655   $37,669,508
Land lease obligations (b)       850,080        21,252        42,504        42,504       743,820
                             -----------   -----------   -----------   -----------   -----------

   Total                     $44,379,580   $   555,622   $ 2,029,471   $ 3,381,159   $38,413,328
                             ===========   ===========   ===========   ===========   ===========
</TABLE>


(a)  The mortgage and construction  notes,  which are collateralized by land and
     buildings,  are payable in aggregate monthly  installments of approximately
     $100,000  including  principal and interest at rates varying from 0% to 10%
     per annum,  through the year 2046. Each subsidiary  partnership's  mortgage
     note payable is  collateralized by the land and buildings of the respective
     subsidiary   partnership,   the  assignment  of  each  certain   subsidiary
     partnership's rents and leases, and is without further recourse.

(b)  One of the  subsidiary  partnerships  is  leasing  the  land on  which  its
     apartment  complex is located for a term of 50 years,  which  commenced  in
     August 1996, with monthly rent payments of $1,449.  Additional rent of $322
     per month, up to $100,000,  will be paid during the final term to reimburse
     the District of Columbia  Department of Housing and  Community  Development
     for site improvement costs.

Off Balance Sheet Arrangements
------------------------------

The Partnership has no off-balance sheet arrangements.

Critical Accounting Policies
----------------------------

In  preparing  the  consolidated  financial  statements,   management  has  made
estimates  and  assumptions  that  affect  the  reported  amounts  of 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.  Set forth below is a summary of the accounting  policies
that  management  believes are critical to the  preparation of the  consolidated
financial  statements.  The summary should be read in conjunction  with the more
complete discussion of the Partnership's accounting policies included in Item 8,
Note 2 to the  consolidated  financial  statements in this annual report on Form
10-K.

Property and Equipment
----------------------

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price,  acquisition fees and expenses, and any other costs incurred
in acquiring the  Properties.  The cost of property and equipment is depreciated
over their estimated useful lives using accelerated and  straight-line  methods.
Expenditures  for repairs and  maintenance  are charged to expense as  incurred;
major  renewals  and  betterments  are  capitalized.  At the time  property  and
equipment  are  retired  or  otherwise  disposed  of,  the cost and  accumulated
depreciation  are  eliminated  from  the  assets  and  accumulated  depreciation
accounts  and the profit or loss on such  disposition  is reflected in earnings.
The  Partnership  complies  with  Statement  of Financial  Accounting  Standards
("SFAS")  No. 144  "Accounting  for the  Impairment  or Disposal  of  Long-Lived
Assets".  A loss on impairment of assets is recorded when  management  estimates
amounts  recoverable  through  future  operations and sale of the Property on an

                                       10
<PAGE>

undiscounted basis are below depreciated cost. At that time Property investments
themselves are reduced to estimated fair value  (generally using discounted cash
flows).

Through March 31, 2007, the Partnership has recorded approximately $1,403,000 as
a loss on  impairment  of assets or reduction  to  estimated  fair value for one
Local Partnership.

At the time management  commits to a plan to dispose of assets,  said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets  are  classified  as  property  and  equipment-held  for sale and are not
depreciated.  Through  March 31,  2007,  the  Partnership  has not  recorded  or
classified any property and equipment as held for sale.

Revenue Recognition
-------------------

Rental income is earned  primarily under standard  residential  operating leases
and is typically  due the first day of each month,  but can vary by Property due
to the terms of the tenant leases.  Rental income is recognized  when earned and
charged to tenants' accounts  receivable if not received by the due date. Rental
payments  received in advance of the due date are deferred until earned.  Rental
subsidies  are  recognized  as  rental  income  during  the month in which it is
earned.

Other  revenues are  recorded  when earned and consist of the  following  items:
Interest  income  earned on cash and cash  equivalent  balances and cash held in
escrow balances,  income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.

Other revenues  include the following  amounts at both the Partnership and Local
Partnership level:
<TABLE>
<CAPTION>
                              Years Ended March 31,
                         ------------------------------
                           2007       2006       2005
                         --------   --------   --------
<S>                      <C>        <C>        <C>
Interest                 $149,881   $118,270   $ 96,706
Other                     155,401    170,101    321,043
                         --------   --------   --------

   Total other revenue   $305,282   $288,371   $417,749
                         ========   ========   ========
</TABLE>

Income Taxes
------------

The  Partnership  is not  required to provide  for, or pay,  any federal  income
taxes.  Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The  Partnership may be subject
to state and local taxes in jurisdictions  in which it operates.  For income tax
purposes, the Partnership has a fiscal year ending December 31.

Results of Operations
---------------------

The following is a summary of the results of operations of the  Partnership  for
the years ended March 31,  2007,  2006 and 2005 (the 2006,  2005 and 2004 Fiscal
Years).

The net loss for the 2006,  2005 and 2004 Fiscal  Years  aggregated  $4,680,957,
$3,471,775 and $3,239,139, respectively.

The Partnership and BACs holders began recognizing Tax Credits with respect to a
Property when the Credit Period for such Property commenced. Because of the time
required for the acquisition,  completion and rent-up of Properties,  the amount
of Tax Credits  per BAC  gradually  increased  over the first three years of the
Partnership.  Tax  Credits  not  recognized  in the first  three  years  will be
recognized in the 11th through 13th years. The Partnership generated $3,164,434,
$5,580,448 and $5,683,281 Tax Credits during the 2006, 2005 and 2004, tax years,
respectively.

2006 vs. 2005
-------------

Rental income  increased  approximately  3% for the 2006 Fiscal Year compared to
the 2005 Fiscal Year,  primarily due to increases in  occupancies at three Local
Partnerships and rental rate increases at the other Local Partnerships.

Total expenses, excluding general and administrative-related parties expense and
loss on impairment of fixed assets  remained  consistent with a decrease of less
than 1% for the 2006 Fiscal Year as compared to the 2005 Fiscal Year.

General  and  administrative-related  parties  expense  decreased  approximately
$106,000 for the 2006 Fiscal Year  compared to the 2005 Fiscal  Year,  primarily
due to a  decrease  in expense  reimbursements  at the  Partnership  level and a
supervisory  and incentive  property  management fee incurred to an affiliate in
the prior year at one Local Partnership.

2005 vs. 2004
-------------

Rental income  increased  approximately  5% for the 2005 Fiscal Year compared to
the 2004 Fiscal Year,  primarily due to increases in  occupancies at three Local
Partnerships and rental rate increases at the other Local Partnerships.

Other income decreased  approximately $129,000 for the 2005 Fiscal Year compared
to the 2004 Fiscal Year,  primarily due to a gain on the disposal of property at
one Local  Partnership  in 2004, a gain on the sale of  investments  at a second
Local Partnership in 2004 and an insurance proceed received for fire damage at a
third Local Partnership also in 2004 offset by insurance and tax refunds in 2005
at a fourth Local Partnership.

                                       11
<PAGE>

Total expenses,  excluding  operating and real estate taxes remained  consistent
with an increase of approximately 5% for the 2005 Fiscal Year as compared to the
2004 Fiscal Year.

Operating  expense  increased  approximately  $122,000  for the 2005 Fiscal Year
compared to the 2004 Fiscal Year,  primarily due to increases in fuel, water and
sewer  charges at three Local  Partnerships  and  increases in fuel charges at a
fourth and fifth Local Partnership.

Real estate tax expense increased approximately $57,000 for the 2005 Fiscal Year
compared to the 2004 Fiscal Year,  primarily due to an  underaccrual  in 2004 at
one Local  Partnership,  an increase  in the  assessed  value at a second  Local
Partnership  and  a  readjustment  of  prior  years'  taxes  at  a  third  Local
Partnership.

Results of Operations of Other Local Partnerships
-------------------------------------------------

The Partnership's  investment as a limited partner in the Local  Partnerships is
subject to the risks of potential  losses arising from  management and ownership
of improved real estate.  The Partnership's  investments also could be adversely
affected by poor economic  conditions  generally,  which could increase  vacancy
levels and rental payment defaults,  and increase operating expenses, any or all
of which could  threaten  the  financing  viability  of one or more of the Local
Partnerships.

There also are  substantial  risks  associated  with the  operation of Apartment
Complexes   receiving   government   assistance.   These  include   governmental
regulations  concerning tenant eligibility,  which may make it more difficult to
rent apartments in the Apartment Complexes; difficulties in obtaining government
approval for rent  increases;  limitations on the percentage of income which low
and  moderate-income  tenants may pay as rent; the possibility that Congress may
not appropriate  funds to enable HUD to make the rental  assistance  payments it
has contracted to make;  and that when the rental  assistance  contracts  expire
there may not be market  demand for  apartments  at full market rents in a Local
Partnership's Apartment Complex.

The Local  Partnerships  are impacted by inflation  in several  ways.  Inflation
allows for  increases in rental rates  generally to reflect the impact of higher
operating and replacement  costs.  Inflation also affects the Local Partnerships
adversely by increasing  operating costs,  for example,  for such items as fuel,
utilities  and labor.  The Credit  Periods  have expired with respect to certain
Local Partnerships,  and, with respect to the others, are scheduled to expire at
various times through  December 31, 2009  depending  upon when the Credit Period
commenced.  The Compliance  Periods will continue through December 31, 2014 with
respect to the Properties depending upon when the Credit Period commenced.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Mortgage notes are payable in aggregate monthly installments including principal
and interest at rates varying from 0% to 10% per annum. The Partnership does not
believe  there is a material risk  associated  with the various  interest  rates
associated  with the  mortgage  notes as the  majority of the Local  Partnership
mortgage notes have fixed rates. The Partnership  currently discloses in Item 8,
Note 3 of the Notes to Consolidated Financial Statements,  the fair value of the
mortgage  notes  payable.  The  Partnership  does not have any other market risk
sensitive instruments.

                                       12
<PAGE>

Item 8. Financial Statements and Supplementary Data
                                                                      Sequential
                                                                         Page
                                                                      ----------

        Consolidated Financial Statements

        Report of Independent Registered Public Accounting Firm           14

        Consolidated Balance Sheets at March 31, 2007 and 2006            37

        Consolidated Statements of Operations for the Years Ended
          March 31, 2007, 2006 and 2005                                   38

        Consolidated Statements of Changes in Partners' Capital
          for the Years Ended March 31, 2007, 2006 and 2005               39

        Consolidated Statements of Cash Flows for the Years Ended
          March 31, 2007, 2006 and 2005                                   40

        Notes to Consolidated Financial Statements                        41


                                       13
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            -------------------------------------------------------

To the Partners of
Independence Tax Credit Plus L.P. III and Subsidiaries
(A Delaware Limited Partnership)

We have audited the consolidated  balance sheets of Independence Tax Credit Plus
L.P. III and Subsidiaries (A Delaware Limited  Partnership) as of March 31, 2007
and 2006,  and the related  consolidated  statements of  operations,  changes in
partners' capital (deficit),  and cash flows for the years ended March 31, 2007,
2006 and 2005  (the  2006,  2005 and 2004  Fiscal  Years,  respectively).  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We did not audit the financial  statements  for four (2006 and 2005
Fiscal  Years) and sixteen  (2004 Fiscal  Year)  subsidiary  partnerships  whose
losses  aggregated  $3,812,500,  $750,146 and $490,848 for the years ended March
31, 2007, 2006 and 2005, respectively,  and whose assets constituted 82% and 25%
of the  Partnership's  assets  at March  31,  2007 and  2006,  presented  in the
accompanying  consolidated  financial  statements.  The financial statements for
these  subsidiary  partnerships  were audited by other  auditors  whose  reports
thereon have been furnished to us and our opinion expressed  herein,  insofar as
it relates to the amounts included for these subsidiary  partnerships,  is based
solely upon the reports of the other auditors.

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  audits 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,  based upon our audits,  and the reports of the other  auditors
referred to above,  the  consolidated  financial  statements  referred to in the
first paragraph present fairly, in all material respects, the financial position
of Independence  Tax Credit Plus L.P. III and Subsidiaries at March 31, 2007 and
2006,  and the  results of their  operations  and their cash flows for the years
ended March 31, 2007, 2006 and 2005, in conformity with U.S.  generally accepted
accounting principles.

/s/TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 15, 2007

                                       14
<PAGE>


[HOLTHOUSE CARLIN & VAN TRIGT LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of the
Edward Hotel Limited Partnership:

We have  audited  the  accompanying  balance  sheets  of  Edward  Hotel  Limited
Partnership (a California limited partnership) as of December 31, 2006 and 2005,
and the related statements of operations,  changes in partners' deficit and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted  our audit 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.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  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  Edward  Hotel  Limited
Partnership  as of December 31, 2006 and 2005, and the results of its operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial  statements  taken  as  a  whole.  The  information  included  in  the
accompanying  Schedule I is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.

/s/ Holthouse Carlin & Van Trigt LLP
Santa Monica, California
February 21, 2007

                                       15
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
Pacific-East L.P.

We have  audited the  accompanying  balance  sheets of  Pacific-East  L.P. as of
December 31, 2006, and the related  statements of operations,  partners'  equity
(deficit) and cash flows for the year then ended. These financial statements are
the  responsibility of the Partnership's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

We conducted  our audit 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.  The  Partnership  has determined
that it is not required to have, nor we were engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  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
audit provides 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  Pacific-East  L.P. as of
December 31, 2006, and the results of its operations, and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.

/s/ Reznick Group, P.C.
Atlanta, Georgia
April 9, 2007

                                       16
<PAGE>

[SMITH, ORTIZ, GOMEZ AND BUZZI, P.A.  LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

The Partners
Overtown Development Group, Ltd.
(A Limited Partnership):

We have audited the accompanying  balance sheets of Overtown  Development Group,
Ltd. (A Limited  Partnership)  as of December 31, 2006 and 2005, and the related
statement of operations,  changes in partners'  capital,  and cash flows for the
years then ended. These financial  statements are the responsibility of Overtown
Development Group, Ltd. management.  Our responsibility is to express an opinion
on these financial statements 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  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not required to have, nor we were engaged to perform,  an
audit of its  internal  control over  financial  reporting.  Our audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for  the  purpose  of  expressing  an  opinion  on  the   effectiveness  of  the
Partnership's internal control over financial reporting. Accordingly, we express
no  such  opinion.  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,  based on our audits, the financial statements referred to above
present fairly,  in all material  respects,  the financial  position of Overtown
Development Group, Ltd. as of December 31, 2006 and 2005, and the results of its
operations  changes  in  partners'  equity and its cash flows for the years then
ended in conformity with accounting  principles generally accepted in the United
States of America.

/s/ Smith, Ortiz, Gomez and Buzzi, P.A.
Miami, Florida
January 26, 2007

                                       17
<PAGE>

[SMITH, ORTIZ, GOMEZ AND BUZZI, P.A.  LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

The Partners
Overtown Development Group, Ltd.
(A Limited Partnership):

We have audited the accompanying  balance sheets of Overtown  Development Group,
Ltd. (A Limited  Partnership)  as of December 31, 2005 and 2004, and the related
statement of operations,  changes in partners'  capital,  and cash flows for the
years then ended. These financial  statements are the responsibility of Overtown
Development Group, Ltd. management.  Our responsibility is to express an opinion
on these financial statements 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  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not required to have, nor we were engaged to perform,  an
audit of its  internal  control over  financial  reporting.  Our audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for  the  purpose  of  expressing  an  opinion  on  the   effectiveness  of  the
Partnership's internal control over financial reporting. Accordingly, we express
no  such  opinion.  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,  based on our audits, the financial statements referred to above
present fairly,  in all material  respects,  the financial  position of Overtown
Development Group, Ltd. as of December 31, 2005 and 2004, and the results of its
operations  changes  in  partners'  equity and its cash flows for the years then
ended in conformity with accounting  principles generally accepted in the United
States of America.

/s/ Smith, Ortiz, Gomez and Buzzi, P.A.
Miami, Florida
February 1st, 2006

                                       18
<PAGE>

[LAWLOR & O'BRIEN, CERTIFIED PUBLIC ACCOUNTANTS LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Sumpter Commons Associates, L.P.

We have audited the  accompanying  balance sheet of Sumpter Commons  Associates,
L.P. as of December 31, 2006, and the related statements of operations,  changes
in partners' (deficit),  and cash flows for the year then ended. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  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 Sumpter Commons  Associates,
L.P. as of December  31,  2006,  and the results of its  operations,  changes in
partners'  (deficit),  and cash flows for the year then ended in conformity with
generally accepted accounting principles in the United States of America.

/s/ Lawlor & O'Brien, Certified Public Accountants
Totowa, New Jersey
February 27, 2007

                                       19
<PAGE>

[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]

To The Partners
Park Housing Limited Partnership

INDEPENDENT AUDITORS' REPORT
----------------------------

We  have  audited  the  accompanying  balance  sheet  of  Park  Housing  Limited
Partnership  as of December 31, 2006,  and the related  statements of operations
and changes in partners' capital,  and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  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
audit provides 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  Park  Housing  Limited
Partnership  as of December 31, 2006, and the results of its operations and cash
flows  for the  year  then  ended,  in  accordance  with  accounting  principles
generally accepted in the United States of America.

/s/ Kostin, Ruffkess & Company, LLC
Farmington, Connecticut
February 28, 2007

                                       20
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
Livingston Manor Urban Renewal Associates, L.P.

We have audited the accompanying balance sheet of Livingston Manor Urban Renewal
Associates,  L.P.  as of  December  31,  2006,  and the  related  statements  of
operations,  changes in partners'  equity  (deficit) and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted  our audit 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.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audit provides 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 Livingston Manor Urban Renewal
Associates,  L.P. as of December  31, 2006,  and the results of its  operations,
changes  in  partners'  equity  (deficit)  and its cash  flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

/s/ Reznick Group, P.C.
Baltimore, Maryland
March 28, 2007

                                       21
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
Jefferis Square Housing Partnership, L.P.

We have  audited  the  accompanying  balance  sheet of Jefferis  Square  Housing
Partnership,  L.P. as of  December  31,  2006,  and the  related  statements  of
operations,  changes in partners'  equity  (deficit) and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted  our audit 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.  The  Partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audit provides 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 Jefferis  Square  Housing
Partnership,  L.P. as of December 31, 2006,  and the results of its  operations,
the changes in partners'  equity  (deficit) and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

/s/ Reznick Group, P.C.
Baltimore, Maryland
March 29, 2007

                                       22
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
2301 First Avenue Limited Partnership

We have audited the  accompanying  balance  sheet of 2301 First  Avenue  Limited
Partnership, for the year ended December 31, 2006, and the related statements of
operations,  changes in partners'  equity  (deficit) and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted  our audit 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.  The  Partnership  has determined
that it is not required to have, nor we were engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  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
audit provides 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 2301 First  Avenue  Limited
Partnership,  as of December 31, 2006, and the results of its operations and its
cash flows for the year then ended,  in conformity  with  accounting  principles
generally accepted in the United States of America.

/s/ Reznick Group, P.C.
Atlanta, Georgia
March 7, 2007

                                       23
<PAGE>

[TOSKI, SCHAEFER & CO., P.C.  LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lewis Street Limited Partnership:

We have  audited  the  accompanying  balance  sheets  of  Lewis  Street  Limited
Partnership  as of  December  31, 2006 and 2005 and the  related  statements  of
operations,  partners'  equity and cash flows for the years  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements 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  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not required to have, nor were we engaged to perform,  an
audit of its  internal  control over  financial  reporting.  Our audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for  the  purpose  of  expressing  an  opinion  on  the   effectiveness  of  the
Partnership's internal control over financial reporting. Accordingly, we express
no  such  opinion.  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  Lewis  Street  Limited
Partnership as of December 31, 2006 and 2005 and the results of its  operations,
changes  in  partners'  equity  and cash  flows for the  years  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The accompanying supplemental information
is presented for purposes of  additional  analysis and is not a required part of
the basic  financial  statements.  Such  information  has been  subjected to the
auditing procedures applied in the audit of the basic financial  statements and,
in our opinion,  is fairly  stated in all  material  respects in relation to the
basic financial statements taken as a whole.

/s/ Toski, Schaefer & Co., P.C.
Williamsville, New York
February 2, 2007

                                       24
<PAGE>

[TOSKI, SCHAEFER & CO., P.C.  LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lewis Street Limited Partnership:

We have  audited  the  accompanying  balance  sheets  of  Lewis  Street  Limited
Partnership  as of  December  31, 2005 and 2004 and the  related  statements  of
operations,  partners'  equity and cash flows for the years  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements 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  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not required to have, nor were we engaged to perform,  an
audit of its  internal  control over  financial  reporting.  Our audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for  the  purpose  of  expressing  an  opinion  on  the   effectiveness  of  the
Partnership's internal control over financial reporting. Accordingly, we express
no  such  opinion.  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  Lewis  Street  Limited
Partnership as of December 31, 2005 and 2004 and the results of its  operations,
changes  in  partners'  equity  and cash  flows for the  years  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a  whole.  The  accompanying  supplemental  information  is
presented for purposes of additional  analysis and is not a required part of the
basic financial statements.  Such information has been subjected to the auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.

/s/ Toski, Schaefer & Co., P.C.
Williamsville, New York
January 25, 2006

                                       25
<PAGE>

[ROMANO & MITCHELL, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Savannah Park Housing Limited Partnership
Washington, D.C.

We have audited the accompanying  balance sheet of Savannah Park Housing Limited
Partnership as of December 31, 2006,  and the related  statements of operations,
partners'  capital  and cash  flows for the year  then  ended.  These  financial
statements  are  the  responsibility  of  the  partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit. The financial statements of Savannah Park Housing Limited Partnership
as of December  31,  2005 were  audited by other  auditors  whose  report  dated
February 28, 2006, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
as established by the Auditing Standards Board (United States) and 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.  The  Partnership  has determined that it is not required to have,
nor were we engaged to perform,  an audit of its internal control over financial
reporting.  Our audit included  consideration of internal control over financial
reporting as a basis for designing audit  procedures that are appropriate in the
circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on the
effectiveness of the  Partnership's  internal control over financial  reporting.
Accordingly,  we express no such opinion. An audit also includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides 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 Savannah Park Housing Limited
Partnership  as of December 31,  2006,  and the results of its  operations,  the
changes  in  partners'  capital  and cash  flows  for the year  then  ended,  in
conformity with U.S. generally accepted accounting principles.

/s/ Romano & Mitchell, Chartered Certified Public Accountants
Bethesda, Maryland
February 28, 2007

                                       26
<PAGE>

[NOVOGRADAC & COMPANY LLP CERTIFIED PUBLIC ACCOUNTANTS LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Members of
Brannon Group, L.C.

We have audited the accompanying balance sheet of Brannon Group, L.C., a Florida
limited liability company, as of December 31, 2006 and the related statements of
operations,  members'  equity  (deficit) and cash flows for the year then ended.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit. The financial statements of Brannon Group, L.C. as of December 31,
2005,  were  audited  by other  auditors  whose  report  dated  March 18,  2006,
expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
as established by the Auditing Standards Board (United States) and 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.  The  Company  is not  required  to have,  nor were we  engaged to
perform,  an audit of its internal control over financial  reporting.  Our audit
included  consideration of internal control over financial  reporting as a basis
for designing audit  procedures that are appropriate in the  circumstances,  but
not for the  purpose  of  expressing  an  opinion  on the  effectiveness  of the
Company's internal control over financial reporting.  Accordingly, we express no
such opinion. 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 audit provides 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 Brannon Group, L.C. at December
31, 2006 and the results of its  operations and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken  as a  whole.  The  accompanying  supplemental  schedules  are
presented for purposes of additional analysis and are not a required part of the
financial  statements of Brannon Group, L.C. Such information has been subjected
to the auditing procedures applied in the audit of the financial statements and,
in our opinion,  is fairly  stated in all  material  respects in relation to the
financial statements taken as a whole.

/s/ Novogradac & Company LLP
San Francisco, California
March 25, 2007

                                       27
<PAGE>

[Goldstein Schechter Price Lucas Horwitz & Co., PA LETTERHEAD]

Independent Auditor's Report

To the Members of Brannon Group, L.C.

We have  audited  the  accompanying  balance  sheets of Brannon  Group,  L.C. (a
Limited  Liability  Company) as of December  31, 2005 and 2004,  and the related
statements  of  operations,  members'  equity  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our audits in  accordance  the  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  The  Company is not
required  to have,  nor were we engaged  to  perform,  an audit of its  internal
control over financial reporting.  Our audit included  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.  We believe 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 the Company at December 31,
2005 and 2004, and the results of its  operations,  changes in members'  deficit
and its cash flows for the years  then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.


/s/ Goldstein Schechter Price Lucas Horwitz & Co., P.A.
Coral Gables, FL
March 18, 2006

                                       28
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
Mansion Court Phase II Venture

We have audited the accompanying balance sheet of Mansion Court Phase II Venture
as of December 31, 2006,  and the related  statement of  operations,  changes in
partners'  equity  (deficit)  and cash  flows  for the year  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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.  The  partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
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  Partnership's
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Mansion Court Phase II Venture
as of  December  31,  2006 and the  results of its  operations,  the  changes in
partner'  equity  (deficit)  and its cash  flows  for the year  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Group, P.C.
Baltimore, Maryland
March 29, 2007

                                       29
<PAGE>

[RUBINBROWN LLP LETTERHEAD]

Report of Independent Registered Public Accounting Firm

To the Partners
Primm Place Partners, L.P.
St. Louis, Missouri

We have audited the  accompanying  balance sheet of Primm Place Partners,  L.P.,
Project No. MT95-650, a limited  partnership,  as of December 31, 2005 and 2004,
and the related  statements of profit and loss,  partners' equity and cash flows
for the years then ended.  These financial  statements are the responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements 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 Primm Place Partners,  L.P. as
of December  31, 2005 and 2004,  and the  results of its  operation,  changes in
partners' equity and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  shown on pages 18 to 20 is  presented  for  purposes of  additional
analysis  and is not a required  part of the basic  financial  statements.  Such
information has been subjected to the auditing  procedures  applied in the audit
of the  financial  statements  and,  in our  opinion,  is  fairly  stated in all
material respects in relation to the financial statements taken as a whole.

/s/ Rubin, Brown, Gornstein & Co.  LLP
St. Louis, Missouri
February 7, 2006

                                       30
<PAGE>

[RAINES AND FISCHER LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of BK-9-A Partners, L.P.:

We have audited the accompanying  balance sheet of BK-9-A Partners,  L.P. (A New
York Limited Partnership) as of December 31, 2006, and the related statements of
operations,  changes in partners' capital (deficit), and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted  our audit 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.  We were not engaged to perform an
audit of the Partnership's  internal control over financial reporting.  An audit
includes  consideration of internal control over financial  reporting as a basis
for designing audit  procedures that are appropriate in the  circumstances,  but
not for the  purpose  of  expressing  an  opinion  on the  effectiveness  of the
Partnership's internal control over financial reporting. Accordingly, we express
no such opinion.  An audit also includes  examining,  on a test basis,  evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management,  as
well as evaluating the overall financial statement presentation. We believe that
our audit provides 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 BK-9-A Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2006,  and the results of its
operations  and its cash  flows  for the year then  ended,  in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Raines & Fischer LLP
New York, New York
February 27, 2007

                                       31
<PAGE>

[RAINES AND FISCHER LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of BK-10K Partners, L.P.:

We have audited the accompanying  balance sheet of BK-10K Partners,  L.P. (A New
York Limited Partnership) as of December 31, 2006, and the related statements of
operations,  changes in partners' capital (deficit), and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted  our audit 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.  We were not engaged to perform an
audit of the Partnership's  internal control over financial reporting.  An audit
includes  consideration of internal control over financial  reporting as a basis
for designing audit  procedures that are appropriate in the  circumstances,  but
not for the  purpose  of  expressing  an  opinion  on the  effectiveness  of the
Partnership's internal control over financial reporting. Accordingly, we express
no such opinion.  An audit also includes  examining,  on a test basis,  evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management,  as
well as evaluating the overall financial statement presentation. We believe that
our audit provides 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 BK-10K Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2006,  and the results of its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Raines & Fischer LLP
New York, New York
February 26, 2007

                                       32
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
Aspen-Olive Associates

We have audited the accompanying  balance sheet of Aspen-Olive  Associates as of
December 31, 2006, and the related statement of operations, changes in partners'
equity  (deficit)  and cash  flows  for the year  then  ended.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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. The partnership is not required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion  on  the  effectiveness  of  the  Partnership's  internal  control  over
financial  reporting.  Accordingly,  we express no such  opinion.  An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial  statement  presentation.  We believe that our audit 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 Aspen-Olive  Associates as of
December 31, 2006,  and the results of its  operations,  the changes in partner'
equity  (deficit) and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Reznick Group, P.C.
Baltimore, Maryland
March 28, 2007

                                       33
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
Universal Court Associates

We have audited the accompanying  balance sheet of Universal Court Associates as
of December  31,  2006,  and the related  statement  of  operations,  changes in
partners'  equity  (deficit)  and cash  flows  for the year  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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.  The  partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial  statement  presentation.  We believe that our audit 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 Universal Court Associates as
of December 31, 2006, and the results of its operations, the changes in partner'
equity  (deficit) and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Reznick Group, P.C.
Baltimore, Maryland
March 29, 2007

                                       34
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana

We have audited the  accompanying  balance sheet of New Zion Apartments  Limited
Partnership,  HUD Project No. LA48E000011, at December 31, 2006, and the related
statement of income,  partners'  capital and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States) and the  standards  applicable to
financial  audits  contained  in  Government  Auditing  Standards  issued by the
Comptroller  General of the 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. The partnership is not required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion  on  the  effectiveness  of  the  Partnership's  internal  control  over
financial  reporting.  Accordingly,  we express no such  opinion.  An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audit provides 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 New Zion Apartments  Limited
Partnership as of December 31, 2006, and the results of its operations,  changes
in capital,  and its cash flows for the year then ended in conformity  with U.S.
generally accepted accounting principles.

In accordance with Government Auditing Standards,  we have also issued a report,
dated  March  12,  2007 on our  consideration  of New  Zion  Apartments  Limited
Partnership's  internal  control over financial  reporting.  The purpose of that
report  is to  describe  the  scope of our  testing  of  internal  control  over
financial  reporting  and the  results  of that  testing  and not to  provide an
opinion on the internal  control over financial  reporting.  In accordance  with
Government  Auditing  Standards,  we have also issued an opinion dated March 12,
2007 on New  Zion  Apartments  Limited  Partnership's  compliance  with  certain
provisions of laws,  regulations,  contracts,  and grant  agreements,  and other
matters  that could have a direct and  material  effect on a major  HUD-assisted
program.  Those reports are an integral part of an audit performed in accordance
with  Government  Auditing  Standards  and should be considered in assessing the
results of our audit.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  on pages 22 through 33 is  presented  for  purposes  of  additional
analysis and is not a required  part of the basic  financial  statements  of the
Partnership. Such information has been subjected to the audit procedures applied
in the audit of the basic financial  statements  and, in our opinion,  is fairly
stated in all material  respects in relation to the basic  financial  statements
taken as a whole.

/s/ Reznick Group, P.C.
Taxpayer Identification Number:
72-0506596
Atlanta, Georgia
March 12, 2007

Lead Auditor:  Joshua D. Northcutt, CPA

                                       35
<PAGE>

[REZNICK GROUP, P.C. LETTERHEAD]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners
Dreitzer Limited Partnership

We have audited the accompanying  balance sheet of Dreitzer Limited  Partnership
as of December 31, 2006,  and the related  statement of  operations,  changes in
partners'  equity  (deficit)  and cash  flows  for the year  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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.  The  partnership  has determined
that it is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the partnership's internal control
over  financial  reporting.  Accordingly,  we express no such opinion.  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
audit provides 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 Dreitzer Limited Partnership as
of December 31, 2006, and the results of its operations,  and its cash flows for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  on page 19 is presented for purposes of additional  analysis and is
not a required part of the basic financial  statements of the Partnership.  Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements and, in our opinion,  is fairly stated,  in all
material  respects,  in relation to the basic  financial  statements  taken as a
whole.

/s/ Reznick Group, P.C.
Atlanta, Georgia
March 29, 2007

                                       36
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                     ASSETS


                                                                                           March 31,
                                                                                  ----------------------------
                                                                                      2007            2006
                                                                                  ------------    ------------

<S>                                                                               <C>             <C>
Property and equipment - at cost, less accumulated depreciation (Notes 2 and 4)   $ 57,470,569    $ 61,307,171
Cash and cash equivalents (Notes 2 and 10)                                             686,353         619,313
Cash held in escrow (Note 5)                                                         5,496,614       5,740,963
Deferred costs, less accumulated amortization (Notes 2 and 6)                          762,580         839,093
Other assets                                                                           795,047         630,778
                                                                                  ------------    ------------

Total assets                                                                      $ 65,211,163    $ 69,137,318
                                                                                  ============    ============


                        LIABILITIES AND PARTNERS' CAPITAL


Liabilities:
  Mortgage notes payable (Note 7)                                                 $ 43,529,500    $ 44,008,776
  Accounts payable                                                                     606,118         645,217
  Accrued interest payable                                                           8,592,177       7,585,653
  Security deposits payable                                                            495,940         465,526
  Due to local general partners and affiliates (Note 8)                              1,976,765       2,024,031
  Due to general partner and affiliates (Note 8)                                     5,430,585       4,827,152
                                                                                  ------------    ------------

Total liabilities                                                                   60,631,085      59,556,355
                                                                                  ------------    ------------

Minority interest (Note 2)                                                             429,202         749,130
                                                                                  ------------    ------------

Commitments and contingencies (Notes 7, 8 and 10)

Partners' capital (deficit):
  Limited partners (43,440 BACs issued and outstanding) (Note 1)                     4,495,496       9,129,643
  General Partner                                                                     (344,620)       (297,810)
                                                                                  ------------    ------------

Total partners' capital                                                              4,150,876       8,831,833
                                                                                  ------------    ------------

Total liabilities and partners' capital                                           $ 65,211,163    $ 69,137,318
                                                                                  ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       37
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                 Years Ended March 31,
                                                       --------------------------------------------
                                                            2007            2006            2005
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
Revenues
Rental income                                          $  7,128,762    $  6,950,116    $  6,603,904
Other income                                                305,282         288,371         417,749
                                                       ------------    ------------    ------------

                                                          7,434,044       7,238,487       7,021,653
                                                       ------------    ------------    ------------

Expenses
General and administrative                                1,987,597       2,007,050       1,846,438
General and administrative-related parties (Note 8)         822,468         928,579         852,485
Repairs and maintenance                                   1,662,034       1,670,321       1,555,575
Operating                                                 1,069,984       1,020,552         898,314
Real estate taxes                                           358,083         336,201         278,986
Insurance                                                   538,762         533,452         526,616
Financial, principally interest                           1,830,713       1,825,894       1,686,818
Depreciation and amortization                             2,689,496       2,682,591       2,708,018
Loss on impairment of property (Note 4)                   1,402,760               0               0
                                                       ------------    ------------    ------------

Total expenses                                           12,361,897      11,004,640      10,353,250
                                                       ------------    ------------    ------------

Net loss before minority interest                        (4,927,853)     (3,766,153)     (3,331,597)

Minority interest in loss of subsidiary partnerships        246,896         294,378          92,458
                                                       ------------    ------------    ------------

Net loss                                               $ (4,680,957)   $ (3,471,775)   $ (3,239,139)
                                                       ============    ============    ============

Net loss - Limited Partners                            $ (4,634,147)   $ (3,437,057)   $ (3,206,747)
                                                       ============    ============    ============

Number of BACs outstanding                                   43,440          43,440          43,440
                                                       ============    ============    ============

Net loss per BAC                                       $    (106.68)   $     (79.12)   $     (73.82)
                                                       ============    ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       38
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
                                                                  Limited         General
                                                   Total          Partners        Partner
                                               ------------    ------------    ------------
<S>                                            <C>               <C>               <C>
Partners' capital (deficit) - April 1, 2004    $ 15,542,747    $ 15,773,447    $   (230,700)

Net loss                                         (3,239,139)     (3,206,747)        (32,392)
                                               ------------    ------------    ------------

Partners' capital (deficit) - March 31, 2005     12,303,608      12,566,700        (263,092)

Net loss                                         (3,471,775)     (3,437,057)        (34,718)
                                               ------------    ------------    ------------

Partners' capital (deficit) - March 31, 2006      8,831,833       9,129,643        (297,810)

Net loss                                         (4,680,957)     (4,634,147)        (46,810)
                                               ------------    ------------    ------------

Partners' capital (deficit) - March 31, 2007   $  4,150,876    $  4,495,496    $   (344,620)
                                               ============    ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       39
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
                                                                                    Years Ended March 31,
                                                                          -----------------------------------------
                                                                              2007           2006           2005
                                                                          -----------    -----------    -----------
<S>                                                                       <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                                                  $(4,680,957)   $(3,471,775)   $(3,239,139)
                                                                          -----------    -----------    -----------
Adjustments to reconcile net loss to net cash provided by
  operating activities:
Depreciation and amortization                                               2,689,496      2,682,591      2,708,018
Loss on impairment of fixed assets                                          1,402,760              0              0
Minority interest in loss of subsidiary partnerships                         (246,896)      (294,378)       (92,458)
(Increase) decrease in assets:
Cash held in escrow                                                           160,715       (272,282)        14,897
Other assets                                                                 (164,269)        69,175        (29,186)
Increase (decrease) in liabilities:
Accounts payable                                                              (39,099)        15,591     (1,667,440)
Accrued interest                                                            1,006,524        999,505      2,567,416
Security deposit payable                                                       30,414         39,976         36,840
Due to local general partners and affiliates                                  169,206          8,874         56,135
Due to general partners and affiliates                                        603,433        271,405        569,238
                                                                          -----------    -----------    -----------

Total adjustments                                                           5,612,284      3,520,457      4,163,460
                                                                          -----------    -----------    -----------

Net cash provided by operating activities                                     931,327         48,682        924,321
                                                                          -----------    -----------    -----------
Cash flows from investing activities:
Acquisition of property and equipment                                        (363,622)      (138,170)      (121,592)
Decrease (increase) in cash held in escrow                                     83,634        (15,014)       (94,218)
(Decrease) increase in due to local general partners and
  affiliates                                                                  (58,517)        52,741        (56,210)
                                                                          -----------    -----------    -----------

Net cash used in investing activities                                        (338,505)      (100,443)      (272,020)
                                                                          -----------    -----------    -----------

Cash flows from financing activities:
Principal payments of mortgage notes                                         (479,276)    (3,452,420)      (506,751)
Proceeds from mortgage notes                                                        0      5,120,086              0
Increase (decrease) in due to local general partners and
  affiliates                                                                   26,526          2,000            (61)
Increase in deferred costs                                                          0       (238,457)             0
Decrease in capitalization of consolidated subsidiaries
  attributable to minority interest                                           (73,032)    (1,268,983)      (163,286)
                                                                          -----------    -----------    -----------

Net cash (used in) provided by financing activities                          (525,782)       162,226       (670,098)
                                                                          -----------    -----------    -----------

Net increase (decrease) in cash and cash equivalents                           67,040        110,465        (17,797)

Cash and cash equivalents at beginning of year                                619,313        508,848        526,645
                                                                          -----------    -----------    -----------

Cash and cash equivalents at end of year                                  $   686,353    $   619,313    $   508,848
                                                                          ===========    ===========    ===========

Supplemental disclosure of cash flows information:

Cash paid during the year for interest                                    $   824,189    $   658,864    $   721,421
                                                                          ===========    ===========    ===========

Supplemental disclosure of non-cash investing and financing activities:

Decrease in property and equipment due to decrease in due to local
  general partners and affiliates                                         $   184,481    $         0    $         0
                                                                          ===========    ===========    ===========
</TABLE>

                                       40
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 1 - General

Independence  Tax  Credit  Plus  L.P.  III  (the  "Partnership")  is  a  limited
partnership which was formed under the laws of the State of Delaware on December
23,  1993.  The  general  partner of the  Partnership  is  Related  Independence
Associates III L.P., a Delaware limited partnership (the "General Partner"). The
general  partner of the General Partner is Related  Independence  Associates III
Inc., a Delaware  corporation  ("RIAI III").  The ultimate parent of the General
Partner is Centerline  Holding  Company  ("Centerline)  (which had been known as
CharterMac until April 2007).

On March 15, 2007,  Centerline  announced  the  retirement  of Alan P. Hirmes as
Chief Financial  Officer of Centerline.  Upon his  retirement,  he also resigned
from his  position as Director,  President,  Chief  Executive  Officer and Chief
Financial Officer of the RIAI III.  Centerline has named Robert L. Levy as Chief
Financial  Officer and Andrew J. Weil as Chief Executive  Officer to replace Mr.
Hirmes.

The  Partnership's   business  is  to  invest  in  other  partnerships   ("Local
Partnerships,"  "subsidiaries"  or "subsidiary  partnerships")  owning leveraged
apartment  complexes  ("Apartment  Complexes" or "Properties") that are eligible
for the low-income  housing tax credit ("Tax Credit")  enacted in the Tax Reform
Act of 1986, some of which may also be eligible for the historic  rehabilitation
tax credit.

As of March 31, 2007, the  Partnership  held a limited  partnership  interest in
twenty subsidiary partnerships.

The  Partnership  was  authorized  to  issue a total of  100,000  ($100,000,000)
Beneficial  Assignment  Certificates  ("BACs")  which were  registered  with the
Securities and Exchange  Commission for sale to the public.  Each BAC represents
all of the economic and virtually all of the ownership rights  attributable to a
limited  partnership  interest in the Partnership.  As of the termination of the
offering on May 9, 1995,  the  Partnership  had  received  $43,440,000  of gross
proceeds of its offering  (the "Gross  Proceeds")  from 2,810  investors  ("BACs
holders").

The  terms of the  Partnership's  Amended  and  Restated  Agreement  of  Limited
Partnership (the "Partnership  Agreement") provide, among other things, that net
profits or losses and distributions of cash flow are, in general,  allocated 99%
to the limited partners and BACs holders and 1% to the general partner.


NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Accounting

For financial reporting purposes the Partnership's fiscal year ends on March 31.
All  subsidiaries  have  fiscal  years  ending  December  31.  Accounts  of  the
subsidiaries  have been adjusted for  intercompany  transactions  from January 1
through March 31. The Partnership's  fiscal year ends March 31 in order to allow
adequate  time for the  subsidiaries'  financial  statements  to be prepared and
consolidated.  The books and records of the  Partnership  are  maintained on the
accrual basis of accounting,  in accordance with accounting principles generally
accepted in the United States of America ("GAAP").

b) Basis of Consolidation

The consolidated  financial  statements  include the accounts of the Partnership
and twenty subsidiary partnerships in which the Partnership is a limited partner
for the years ended March 31, 2007, 2006 and 2005, respectively, (the 2006, 2005
and 2004  Fiscal  Years).  Through  the  rights  of the  Partnership  and/or  an
affiliate of the General Partner,  which affiliate has a contractual  obligation
to act on behalf of the  Partnership,  to remove  the  general  partners  of the
subsidiary local partnerships  ("Local General Partners") and to approve certain
major  operating  and financial  decisions,  the  Partnership  has a controlling
financial interest in the subsidiary partnerships. All intercompany accounts and
transactions   with  the  subsidiary   partnerships   have  been  eliminated  in
consolidation.

Increases  (decreases)  in  the  capitalization  of  consolidated   subsidiaries
attributable  to  minority  interest  arise  from  cash  contributions  and cash
distributions to the minority interest partners.

Losses  attributable to minority  interest which exceed the minority  interests'
investment  in a subsidiary  have been charged to the  Partnership.  Such losses
aggregated  approximately $34,000, $21,000 and $20,000 for the years ended March
31, 2007,  2006 and 2005,  respectively.  The  Partnership's  investment in each
subsidiary  is  equal  to the  respective  subsidiary's  partners'  equity  less
minority interest capital, if any. In consolidation,  all subsidiary partnership
losses are  included  in the  Partnership's  capital  account  except for losses
allocated to minority interest capital.

c) Cash and Cash Equivalents

Cash and cash  equivalents  include cash on hand, cash in banks, and investments
in short-term highly liquid  investments  purchased with original  maturities of
three months or less.

d) Property and Equipment

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price, acquisition fees and expenses,  construction period interest
and any other costs incurred in acquiring the  properties.  The cost of property

                                       41
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods.  Expenditures for repairs and maintenance are charged
to expense as incurred;  major renewals and betterments are capitalized.  At the
time property and  equipment are retired or otherwise  disposed of, the cost and
accumulated   depreciation  are  eliminated  from  the  assets  and  accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings.  A loss on impairment of assets is recorded when management  estimates
amounts  recoverable  through  future  operations and sale of the property on an
undiscounted   basis  are  below  depreciated  cost.  At  that  time,   property
investments  themselves  are reduced to estimated  fair value  (generally  using
discounted cash flows).

Through March 31, 2007, the Partnership has recorded approximately $1,403,000 as
a loss on  impairment  of assets or reduction  to  estimated  fair value for one
Local Partnership.

At the time management  commits to a plan to dispose of assets,  said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets  are  classified  as  property  and  equipment-held  for sale and are not
depreciated.  Through  March 31,  2007,  the  Partnership  has not  recorded  or
classified any property and equipment as held for sale.

e) Revenue Recognition

Rental income is earned  primarily under standard  residential  operating leases
and is typically  due the first day of each month,  but can vary by property due
to the terms of the tenant leases.  Rental income is recognized  when earned and
charged to tenants' accounts  receivable if not received by the due date. Rental
payments  received in advance of the due date are deferred until earned.  Rental
subsidies  are  recognized  as  rental  income  during  the month in which it is
earned.

Other  revenues are  recorded  when earned and consist of the  following  items:
Interest  income  earned on cash and cash  equivalent  balances and cash held in
escrow balances,  income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.

Other revenues  include the following  amounts at both the Partnership and Local
Partnership level:
<TABLE>
<CAPTION>
                              Years Ended March 31,
                         ------------------------------
                            2007      2006        2005
                         --------   --------   --------
<S>                      <C>        <C>        <C>
Interest                 $149,881   $118,270   $ 96,706
Other                     155,401    170,101    321,043
                         --------   --------   --------

   Total other revenue   $305,282   $288,371   $417,749
                         ========   ========   ========
</TABLE>

f) Income Taxes

The  Partnership  is not  required to provide  for, or pay,  any federal  income
taxes.  Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The  Partnership may be subject
to state and local taxes in jurisdictions  in which it operates.  For income tax
purposes, the Partnership has a fiscal year ending December 31 (Note 9).

g) Loss Contingencies

The  Partnership   records  loss  contingencies  as  a  charge  to  income  when
information  becomes available which indicates that it is probable that an asset
has  been  impaired  or a  liability  has  been  incurred  as of the date of the
financial statements and the amount of loss can be reasonably estimated.

h) Use of Estimates

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management  to make  estimates  and  assumptions  that affect  certain  reported
amounts and  disclosures.  Accordingly,  actual  results could differ from those
estimates.


NOTE 3 - Fair Value of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each  class  of  financial  instruments  (all of which  are held for  nontrading
purposes) for which it is practicable to estimate that value:

Cash and  Cash  Equivalents,  Investments  Available-for-Sale  and Cash  Held in
--------------------------------------------------------------------------------
Escrow
------
The carrying amount approximates fair value.

Mortgage Notes Payable
----------------------
The fair value of mortgage notes payable is estimated, where practicable,  based
on the borrowing rate currently available for similar loans.

                                       42
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


The  estimated  fair  values of the  Partnership's  mortgage  notes  payable and
construction loans payable are as follows:
<TABLE>
<CAPTION>
                                                March 31, 2007             March 31, 2006
                                          -------------------------   -------------------------
                                           Carrying                     Carrying
                                            Amount      Fair Value       Amount      Fair Value
                                          -----------   -----------   -----------   -----------
<S>                                       <C>           <C>           <C>           <C>
Mortgage notes payable for which it is:

Practicable to estimate fair value        $13,217,202   $12,194,421   $13,403,675   $12,385,902
Not practicable                            30,312,298             *    30,605,101             *
</TABLE>

*  Management  believes it is not  practical  to estimate  the fair value of the
   mortgage notes payable because mortgage programs with similar characteristics
   are not currently available to the Local Partnerships.


Management  believes it is not  practical  to estimate  the fair value of due to
local and general  partners and affiliates  because  market  information on such
unique loans are not currently available to the Local Partnerships.

The carrying amount of other financial  instruments that require such disclosure
approximates fair value.


NOTE 4 - Property and Equipment

The components of property and equipment and their estimated useful lives are as
follows:
<TABLE>
<CAPTION>

                                           March 31,                Estimated
                                 ----------------------------     Useful Lives
                                     2007            2006            (Years)
                                 ------------    ------------     ------------
<S>                              <C>             <C>                  <C>
Land                             $  1,166,583    $  1,166,583           -
Building and improvements          81,876,119      83,788,184         20-40
Furniture and fixtures              1,375,560       1,259,853          5-12
                                 ------------    ------------
                                   84,418,262      86,214,620

Less: Accumulated depreciation    (26,947,693)    (24,907,449)
                                 ------------    ------------

                                 $ 57,470,569    $ 61,307,171
                                 ============    ============
</TABLE>

Included in property and equipment is $2,509,717 of acquisition fees paid to the
General Partner and $1,178,468 of acquisition  expenses as of March 31, 2007 and
2006,  respectively.  In addition,  as of March 31, 2007 and 2006,  building and
improvements include $1,106,837 of capitalized interest.

In  connection  with  the  rehabilitation  of  the  properties,  the  subsidiary
partnerships  have incurred  developer's fees of $8,980,181 to the Local General
Partners and their affiliates as of March 31, 2007 and 2006. Such fees have been
included in the cost of property and equipment.

Depreciation  expense for the years ended March 31, 2007, 2006 and 2005 amounted
to $2,612,983, $2,574,993 and $2,650,522, respectively.

During the year ended March 31, 2007, in accordance  with Statement of Financial
Accounting  Standards No. 144 ("SFAS No. 144") "Accounting for the Impairment of
Disposal of Long-Lived  Assets",  the Partnership deemed the building of Mansion
Court  Phase II  Venture  impaired  and  wrote it down to its fair  value  which
resulted in a loss on  impairment of  approximately  $1,403,000  (consisting  of
approximately   $1,976,000  of  fixed  assets  and  approximately   $573,000  of
accumulated  depreciation).  Fair value was  obtained  from an  appraisal  after
indications that the carrying value of the assets was not recoverable  evidenced
by a  history  of  negative  net  operating  income  over the  past  few  years.
Therefore, the property was written down to its appraised value of approximately
$549,000.

                                       43
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 5 - Cash Held in Escrow

Cash held in escrow consists of the following:
<TABLE>
<CAPTION>
                                                March 31,
                                         -----------------------
                                            2007          2006
                                         ----------   ----------
<S>                                      <C>          <C>
Purchase price payments*                 $  130,418   $  130,418
Real estate taxes, insurance and other    3,193,913    3,367,132
Reserve for replacements                  1,763,163    1,846,797
Tenant security deposits                    409,120      396,616
                                         ----------   ----------

                                         $5,496,614   $5,740,963
                                         ==========   ==========
</TABLE>

* Represents  amounts  to be  paid  to  seller  upon  meeting  specified  rental
  achievement criteria.


NOTE 6 - Deferred Costs

The  components  of  deferred  costs and their  periods of  amortization  are as
follows:
<TABLE>
<CAPTION>

                                           March 31,               Estimated
                                 ---------------------------     Useful Lives
                                     2007           2006           (Years)
                                 -----------    ------------    ------------
<S>                              <C>            <C>                  <C>
Financing costs                  $ 1,335,101    $  1,335,101         *
Less: Accumulated amortization      (572,521)       (496,008)
                                 -----------    ------------

                                 $   762,580    $    839,093
                                 ===========    ============
</TABLE>

* Over the life of the related mortgages.


Amortization  expense for the years ended March 31, 2007, 2006 and 2005 amounted
to $76,513, $107,598 and $57,496, respectively.


NOTE 7 - Mortgage Notes Payable

The mortgage notes, which are collateralized by land and buildings,  are payable
in aggregate monthly installments of approximately  $100,000 including principal
and interest at rates  varying from 0% to 10% per annum,  through the year 2046.
Each subsidiary  partnership's  mortgage note payable is  collateralized  by the
land and buildings of the respective subsidiary  partnership,  the assignment of
each certain subsidiary  partnership's  rents and leases, and is without further
recourse.

BK-9-A Partners L.P. ("Lafayette")
---------------------------------
On August 22, 2005, Lafayette  refinanced its existing mortgage  indebtedness in
the amount of $885,701.  The new mortgage in the amount of $1,975,000 matures on
August 31, 2015 and bears interest at the rate of 5.625% per annum for the first
five years of the loan. Effective September 1, 2010 and on the first day of each
September thereafter, the interest rate will be adjusted to 2.5% above the Prime
Rate. Financing costs of approximately $100,000 were incurred, and a partnership
reserve  account  in the  amount  of  $105,000  was  established  by  the  Local
Partnership.   The  refinancing  resulted  in  a  distribution  from  the  Local
Partnership to the Partnership of approximately $451,000.

Primm Place Partners, L.P. ("Primm Place")
------------------------------------------
In November 2005, Primm Place  refinanced an existing  mortgage in the amount of
$2,150,000  by acquiring a first  mortgage  loan  provided by U.S.  Bank,  N.A.,
through the issuance of Multifamily  Housing  Refunding  Revenue  Bonds,  Series
2005, of $2,150,000. The loan, secured by a first deed of trust on the property,
bears interest at an annual rate of 5.32%,  payable monthly beginning January 1,
2006.  Principal  payments are not required  until maturity on November 1, 2015.
Additionally,  in November 2005,  Primm Place entered into a loan with U.S. Bank
N.A.  The loan,  in the amount of  $995,086,  is also secured by a first deed of
trust on the  property.  Approximately  $771,000 of these  proceeds were used to
reimburse  certain  advances owed to the Local General  Partner.  The loan bears
interest  at an annual  rate of  7.07%.  Commencing  January  1,  2006,  monthly
principal  and  interest  payments  are  required  to be made until  maturity on
November 1, 2015.

                                       44
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


Annual principal payment requirements by the subsidiary partnerships for each of
the next five years and thereafter, are as follows:
<TABLE>
<CAPTION>
  December 31,                                Amount
----------------                           ------------
<S>                                        <C>
2007                                       $    534,370
2008                                            581,733
2009                                          1,405,234
2010                                          2,403,659
2011                                            934,996
Thereafter                                   37,669,508
                                           ------------

                                           $ 43,529,500
                                           ============
</TABLE>


Accrued  interest  payable  as of March  31,  2007  and  2006 was  approximately
$8,592,000 and $7,586,000, respectively. Interest accrues on all mortgage loans,
which  include  primary  and  secondary  loans.  Certain  secondary  loans  have
provisions  such that  interest is accrued but not payable  until a future date.
The  Partnership  anticipates  the payment of accrued  interest on the secondary
loans (which make up the  majority of the accrued  interest  payable  amount and
which  have  been  accumulating  since  the  Partnership's   investment  in  the
respective  Local  Partnership)  will be made from future  refinancings or sales
proceeds from the respective Local Partnerships.

The mortgage  agreements  require  monthly  deposits to replacement  reserves of
approximately  $29,000 and monthly  deposits to escrow  accounts for real estate
taxes, hazard and mortgage insurance and other (Note 5).


NOTE 8 - Related Party Transactions

An affiliate  of the General  Partner has a .01%  interest as a special  limited
partner in each of the Local Partnerships.

Pursuant to the  Partnership  Agreement  and the  partnership  agreements of the
Local Partnerships ("Local Partnership Agreements"), the General Partner and its
affiliates receive their pro rata shares of profits, losses and tax credits.

A) Guarantees

In connection with investments in  development-stage  Apartment  Complexes,  the
General  Partner  generally  required  that the Local General  Partners  provide
completion guarantees and/or undertake to repurchase the Partnership's  interest
in the Local  Partnership if  construction or  rehabilitation  was not completed
substantially  on time or on  budget  ("Development  Deficit  Guarantees").  The
Development Deficit Guarantees generally also required the Local General Partner
to provide  any funds  necessary  to cover net  operating  deficits of the Local
Partnership  until such time as the  Apartment  Complex had achieved  break-even
operations.  The  General  Partner  generally  required  that the Local  General
Partners  undertake  an  obligation  to fund  operating  deficits  of the  Local
Partnership  (up to a stated  maximum  amount)  during a limited  period of time
(typically  three  to  five  years)  following  the  achievement  of  break-even
operations  ("Operating  Deficit  Guarantees").  As of March 31, 2007, the gross
amount of the Operating Deficit Guarantees aggregate  approximately  $5,487,000,
all of which have expired.  Management does not expect that expiration to have a
material  impact on liquidity,  based on prior years'  fundings.  Amounts funded
under such  agreements are treated as noninterest  bearing loans,  which will be
paid  only out of 50% of  available  cash flow or out of  available  net sale or
refinancing  proceeds.  In some instances,  the Local General Partners have been
required to undertake an obligation to comply with a Rent-Up Guaranty Agreement,
whereby  the Local  General  Partner  has  agreed to pay  liquidated  damages if
predetermined occupancy rates are not achieved.  These payments are made without
right  of  repayment.   In  cases  where  the  General  Partner  has  deemed  it
appropriate,  the  obligations of a Local General  Partner under the Development
Deficit,  Operating  Deficit  and/or  Rent-Up  Guarantees  have been  secured by
letters of credit and/or cash escrow deposits.

                                       45
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


B) Other Related Party Expenses

The General Partner and its affiliates perform services for the Partnership. The
costs  incurred to the General  Partner and other related  parties for the years
ended March 31, 2007, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>
                                                 Years Ended March 31,
                                             ------------------------------
                                               2007       2006       2005
                                             --------   --------   --------
<S>                                          <C>        <C>        <C>
Partnership management fees (a)              $341,984   $351,400   $334,141
Expense reimbursement (b)                     140,388    233,499    152,857
Local administrative fees (d)                  60,250     60,250     60,250
                                             --------   --------   --------

Total general and administrative-General
 Partner                                      542,622    645,149    547,248
                                             --------   --------   --------

Property management fees incurred to
 affiliates of the subsidiary
 partnerships' general partners (c)           279,846    283,430    305,237
                                             --------   --------   --------

Total  general and  administrative-related
 parties                                     $822,468   $928,579   $852,485
                                             ========   ========   ========
</TABLE>


(a) The General  Partner is entitled to receive a  partnership  management  fee,
after payment of all Partnership expenses,  which together with the annual local
administrative  fees  will not  exceed a maximum  of 0.5% per annum of  invested
assets (as defined in the Partnership Agreement),  for administering the affairs
of  the  Partnership.  Subject  to the  foregoing  limitation,  the  partnership
management fee will be determined by the General  Partner in its sole discretion
based  upon its  review of the  Partnership's  investments.  Unpaid  partnership
management  fees for any  year  will be  accrued  without  interest  and will be
payable only to the extent of  available  funds after the  Partnership  has made
distributions to the limited  partners of sale or refinancing  proceeds equal to
their original capital  contributions plus a 10% priority return thereon (to the
extent not theretofore paid out of cash flow).  Partnership management fees owed
to the General Partner amounting to approximately $3,233,000 and $2,891,000 were
accrued  and unpaid as of March 31,  2007 and 2006,  respectively.  Without  the
General Partner's  continued accrual without payment the Partnership will not be
in a  position  to meet its  obligations.

(b) The Partnership reimburses the General Partner and its affiliates for actual
Partnership   operating  expenses  incurred  by  the  General  Partner  and  its
affiliates on the  Partnership's  behalf.  The amount of reimbursement  from the
Partnership is limited by the provisions of the Partnership  Agreement.  Another
affiliate of the General Partner  performs asset monitoring for the Partnership.
These   services   include  site  visits  and   evaluations  of  the  subsidiary
partnerships' performance.

(c)  Property  management  fees  incurred  by  Local  Partnerships  amounted  to
$505,392,  $498,034 and  $512,072  for the years ended March 31, 2007,  2006 and
2005, respectively. Of these fees, $279,846, $283,430 and $305,237 were incurred
to affiliates of the subsidiary partnerships' general partners.

(d) Independence SLP III L.P., a limited partner of the subsidiary partnerships,
is entitled to receive a local  administrative fee of up to $5,000 per year from
each subsidiary partnership.

C) Due to Local General Partners and Affiliates

Due to local general partners and affiliates consists of the following:
<TABLE>
<CAPTION>
                                              March 31,
                                      ------------------------
                                          2007         2006
                                      ----------   ----------
<S>                                   <C>          <C>
Operating advances                    $  126,817   $   80,406
Development fee payable                1,254,234    1,497,232
Other capitalized costs                   16,335       16,335
Construction costs payable               154,543      154,543
General Partner loan payable             246,534      220,008
Management and other operating fees      178,302       55,507
                                      ----------   ----------

                                      $1,976,765   $2,024,031
                                      ==========   ==========
</TABLE>

                                       46
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


D) Advances from Partnership to Local Partnerships

As of March 31, 2007, the  Partnership  has advanced  certain Local  Partnership
operating loans  (non-interest  bearing) amounting to approximately  $2,981,000.
Such advances are eliminated in  consolidation.  The following table  summarizes
these advances:
<TABLE>
<CAPTION>
                               March 31,
                       -----------------------
                          2007         2006
                       ----------   ----------
<S>                    <C>          <C>
New Zion               $    2,655   $    2,655
Knickerbocker Avenue      454,441      454,441
Lafayette Avenue          416,094      416,094
Eastern Parkway         1,016,321    1,016,321
2301 First Avenue       1,080,628    1,080,628
Sumpter Commons            10,580        7,876
                       ----------   ----------

                       $2,980,719   $2,978,015
                       ==========   ==========
</TABLE>


NOTE 9 - Taxable Net Loss

A reconciliation of the financial statement net loss to the taxable net loss for
the Partnership and its consolidated subsidiaries follows:
<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                     -----------------------------------------
                                                                         2006           2005           2004
                                                                     -----------    -----------    -----------

<S>                                                                  <C>            <C>            <C>
Financial statement net loss                                         $(4,680,957)   $(3,471,775)   $(3,239,139)

Differences between  depreciation and amortization expense records
  for financial reporting purposes and the accelerated costs
  recovery system utilized for income tax purposes                      (153,314)      (169,991)      (199,664)

Differences resulting from parent company having a different
  fiscal year for income tax and financial reporting purposes            (20,730)        27,039         67,422

Loss on impairment of property for financial reporting purposes
  not deductible for tax purposes                                      1,402,760              0              0

Other, including accruals for financial reporting not deductible
  for tax purposes until paid                                            361,011       (227,594)        46,799
                                                                     -----------    -----------    -----------

Net loss as shown on the income tax return for the calendar year
  ended                                                              $(3,091,230)   $(3,842,321)   $(3,324,582)
                                                                     ===========    ===========    ===========
</TABLE>

                                       47
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007



NOTE 10 - Selected Quarterly Financial Data (Unaudited)

The following table summarizes the Partnership's quarterly results of operations
for the years ended March 31, 2007 and 2006.
<TABLE>
<CAPTION>
                                                                Quarter Ended
                                            --------------------------------------------------------
                                              June 30,     September 30,  December 31,    March 31,
              OPERATIONS                        2006           2006           2006          2007
----------------------------------------    -----------    ------------   ------------   -----------
<S>                                         <C>            <C>            <C>            <C>
Revenues                                    $ 1,809,387    $ 1,869,778    $ 1,889,328    $ 1,865,551

Operating expenses                           (2,629,423)    (2,660,999)    (2,640,388)    (4,431,087)
                                            -----------    -----------    -----------    -----------

Loss before minority interest                  (820,036)      (791,221)      (751,060)    (2,565,536)

Minority interest in loss of subsidiaries        68,382         64,973         57,550         55,991
                                            -----------    -----------    -----------    -----------

Net loss                                    $  (751,654)   $  (726,248)   $  (693,510)   $(2,509,545)
                                            ===========    ===========    ===========    ===========

Net loss per weighted average BAC           $    (17.13)   $    (16.55)   $    (15.81)   $    (57.19)
                                            ===========    ===========    ===========    ===========
<CAPTION>
                                                                Quarter Ended
                                            --------------------------------------------------------
                                              June 30,     September 30,  December 31,    March 31,
              OPERATIONS                        2005           2005           2005          2006
----------------------------------------    -----------    ------------   ------------   -----------
<S>                                         <C>            <C>            <C>            <C>
Revenues                                    $ 1,740,672    $ 1,756,367    $ 1,761,014    $ 1,980,434

Operating expenses                           (2,726,742)    (2,499,360)    (2,622,895)    (3,155,643)
                                            -----------    -----------    -----------    -----------

Loss before minority interest                  (986,070)      (742,993)      (861,881)    (1,175,209)

Minority interest in loss of subsidiaries        69,567         12,520          8,941        203,350
                                            -----------    -----------    -----------    -----------

Net loss                                    $  (916,503)   $  (730,473)   $  (852,940)   $  (971,859)
                                            ===========    ===========    ===========    ===========

Net loss per weighted average BAC           $    (20.89)   $    (16.65)   $    (19.43)   $    (22.15)
                                            ===========    ===========    ===========    ===========
</TABLE>


                                       48
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 11 - Commitments and Contingencies

a) Leases

Savanah  Park  Housing  Limited  Partnership  is  leasing  the land on which its
apartment  complex is located for a term of 50 years,  which commenced in August
1996, with monthly rent payments of $1,449.  Estimated  future minimum  payments
due under the terms of the lease are as follows:
<TABLE>
<CAPTION>
December 31,                                        Amount
-------------                                     ----------
<S>                                               <C>
2007                                              $   21,252
2008                                                  21,252
2009                                                  21,252
2010                                                  21,252
2011                                                  21,252
Thereafter                                           743,820
                                                  ----------
                                                  $  850,080
                                                  ==========
</TABLE>


As of December 31, 2006,  the lease  agreement was current.  For the years ended
December 31, 2006 and 2005,  $38,962 and $26,242,  respectively,  have been paid
under the terms of the lease and $0 and $14,489, respectively, remained payable.

b) Uninsured Cash and Cash Equivalents

The Partnership  maintains its cash and cash  equivalents in various banks.  The
accounts  at  each  bank  are  guaranteed  by  the  Federal  Deposit   Insurance
Corporation  up to $100,000.  Uninsured cash and cash  equivalents  approximated
$181,000 at March 31, 2007.

c) Cash Distributions

Cash distributions from the Local Partnerships to the Partnership are restricted
by the  provisions of the respective  Local  Partnership  Agreements  and/or HUD
based on operating results and a percentage of the owner's equity  contribution.
Such cash distributions are typically made from surplus cash flow.

d) Other

The  Partnership and BACs holders began to recognize Tax Credits with respect to
a property when the credit period for such  Property  (generally  ten years from
the date of  investment  or,  if  later,  the date the  property  is  leased  to
qualified tenants) commenced.  Because of the time required for the acquisition,
completion  and  rent-up of  Properties,  the amount of Tax  Credits per BAC has
gradually  increased over the first three years of the Partnership.  Tax Credits
not  recognized  in the first three years will be recognized in the 11th through
13th years. The Partnership generated $3,164,434,  $4,614,216 and $5,580,448 Tax
Credits during the 2006, 2005 and 2004 tax years, respectively.

The  Partnership  is subject to the risks  incident to potential  losses arising
from the management and ownership of improved real estate.  The  Partnership can
also be affected by poor economic  conditions  generally;  however, no more than
35%  of the  Properties  are  located  in  any  single  state.  There  are  also
substantial  risks associated with owning  interests in properties,  as does the
Partnership,  which receive government  assistance,  for example the possibility
that Congress may not appropriate  funds to enable the Department of Housing and
Urban Development ("HUD") to make rental assistance payments. HUD also restricts
annual  cash  distributions  to  partners  based  on  operating  results  and  a
percentage of the owner's equity  contribution.  The Partnership  cannot sell or
substantially  liquidate its investments in subsidiary  partnerships  during the
period that the subsidy  agreements  are in existence  without  HUD's  approval.
Furthermore,  there may not be market demand for apartments at full market rents
when the rental assistance contracts expire.

                                       49
<PAGE>

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

None

Item 9A. Controls and Procedures

(a) EVALUATION OF DISCLOSURE  CONTROLS AND PROCEDURES.  The Principal  Executive
Officer and Principal Financial Officer of Related  Independence  Associates III
L.P., the general partner of the Partnership,  and its general partner,  Related
Independence  Associates  III Inc.,  have  evaluated  the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as such term is defined in
Rules  13a-15(e) and  15d-15(e)  under the  Securities  Exchange Act of 1934, as
amended  ("Exchange  Act") as of the end of the period  covered by this  report.
Based on such  evaluation,  such officers have concluded  that, as of the end of
such period, the Partnership's disclosure controls and procedures are effective.

(b) INTERNAL CONTROL OVER FINANCIAL  REPORTING.  There have not been any changes
in  Partnership's  internal  control over financial  reporting during the fiscal
year to  which  this  report  relates  that  have  materially  affected,  or are
reasonably likely to materially affect, the Partnership's  internal control over
financial reporting.

Item 9B.  Other Information

Not applicable.


                                    PART III

Item 10. Directors, Executive Officers and Corporate Governance

The Partnership has no directors or executive  officers.  The general partner of
the Partnership is Related Independence  Associates III L.P., a Delaware limited
partnership (the "General Partner").  The general partner of the General Partner
is Related  Independence  Associates  III Inc.,  a Delaware  corporation  ("RIAI
III").  The  Partnership's  affairs are managed  and  controlled  by the General
Partner.  The  Partnership has not adopted a separate code of ethics because the
Partnership has no directors or executive  officers.  The ultimate parent of the
General Partner, Centerline Holding Company ("Centerline") (which had been known
as   CharterMac   until  April  2007),   has  adopted  a  code  of  ethics  (see
http://www.centerline.com).

On March 15, 2007,  Centerline  announced  the  retirement  of Alan P. Hirmes as
Chief Financial  Officer of Centerline.  Upon his  retirement,  he also resigned
from his  position as Director,  President,  Chief  Executive  Officer and Chief
Financial  Officer  of RIAI III.  Centerline  has named  Robert L. Levy as Chief
Financial  Officer and Andrew J. Weil as Chief Executive  Officer to replace Mr.
Hirmes.

Certain information  concerning the directors and executive officers of RIAI III
is set forth below.

Name                                 Position
--------------------                 -------------------------------------------

Robert L. Levy                       Chief Financial Officer

Andrew J. Weil                       President and Chief Executive Officer

Marc D. Schnitzer                    Senior Vice President

Glenn F. Hopps                       Treasurer


ROBERT L. LEVY, 41, is the Chief  Financial  Officer of Centerline.  Mr. Levy is
also the  Chief  Financial  Officer  of  American  Mortgage  Acceptance  Company
("AMAC"), a publicly traded real estate investment trust managed by an affiliate
of  Centerline.  Mr. Levy is responsible  for overseeing the Corporate  Finance,
Capital Markets,  Accounting,  Budgeting, Tax and Treasury departments. Mr. Levy
joined  Centerline's  predecessor in November of 2001 as the Director of Capital
Markets.  From 1998  through  2001,  Mr. Levy was a Vice  President  in the Real
Estate Equity Research and Investment Banking Departments at Robertson Stephens,
an  investment  banking  firm in San  Francisco.  Prior  to 1998,  Mr.  Levy was
employed by Prudential  Securities in the Real Estate Equity  Research Group and
at Prudential  Realty Group,  the real estate  investment  arm of the Prudential
Insurance Company.  He received his Masters in Business  Administration from the
Leonard N. Stern School of Business at New York  University  and his Bachelor of
Arts from Northwestern University.

ANDREW J. WEIL, 36, is an Executive Managing Director of Centerline,  and is the
Head of the Affordable Housing Group. Mr. Weil is responsible for overseeing the
day to day operations of the Affordable Housing Group, including the acquisition
of  properties  with  Low-Income  Housing Tax Credits  and the  origination  and
structuring of institutional funds. Prior to joining Centerline's predecessor in
January  1994,  Mr.  Weil was a Financial  Analyst  for the  Heights  Management
Company,  where he  specialized  in the  analysis of potential  investments  and
property management. Mr. Weil received a Bachelor of Science degree in Economics
with a  concentration  in Finance form the Wharton  School of the  University of
Pennsylvania.

MARC D.  SCHNITZER,  46, is Senior Vice President of RIAI III. He is responsible
both  for  financial  restructuring  of real  estate  properties  and  directing
Centerline's  acquisitions  of properties  generating  Housing Tax Credits.  Mr.
Schnitzer received a Masters of Business  Administration from The Wharton School
of the University of Pennsylvania in December 1987 before joining  Centerline in
January  1988.  From 1983 to January  1986,  he was a financial  analyst for the
First Boston  Corporation in New York. Mr.  Schnitzer  graduated summa cum laude
with a  Bachelor  of  Science  in  Business  Administration  from the  School of
Management at Boston  University in May 1983. In March 2006,  Mr.  Schnitzer was
appointed Chief Executive  Officer of Centerline.  Mr.  Schnitzer also serves on
the Board of Trustees of Centerline and AMAC.

                                       50
<PAGE>

GLENN F. HOPPS,  44, joined  Centerline in December 1990, and prior to that date
was  employed by Marks Shron & Company and  Weissbarth,  Altman and  Michaelson,
certified public accountants. Mr. Hopps graduated from New York State University
at Albany with a Bachelor of Science Degree in Accounting.

Item 11.  Executive Compensation

The  Partnership has no officers or directors.  The Partnership  does not pay or
accrue  any fees,  salaries  or other  forms of  compensation  to  directors  or
officers of the General Partner for their services.  However, under the terms of
the Partnership Agreement, the Partnership has entered into certain arrangements
with the General Partner and its affiliates,  which provide for  compensation to
be paid to the General Partner and its  affiliates.  Such  arrangements  include
(but are not limited to)  agreements  to pay  nonrecurring  acquisition  fees, a
nonaccountable   acquisition   expense   allowance,   an   accountable   expense
reimbursement  and  subordinated  disposition fees to the General Partner and/or
its affiliates.  In addition,  the General Partner is entitled to a subordinated
interest in cash from sales or refinancings and a 1% interest in net income, net
loss,  distributions  of adjusted  cash from  operations  and cash from sales or
refinancings.  Certain  directors  and officers of the General  Partner  receive
compensation from the General Partner and its affiliates for services  performed
for various  affiliated  entities which may include  services  performed for the
Partnership.  The maximum annual partnership  management fee paid to the General
Partner  is 0.5% of  invested  assets.  See  Note 8 in Item 8  above,  which  is
incorporated herein by reference.

Tabular information concerning salaries, bonuses and other types of compensation
payable to executive  officers has not been included in this annual  report.  As
noted  above,  the  Partnership  has  no  executive  officers.   The  levels  of
compensation  payable to the General Partner and/or its affiliates is limited by
the terms of the Partnership  Agreement and may not be increased  therefrom on a
discretionary basis.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Security Holder Matters
<TABLE>
<CAPTION>
                                 Name and Address of          Amount and Nature of        Percentage
Title of Class                   Beneficial Ownership         Beneficial Ownership         of Class
----------------------------    ---------------------    -----------------------------    ----------
<S>                             <C>                      <C>                                 <C>
                                Related Independence
                                Associates III L.P.
General Partnership Interest    625 Madison Avenue       $1,000 capital contribution -
 in the Partnership             New York, NY 10022       directly owned                      100%
</TABLE>


Independence  SLP III L.P., a limited  partnership  whose general partner is the
general  partner of the General Partner of the Partnership and which acts as the
special  limited  partner  of  each  Local  Partnership,  holds  a .01%  limited
partnership  interest  in each Local  Partnership.  See Note 8 to the  Financial
Statements  in  Item 8  above,  which  information  is  incorporated  herein  by
reference   thereto.   The  following  table  sets  forth  the  number  of  BACs
beneficially  owned,  as of May 18,  2007,  by (i) each BACs holder known to the
Partnership  to be a  beneficial  owner of more than 5% of the  BACs,  (ii) each
director and executive officer of the general partner of the General Partner and
(iii) the directors and executive officers of the general partner of the General
Partner as a group.  Unless  otherwise  noted,  all BACs are owned directly with
sole voting and dispositive powers.

Except as set forth  below,  no  person  is known by the  Partnership  to be the
beneficial owner of more than five percent of the Limited Partnership  Interests
in the Partnership and/or BACs, and neither the General Partner nor any director
or officer of the General  Partner  beneficially  owns any  Limited  Partnership
Interests in the Partnership or BACs.
<TABLE>
<CAPTION>
                                        Amount and Nature of          Percent of
Name of Beneficial Owner (1)            Beneficial Ownership            Class
------------------------                --------------------          ----------
<S>                                     <C>                           <C>
Lehigh Tax Credit Partners, Inc.        3,242.94 (2) (3)              7.5%

J. Michael Fried                        3,242.94 (2) (3)              7.5%

Alan P. Hirmes                          3,242.94 (2) (3)              7.5%

Stuart J. Boesky                        3,242.94 (2) (3)              7.5%

Stephen M. Ross                         3,242.94 (2) (3)              7.5%

Marc D. Schnitzer                       3,242.94 (2) (3)              7.5%

Denise L. Kiley                         3,242.94 (2) (3)              7.5%

Glenn F. Hopps                          -                             -

All directors and executive  officers
of  the   general   partner   of  the
Related  General  Partner  as a group
(nine persons)                          3,242.94 (2) (3)              7.5%
</TABLE>

(1) The address for each of the persons in the table is 625 Madison Avenue,  New
York, New York 10022.

(2) As set forth in Schedule 13D filed by Lehigh Tax Credit  Partners III L.L.C.
("Lehigh III") and Lehigh Tax Credit Partners,  Inc. (the "Managing  Member") on

                                       51
<PAGE>

January 25, 1999 with the Securities and Exchange  Commission (the "Commission")
and pursuant to a letter  agreement dated October 6, 1998 among the Partnership,
Lehigh III and the General  Partner  (the  "Standstill  Agreement"),  Lehigh III
agreed that, prior to October 6, 2008 (the  "Standstill  Expiration  Date"),  it
will not and it will  cause  certain  affiliates  not to (i) seek to  propose to
enter  into,  directly  or  indirectly,  any  merger,  consolidation,   business
combination,  sale or acquisition of assets,  liquidation,  dissolution or other
similar  transaction  involving the  Partnership,  (ii) form,  join or otherwise
participate  in a "group"  (within  the meaning of Section 13 (d)(3) of the Act)
with  respect to any voting  securities  of the  Partnership,  except that those
affiliates bound by the Standstill Agreement will not be deemed to have violated
it and  formed a "group"  solely by acting  in  accordance  with the  Standstill
Agreement,  (iii)  disclose  in writing to any third  party  intention,  plan or
arrangement  inconsistent  with the terms of the Standstill  Agreement,  or (iv)
loan money to,  advise,  assist or encourage any person in  connection  with any
action inconsistent with the terms of the Standstill Agreement.  Lehigh III also
agreed to vote its BACs in the same  manner as a  majority  of all  voting  BACs
holders;  provided,  however,  Lehigh  III is  entitled  to vote  its BACs as it
determines  with regard to any proposal  (i) to remove the General  Partner as a
general partner of the Partnership or (ii) concerning the reduction of any fees,
profits,  distributions or allocations for the benefit of the General Partner or
its  affiliates.  The  address  of each of the  Partnership,  Lehigh III and the
General Partner is 625 Madison Avenue, New York, New York 10022.

(3) Each such party serves as a director and  executive  officer of the Managing
Member and owns an equity  interest  therein  except J. Michael  Fried,  Alan P.
Hirmes, Denise L. Kiley and Stuart J. Boesky who own only an economic interest.

Item 13. Certain Relationships and Related Transactions

The  Partnership  has and will continue to have certain  relationships  with the
General Partner and its  affiliates,  as discussed in Item 11 and also Note 8 in
Item 8 above, which are incorporated herein by reference thereto. However, there
have been no direct  financial  transactions  between  the  Partnership  and the
directors and officers of the General Partner.

Item 14. Principal Accountant Fees and Services

Audit Fees
----------
The  aggregate  fees billed by Trien  Rosenberg  Rosenberg  Weinberg  Ciullo and
Fazzari LLP and its affiliates for professional  services rendered for the audit
of the Partnership's  annual financial  statements for the years ended March 31,
2007 and 2006 and for the reviews of the  financial  statements  included in the
Partnership's  quarterly  reports on Form 10-Q for those years were  $52,700 and
$84,700, respectively.

Audit Related Fees
------------------
None

Tax Fees
--------
The  aggregate  fees billed by Weiser LLP and its  affiliates  for  professional
services  rendered for the preparation of the  Partnership's  annual tax returns
were $8,900 and $8,700 for the years ended December 31, 2006 and 2005.

All Other Fees
--------------
None

The  Partnership is not required to have, and does not have, a stand alone audit
committee.

                                       52
<PAGE>

                                     PART IV


Item 15. Exhibits and Financial Statement Schedules
                                                                      Sequential
                                                                         Page
                                                                      ----------

(a) 1.   Financial Statements
         --------------------

         Report of Independent Registered Public Accounting Firm          14

         Consolidated Balance Sheets at March 31, 2007 and 2006           37

         Consolidated Statements of Operations for the Years Ended
           March 31, 2007, 2006 and 2005                                  38

         Consolidated Statements of Changes in Partners' Capital
           for the Years Ended March 31, 2007, 2006 and 2005              39

         Consolidated Statements of Cash Flows for the Years Ended
           March 31, 2007, 2006 and 2005                                  40

         Notes to Consolidated Financial Statements                       41

(a) 2.   Consolidated Financial Statement Schedules
         ------------------------------------------

         Report of Independent Registered Public Accounting Firm          60

         Schedule I - Condensed Financial Information of Registrant       61

         Schedule III - Real Estate and Accumulated Depreciation          64

         All other  schedules have been omitted because they are not
           required or because the required  information is contained
           in the financial statements or notes thereto.

(a)3.    Exhibits
         --------

(3A)     Agreement of Limited  Partnership of Independence Tax Credit
           Plus L.P. III as adopted on December 23, 1993*

(3B)     Form of Amended and Restated Agreement of Limited Partnership
           of Independence Tax Credit Plus L.P. III, attached to the
           Prospectus as Exhibit A**

(3C)     Certificate of Limited Partnership of Independence Tax Credit
           Plus L.P. III as filed on December 23, 1993*

(10A)    Form of Subscription Agreement attached  to the Prospectus
           as Exhibit B**

(10B)    Escrow Agreement between Independence Tax Credit Plus L.P.
           III and Bankers Trust Company*

(10C)    Form of Purchase and Sales Agreement pertaining  to  the
           Partnership's acquisition of Local Partnership Interests*

(10D)    Form of Amended and Restated  Agreement of Limited Partnership
           of Local Partnerships*

(21)     Subsidiaries of the Registrant                                   54

(31.1)   Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)       57

(31.2)   Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)       58

(32.1)   Certification  Pursuant to Rule  13a-14(b) or Rule  15d-14(b)
          and Section 1350 of Title 18 of the United States Code
          (18 U.S.C. 1350).                                               59

         *  Incorporated herein as an exhibit by reference to exhibits
            filed with Post-Effective Amendment No. 4 to the
            Registration Statement on Form S-11 {Registration No.
            33-37704}

         ** Incorporated herein as an exhibit by reference to
            exhibits filed with Post-Effective Amendment  No. 8
            to the Registration Statement on Form S-11 {Registration
            No. 33-37704}

                                       53
<PAGE>

Item 15. Exhibits and Financial Statement Schedules (continued)


                                                                    Jurisdiction
                                                                        of
         Subsidiaries of the Registrant (Exhibit 21)                Organization
         ------------------------------                             ------------
         Edward Hotel Limited Partnership                               CA
         Pacific-East L.P.                                              NY
         Overtown Development Group, Ltd.                               FL
         Sumpter Commons Associates, L.P.                               NY
         Park Housing Limited Partnership                               CT
         Livingston Manor Urban Renewal Associates, L.P.                NJ
         Jefferis Square Housing Partnership, L.P.                      PA
         2301 First Avenue Limited Partnership                          NY
         Lewis Street Limited Partnership                               NY
         Savannah Park Housing Limited Partnership                      DC
         Brannon Group, L.C.                                            FL
         Mansion Court Phase II Venture                                 PA
         Primm Place Partners, L.P.                                     MI
         BK-9-A Partners L.P.                                           NY
         BK-10K Partners L.P.                                           NY
         Aspen-Olive Associates                                         PA
         West Mill Creek Associates, III L.P.                           PA
         Universal Court Associates                                     PA
         New Zion Apartments                                            LA
         Dreitzer House                                                 NY

                                       54
<PAGE>

                                   SIGNATURES
                                   ----------


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.



                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                      -------------------------------------
                                  (Registrant)



                            By:  RELATED INDEPENDENCE ASSOCIATES III L.P.,
                                 General Partner



                                 By:  RELATED INDEPENDENCE ASSOCIATES III INC.,
                                      General Partner



Date: June 22, 2007                   By:  /s/ Robert L. Levy
      -------------                        ------------------
                                           Robert L. Levy
                                           Chief Financial Officer




Date: June 22, 2007                   By:  /s/ Andrew J. Weil
      -------------                        ------------------
                                           Andrew J. Weil
                                           President and Chief Executive Officer


                                       55
<PAGE>


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 dates indicated:



      Signature                          Title                          Date
------------------   -------------------------------------------   -------------



/s/ Robert L. Levy
------------------   Chief Financial Officer of Related            June 22, 2007
Robert L. Levy       Independence Associates III Inc.              -------------




/s/ Andrew J. Weil
------------------   President (Chief Executive Officer)           June 22, 2007
Andrew J. Weil       of Related Independence Associates III Inc.   -------------




/s/ Glenn F. Hopps
------------------   Treasurer (principal accounting officer)      June 22, 2007
Glenn F. Hopps       of Related Independence Associates III Inc.   -------------


                                       56
<PAGE>

                                                                    Exhibit 31.1


                         CERTIFICATION PURSUANT TO RULE
                           13a-14(a) OR RULE 15d-14(a)


I, Robert L. Levy, certify that:

     1.  I have  reviewed  this report on Form 10-K for the period  ending March
         31, 2007 of Independence Tax Credit Plus L.P. III;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this  report,  fairly  present in all material
         respects the financial condition,  results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The other certifying officer and I are responsible for establishing and
         maintaining  disclosure controls and procedures (as defined in Exchange
         Act Rules  13a-15(e) and 15d-15(e) and internal  control over financial
         reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for
         the registrant and have:

         a) designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  that  material  information  relating  to the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

         b) designed such internal control over financial  reporting,  or caused
         such internal control over financial reporting to be designed under our
         supervision,  to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles;

         c) evaluated the effectiveness of the registrant's  disclosure controls
         and procedures and presented in this report our  conclusions  about the
         effectiveness of the disclosure controls and procedures,  as of the end
         of the period covered by this report based on such evaluation; and

         d)  disclosed  in this report any change in the  registrant's  internal
         control over financial  reporting that occurred during the registrant's
         fourth fiscal  quarter that has materially  affected,  or is reasonably
         likely to materially  affect,  the  registrant's  internal control over
         financial reporting; and

     5.  The other  certifying  officer and I have disclosed,  based on our most
         recent evaluation of internal control over financial reporting,  to the
         registrant's auditors and the audit committee of the registrant's board
         of directors (or persons performing the equivalent functions):

         a) all significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal control over financial reporting.


         Date:  June 22, 2007                       By:  /s/ Robert L. Levy
                -------------                            ------------------
                                                         Robert L. Levy
                                                         Chief Financial Officer


                                       57
<PAGE>

                                                                    Exhibit 31.2


                         CERTIFICATION PURSUANT TO RULE
                           13a-14(a) OR RULE 15d-14(a)


I, Andrew J. Weil, hereby certify that:

     1.  I have  reviewed  this report on Form 10-K for the period  ending March
         31, 2007 of Independence Tax Credit Plus L.P. III;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this  report,  fairly  present in all material
         respects the financial condition,  results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The other certifying officer and I are responsible for establishing and
         maintaining  disclosure controls and procedures (as defined in Exchange
         Act Rules  13a-15(e) and 15d-15(e) and internal  control over financial
         reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for
         the registrant and have:

         a) designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  that  material  information  relating  to the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

         b) designed such internal control over financial  reporting,  or caused
         such internal control over financial reporting to be designed under our
         supervision,  to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles;

         c) evaluated the effectiveness of the registrant's  disclosure controls
         and procedures and presented in this report our  conclusions  about the
         effectiveness of the disclosure controls and procedures,  as of the end
         of the period covered by this report based on such evaluation; and

         d)  disclosed  in this report any change in the  registrant's  internal
         control over financial  reporting that occurred during the registrant's
         fourth fiscal  quarter that has materially  affected,  or is reasonably
         likely to materially  affect,  the  registrant's  internal control over
         financial reporting; and

     5.  The other  certifying  officer and I have disclosed,  based on our most
         recent evaluation of internal control over financial reporting,  to the
         registrant's auditors and the audit committee of the registrant's board
         of directors (or persons performing the equivalent functions):

         a) all significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal control over financial reporting.


         Date: June 22, 2007                        By:  /s/ Andrew J. Weil
               --------------                            ------------------
                                                         Andrew J. Weil
                                                         Chief Executive Officer

                                       58
<PAGE>

                                                                    Exhibit 32.1


                             CERTIFICATION PURSUANT
                       TO RULE 13a-14(b) OR RULE 15d-14(b)
                          AND SECTION 1350 OF TITLE 18
                   OF THE UNITED STATES CODE (18 U.S.C. 1350)


In connection with the Annual Report of Independence Tax Credit Plus L.P. III on
Form 10-K for the year ended  March 31,  2007 as filed with the  Securities  and
Exchange  Commission  ("SEC") on the date  hereof (the  "Report"),  I, Robert L.
Levy, and I, Andrew J. Weil, certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:


       (1) The Report fully complies with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and


       (2) The  information  contained  in the Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
registrant.

A signed  original of this  written  statement  required by Section 906 has been
provided to the  registrant and will be retained by the registrant and furnished
to the SEC or its staff upon request.


By:  /s/ Robert L. Levy                            By:  /s/ Andrew J. Weil
     ------------------                                 ------------------
     Robert L. Levy                                     Andrew J. Weil
     Chief Financial Officer                            Chief Executive Officer
     June 22, 2007                                      June 22, 2007


                                       59
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            -------------------------------------------------------


To the Partners of
Independence Tax Credit Plus L.P. III and Subsidiaries
(A Delaware Limited Partnership)


In  connection  with our  audits of the  consolidated  financial  statements  of
Independence  Tax Credit Plus L.P.  III and  Subsidiaries  (A  Delaware  Limited
Partnership)  included in the Form 10-K as presented  in our opinion  dated June
15,  2007 on page 14, and based on the reports of other  auditors,  we have also
audited  supporting  Schedule  I for the 2006,  2005 and 2004  Fiscal  Years and
Schedule III as of March 31, 2007.  In our opinion,  and based on the reports of
the other auditors,  these consolidated  schedules present fairly,  when read in
conjunction with the related consolidated  financial  statements,  the financial
data required to be set forth therein.


/s/TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 15, 2007

                                       60
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              (Not Including Consolidated Subsidiary Partnerships)


                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                     ASSETS


                                                                    March 31,
                                                            -------------------------
                                                                2007          2006
                                                            -----------   -----------
<S>                                                         <C>           <C>
Cash and cash equivalents                                   $    14,460   $    36,194
Investment in subsidiary partnerships                        12,158,076    15,057,064
Cash held in escrow                                             130,418       130,418
Other assets                                                          0            44
                                                            -----------   -----------

Total assets                                                $12,302,954   $15,223,720
                                                            ===========   ===========


                        LIABILITIES AND PARTNERS' CAPITAL


Due to general partner and affiliates                       $ 4,599,173   $ 4,071,802
Other liabilities                                                12,885        16,394
                                                            -----------   -----------

Total liabilities                                             4,612,058     4,088,196

Partners' capital                                             7,690,896    11,135,524
                                                            -----------   -----------

Total liabilities and partners' capital                     $12,302,954   $15,223,720
                                                            ===========   ===========
</TABLE>

Investment in subsidiary  partnerships is recorded in accordance with the equity
method of  accounting,  wherein  the  investments  are not  reduced  below zero.
Accordingly,  partners'  capital on the consolidated  balance sheets will differ
from partners' capital shown above.

                                       61
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              (Not Including Consolidated Subsidiary Partnerships)


                       CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                              Years Ended March 31,
                                                   -----------------------------------------
                                                       2007           2006           2005
                                                   -----------    -----------    -----------
<S>                                                <C>            <C>            <C>
Revenues

Other income                                       $       727    $     2,024    $       550
                                                   -----------    -----------    -----------

Expenses

Administrative and management                          133,176        107,043         88,148
Administrative and management - related parties        482,372        584,899        486,998
                                                   -----------    -----------    -----------

Total expenses                                         615,548        691,942        575,146
                                                   -----------    -----------    -----------

Losses from operations                                (614,821)      (689,918)      (574,596)

Equity in losses of subsidiary partnerships         (2,829,807)    (2,262,425)    (2,116,207)

Distribution income from subsidiary partnerships             0          7,359              0
                                                   -----------    -----------    -----------

Net loss                                           $(3,444,628)   $(2,944,984)   $(2,690,803)
                                                   ===========    ===========    ===========
</TABLE>

                                       62
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                  Years Ended March 31,
                                                        -----------------------------------------
                                                            2007           2006           2005
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>
Cash flows from operating activities:

Net loss                                                $(3,444,628)   $(2,944,984)   $(2,690,803)

Adjustments to reconcile net loss to net cash used in
 operating activities:

Equity in loss of subsidiary partnerships                 2,829,807      2,262,425      2,116,207
Distribution income from subsidiary partnerships                  0         (7,359)             0
Decrease (increase) in other assets                              44            (44)             0
Increase (decrease) in liabilities:
Due to general partners and affiliates                      527,371        222,947        535,728
Other liabilities                                            (3,509)         7,150         (5,034)
                                                        -----------    -----------    -----------

Total adjustments                                         3,353,713      2,485,119      2,646,901
                                                        -----------    -----------    -----------

Net cash used in operating activities                       (90,915)      (459,865)       (43,902)
                                                        -----------    -----------    -----------

Cash flows from investing activities:

Investment in subsidiary partnerships                             0              0         (6,832)
Distributions from subsidiary partnerships                   69,181        470,314         41,421
Decrease in cash held in escrow                                   0              0          1,757
                                                        -----------    -----------    -----------

Net cash provided by investing activities                    69,181        470,314         36,346
                                                        -----------    -----------    -----------

Net (decrease) increase in cash and cash equivalents        (21,734)        10,449         (7,556)

Cash and cash equivalents, beginning of year                 36,194         25,745         33,301
                                                        -----------    -----------    -----------

Cash and cash equivalents, end of year                  $    14,460    $    36,194    $    25,745
                                                        ===========    ===========    ===========
</TABLE>

                                       63
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2007
<TABLE>
<CAPTION>
                                                   Initial Cost to Partnership
                                            ------------------------------------------

                                                                                         Cost Capitalized
                                                                                          Subsequent to
                                                                         Buildings and     Acquistion:
              Description                   Encumbrances      Land       Improvements     Improvements
-----------------------------------------   ------------   -----------   -------------   ----------------
<S>                                         <C>           <C>            <C>             <C>
Edward Hotel Limited Partnership
 Los Angeles, CA                            $ (2,399,459) $    275,000   $     591,240   $      2,583,269
Pacific East, L.P.
 Brooklyn, NY                                 (1,980,442)        1,950       3,125,584            192,537
Overtown Development Group, Ltd.
 Miami, FL                                    (1,028,717)       52,284       2,627,099            164,076
Sumpter Commons Associates, L.P.              (1,192,018)          500       1,862,916             50,963
Park Housing Limited Partnership                (822,282)        5,000       2,343,351             64,880
Livingston Manor Urban
 Renewal Associates, L.P.                     (3,080,000)      119,988       7,047,532            634,850
Jefferis Square Housing Partnership, L.P.     (1,900,000)       55,158               0          4,553,296
2301 First Avenue Limited Partnership         (4,638,147)       64,350       5,818,269            208,786
Lewis Street Limited Partnership              (1,600,000)        7,000               0          2,877,050
Savannah Park Housing Limited Partnership       (694,709)            0       2,049,888          2,149,073
Brannon Group, L.C.                           (4,380,104)      380,000       2,598,402          5,520,776
Independence Tax Credit Fund L.P.
 (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)        (2,510,527)        1,732         339,661          4,302,161
Primm Place Partners, L.P.                    (4,708,658)      168,258               0          6,960,006
BK-9-A Partners L.P.                          (1,975,000)            0       1,517,313             56,847
BK-10K Partners L.P.                            (989,609)       11,000       1,637,762             97,915
Westmill Creek Associates III L.P.            (2,843,918)       37,031       6,922,563             46,017
Universal Court Associates                    (1,650,000)       31,024         279,220          4,541,485
New Zion Apartments                             (860,910)       20,000       2,688,770             12,362
Dreitzer House                                (4,275,000)            5              0           6,722,063
                                            ------------   -----------   -------------   ----------------

                                            $(43,529,500)  $ 1,230,280   $  41,449,570   $     41,738,412
                                            ============   ===========   =============   ================

<CAPTION>
                                            Gross Amount at which Carried at Close of Period
                                            ------------------------------------------------



                                                            Buildings and                       Accumulated
              Description                      Land         Improvements          Total         Depreciation
-----------------------------------------   -----------     -------------     --------------    ------------
<S>                                         <C>             <C>               <C>               <C>
Edward Hotel Limited Partnership
 Los Angeles, CA                            $   281,123     $   3,168,386     $    3,449,509    $  1,243,061
Pacific East, L.P.
 Brooklyn, NY                                     8,075         3,311,996          3,320,071       1,543,488
Overtown Development Group, Ltd.
 Miami, FL                                       58,408         2,785,051          2,843,459         884,278
Sumpter Commons Associates, L.P.                  3,673         1,910,706          1,914,379         787,088
Park Housing Limited Partnership                  8,173         2,405,058          2,413,231         923,994
Livingston Manor Urban
 Renewal Associates, L.P.                       123,161         7,679,209          7,802,370       2,183,436
Jefferis Square Housing Partnership, L.P.        39,347         4,569,107          4,608,454       1,317,795
2301 First Avenue Limited Partnership            67,523         6,023,882          6,091,405       2,711,242
Lewis Street Limited Partnership                 10,173         2,873,877          2,884,050       1,100,433
Savannah Park Housing Limited Partnership         3,173         4,195,788          4,198,961       1,292,257
Brannon Group, L.C.                             383,173         8,116,005          8,499,178       1,957,703
Independence Tax Credit Fund L.P.
 (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)            5,123         4,638,431          4,643,554       1,176,771
Primm Place Partners, L.P.                       67,577         7,060,687          7,128,264       1,784,387
BK-9-A Partners L.P.                              3,173         1,570,987          1,574,160         467,123
BK-10K Partners L.P.                             14,176         1,732,501          1,746,677         510,420
Westmill Creek Associates III L.P.               37,649         6,967,962          7,005,611       2,974,506
Universal Court Associates                       31,642         4,820,087          4,851,729       1,094,831
New Zion Apartments                              20,618         2,700,514          2,721,132       1,018,003
Dreitzer House                                      623         6,721,445          6,722,068       1,976,877
                                            -----------     -------------     --------------    ------------

                                            $ 1,166,583     $  83,251,679     $   84,418,262    $ 26,947,693
                                            ===========     =============     ==============    ============

<CAPTION>

                                                                           Life on which
                                                                           Depreciation in
                                               Year of                     Latest Income
                                            Construction/      Date        Statements are
              Description                     Renovation      Acquired     Computed(a)(b)
-----------------------------------------   -------------   ------------   ---------------
<S>                                             <C>            <C>         <C>
Edward Hotel Limited Partnership
 Los Angeles, CA                                1994-95        Nov. 1994        27.5 years
Pacific East, L.P.
 Brooklyn, NY                                   1994-95        Dec. 1994        27.5 years
Overtown Development Group, Ltd.
 Miami, FL                                      1994-95        Dec. 1994          40 years
Sumpter Commons Associates, L.P.                1995-96        Apr. 1995        27.5 years
Park Housing Limited Partnership                1995-96         May 1995        27.5 years
Livingston Manor Urban
 Renewal Associates, L.P.                       1995-96        June 1995       15-40 years
Jefferis Square Housing Partnership, L.P.       1995-96        June 1995     20 - 40 years
2301 First Avenue Limited Partnership           1995-96        Aug. 1995        27.5 years
Lewis Street Limited Partnership                1995-96        Oct. 1995        27.5 years
Savannah Park Housing Limited Partnership       1995-96        Oct. 1995        27.5 years
Brannon Group, L.C.                             1995-96        Dec. 1995          40 years
Independence Tax Credit Fund L.P.
 (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)          1995-96        Dec. 1995     20 - 40 years
Primm Place Partners, L.P.                      1995-96        Dec. 1995     10 - 40 years
BK-9-A Partners L.P.                            1995-96        Dec. 1995          40 years
BK-10K Partners L.P.                            1995-96        Dec. 1995          40 years
Westmill Creek Associates III L.P.              1997-98        Dec. 1996        27.5 years
Universal Court Associates                      1997-98        Apr. 1997       20-40 years
New Zion Apartments                             1997-98        Nov. 1997   15 - 27.5 years
Dreitzer House                                  1997-99        Dec. 1997        27.5 years
</TABLE>


(a) Depreciation is computed using primarily the  straight-line  method over the
estimated useful lives determined by the Partnership date of acquisition.
(b) Personal property is depreciated  primarily by the straight-line method over
the estimated useful lives of 5 - 12 years.


                                       64
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2007
                                   (continued)
<TABLE>
<CAPTION>
                                             Cost of Property and Equipment                      Accumulated Depreciation
                                     --------------------------------------------    ----------------------------------------------
                                                                         Year Ended March 31,
                                     -------------------------------------------------------------------------------------------
                                          2007           2006            2005            2007            2006           2005
                                     ------------    ------------    ------------    ------------    ------------   ------------
<S>                                  <C>             <C>             <C>             <C>             <C>            <C>
Balance at beginning of period       $ 86,214,620    $ 86,076,450    $ 85,974,858    $ 24,907,449    $ 22,332,456   $ 19,701,934
Additions during period:
  Improvements                            179,141         138,170         121,592
  Depreciation expense                                                                  2,612,983       2,574,993      2,650,522
Reductions during period:
  Dispositions and impairment loss     (1,975,499)                        (20,000)       (572,739)                       (20,000)
                                     ------------    ------------    ------------    ------------    ------------   ------------

Balance at close of period           $ 84,418,262    $ 86,214,620    $ 86,076,450    $ 26,947,693    $ 24,907,449   $ 22,332,456
                                     ============    ============    ============    ============    ============   ============
</TABLE>


At the time the local partnerships were acquired by Independence Tax Credit Plus
III Limited  Partnership,  the entire  purchase price paid by  Independence  Tax
Credit Plus III Limited Partnership was pushed down to the local partnerships as
property and equipment with an offsetting credit to capital.  Since the projects
were in the construction phase at the time of acquisition,  the capital accounts
were  insignificant  at the time of purchase.  Therefore,  there are no material
differences between the original cost basis for tax and GAAP.