July 13, 2005


Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC.  20549


        Boston Financial Qualified Housing Tax Credits L.P. III
        Annual Report on Form 10-KSB for Year Ended March 31, 2005
        File Number 01-18462


Dear Sir/Madam:

Pursuant to the requirements of section 15(d) of the Securities Exchange Act of
1934, filed herewith is one copy of subject report.


Very truly yours,


/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller





<PAGE>


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

                                   FORM 10-KSB
(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, 2005
                         -----------------------------------------------------

                                                         OR

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

For the transition period from                       to
                               ---------------------   -------------------

                        Commission file number 01-18462

                  Boston Financial Qualified Housing Tax Credits L.P. III

                  (Exact name of registrant as specified in its charter)

                   Delaware                               04-3032106
      -------------------------------        -------------------------
      (State or other jurisdiction of      (I.R.S. Employer Identification No.)
       incorporation or organization)

   101 Arch Street, Boston, Massachusetts                02110-1106
--------------------------------------------     ------------------------------
    (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code      (617) 439-3911
                                                       ---------------------

Securities registered pursuant to Section 12(b) of the Act:
                                                Name of each exchange on
          Title of each class                     which registered
          -------------------                  -----------------------------
                 None                                   None

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

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of Class)
                                     100,000

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 (Subsection 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-KSB or any amendment to this Form 10-KSB. [ X ]

State the aggregate sales price of partnership units held by nonaffiliates of
the registrant.
                       $99,610,000 as of March 31, 2005
                       --------------------------------


<PAGE>



DOCUMENTS INCORPORATED BY REFERENCE:  LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-KSB INTO WHICH THE
DOCUMENT IS INCORPORATED:  (1) ANY ANNUAL REPORT TO SECURITY HOLDERS;
(2) ANY PROXY OR INFORMATION STATEMENT; AND (3) ANY PROSPECTUS FILED PURSUANT TO
RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933.

<TABLE>
<CAPTION>


                                                                        Part of Report on
                                                                        Form 10-KSB into
                                                                        Which the Document
Documents incorporated by reference                                     is Incorporated
-----------------------------------                                     -----------------------

Post-effective Amendment No. 1 to the Form S-11
<S>                                                                     <C>
  Registration Statement, File # 33-24175                               Part I, Item 1

Supplement No. 4 to the Prospectus dated May 9, 1989                    Part I, Item 1

Report on Form 8-K dated November 21, 1989                              Part I, Item 1

Acquisition Reports                                                     Part I, Item 1

Prospectus - Sections Entitled:

  "Investment Objectives and Policies -
   Principal Investment Policies"                                       Part I, Item 1

  "Estimated Use of Proceeds"                                           Part III, Item 12

  "Management Compensation and Fees"                                    Part III, Item 12

  "Profits and Losses for Tax Purposes, Tax
   Credits and Cash Distributions"                                      Part III, Item 12


</TABLE>


<PAGE>


             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (a Limited Partnership)

                          ANNUAL REPORT ON FORM 10-KSB
                        FOR THE YEAR ENDED MARCH 31, 2005

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS


PART I                                                               Page No.

<S>                                                                    <C>
   Item 1    Business                                                  K-4
   Item 2    Properties                                                K-8
   Item 3    Legal Proceedings                                         K-20
   Item 4    Submission of Matters to a
             Vote of Security Holders                                  K-21

PART II

   Item 5     Market for the Registrant's Units
              and Related Security Holder Matters                      K-21
   Item 6     Management's Discussion and Analysis of
              Financial Condition and Results of Operations            K-22
   Item 7     Financial Statements and Supplementary Data              K-29
   Item 8     Changes in and Disagreements with
              Accountants on Accounting and Financial
              Disclosure                                               K-29
   Item 8A    Controls and Procedures                                  K-29
   Item 8B    Other Information                                        K-29
PART III

   Item 9     Directors and Executive Officers
              of the Registrant                                        K-29
   Item 10    Management Remuneration                                  K-30
   Item 11    Security Ownership of Certain Beneficial
              Owners and Management                                    K-30
   Item 12    Certain Relationships and Related
              Transactions                                             K-31
   Item 13    Exhibits, Financial Statement Schedules and
              Reports on Form 8-K                                      K-32
   Item 14.   Principal Accountant Fees and Services                   K-32


SIGNATURES                                                             K-33
----------

CERTIFICATIONS                                                         K-34

</TABLE>



<PAGE>


                                     PART I

Item 1.  Business

Boston Financial Qualified Housing Tax Credits L.P. III (the "Partnership") is a
limited partnership formed on August 9, 1988 under the Uniform Limited
Partnership Act of the State of Delaware. The Certificate and Agreement of
Limited Partnership ("Partnership Agreement") authorized the sale of up to
100,000 units of Limited Partnership Interest ("Units") at $1,000 per Unit
(Gross Proceeds is $100,000,000), adjusted for certain discounts. The
Partnership raised $99,610,000, net of discounts of $390,000, through the sale
of 100,000 Units. Such amounts exclude five unregistered Units previously
acquired for $5,000 by the Initial Limited Partner, which is also one of the
General Partners. The offering of Units terminated on May 30, 1989. No further
sale of Units is expected.

The Partnership is engaged solely in the business of real estate investment.
Accordingly, a presentation of information about industry segments is not
applicable and would not be material to an understanding of the Partnership's
business taken as a whole.

The Partnership has invested as a limited partner in twenty-three other limited
partnerships ("Local Limited Partnerships") which own and operate residential
apartment complexes ("Properties"), some of which benefit from some form of
federal, state or local assistance programs and all of which qualify for the
low-income housing tax credits ("Tax Credits") that were added to the Internal
Revenue Code by the Tax Reform Act of 1986 (the "Code"). The investment
objectives of the Partnership include the following: (i) to provide current tax
benefits in the form of Tax Credits which qualified Limited Partners may use to
offset their federal income tax liability; (ii) to preserve and protect the
Partnership's capital; (iii) to provide limited cash distributions from Property
operations which are not expected to constitute taxable income during the
expected duration of the Partnership's operations; and (iv) to provide cash
distributions from sale or refinancing transactions. There cannot be any
assurance that the Partnership will attain any or all of these investment
objectives. A more detailed discussion of these investment objectives, along
with the risks in achieving them, is contained in the section of the prospectus
entitled "Investment Objectives and Policies - Principal Investment Policies"
which is herein incorporated by this reference.

Table A on the following pages lists the Properties originally acquired by Local
Limited Partnerships in which the Partnership has invested. Item 6 of this
Report contains other significant information with respect to such Local Limited
Partnerships. As required by applicable rules, the terms of the acquisition of
Local Limited Partnership interests have been described in supplements to the
Prospectus and collected in one post-effective amendment to the Registration
Statement and in another supplement to the Prospectus and in a report on Form
8-K (collectively, the "Acquisition Reports"); such descriptions are
incorporated herein by this reference.


<PAGE>

<TABLE>
<CAPTION>

                                     TABLE A

                             SELECTED LOCAL LIMITED
                                PARTNERSHIP DATA

                                                                                                            Date
Properties owned by                                                                                       Interest
 Local Limited Partnerships                                Location                                       Acquired

<S>                                                       <C>                                              <C>
West Dade                                                 Miami, FL                                        12/31/88
West Dade II                                              Miami, FL                                        12/31/88
Regency Square (1)                                        Dayton, OH                                       03/13/89
Westwood Manor                                            Flint, MI                                        02/21/89
Rolling Hills (1)                                         Dayton, OH                                       03/13/89
Boulevard Commons II (1)                                  Chicago, IL                                      04/04/89
Boulevard Commons IIA (1)                                 Chicago, IL                                      04/04/89
Fox Run Housing                                           Victoria, TX                                     04/07/89
Waterfront                                                Buffalo, NY                                      04/28/89
Shoreline                                                 Buffalo, NY                                      04/28/89
Colony Apartments (1)                                     Columbia, SC                                     05/19/89
Admiral Court (1)                                         Philadelphia, PA                                 06/07/89
Crestwood (1)                                             Bridgeport, TX                                   06/05/89
Elmwood Delmar                                            Aurora, CO                                       05/16/89
El Jardin (1)                                             Davie, FL                                        06/14/89
Ashley Place (1)                                          Orlando, FL                                      06/23/89
Willowick (1)                                             Gainesville, TX                                  06/30/89
Kirkendall Heights (1)                                    Ellsworth, KS                                    07/19/89
Bentley Hill (1)                                          Syracuse, KS                                     06/30/89
Columbia Townhouses (1)                                   Burlington, IA                                   07/28/89
Quartermill                                               Richmond, VA                                     08/02/89
Ponca Manor (1)                                           Satanta, KS                                      07/28/89
Pearl Place (1)                                           Rossville, KS                                    07/28/89
Crown Point (1)                                           Venus, TX                                        08/22/89
Godley Arms (1)                                           Godley, TX                                       08/25/89
Pilot Point (1)                                           Pilot Point, TX                                  08/22/89
Sherwood Arms (1)                                         Keene, TX                                        08/22/89
South Holyoke (1)                                         Holyoke, MA                                      08/29/89
Walker Woods                                              Dover, DE                                        08/30/89
Lakeway Colony (1)                                        Lake Dallas, TX                                  08/30/89
One Main Place (1)                                        Little Elm, TX                                   08/22/89
Eaglewood (1)                                             Covington, TN                                    09/06/89
Harbour View (1)                                          Staten Island, NY                                09/29/89
Georgetown II                                             Georgetown, DE                                   09/28/89
Granite V (1)                                             Boston, MA                                       09/29/89
Garden Plain (1)                                          Garden Plain, KS                                 08/09/89
Fulton (1)                                                Fulton, KY                                       10/05/89
Lone Oak (1)                                              Graham, TX                                       10/06/89
Hallet West (1)                                           Hallettsville, TX                                11/20/89
</TABLE>



<PAGE>

<TABLE>
<CAPTION>


                                                                                                            Date
Properties owned by                                                                                       Interest
 Local Limited Partnerships                                Location                                       Acquired

<S>                                               <C>                                                      <C>
Glenbrook (1)                                     St. Jo, TX                                               10/06/89
Eagles Nest (1)                                   Decatur, TN                                              10/06/89
Billings Family (1)                               Billings, MO                                             08/09/89
Brownsville (1)                                   Brownsville, TN                                          08/09/89
Sunnyhill Villa (1)                               Wayne, NE                                                08/09/89
Longview (1)                                      Humboldt, KS                                             10/13/89
Horseshoe Bend (1)                                Horseshoe Bend, AR                                       08/09/89
Briarwood II (1)                                  Lake Havasua, AZ                                         10/04/89
Quail Run (1)                                     Iowa Park, TX                                            10/06/89
Smithville (1)                                    Smithville, MO                                           08/09/89
Aurora East Apartments (1)                        Denver, CO                                               11/06/89
Elver Park II                                     Madison, WI                                              11/09/89
Elver Park III                                    Madison, WI                                              11/09/89
Tucson Trails I                                   Madison, WI                                              11/22/89
Tucson Trails II                                  Madison, WI                                              11/23/89
Pleasant Plaza (1)                                Malden, MA                                               12/01/89
241 Pine Street (1)                               Manchester, NH                                           12/04/89
Heather Oaks                                      Oak Grove, MO                                            11/24/89
Riverfront                                        Sunbury, PA                                              12/26/89
Susquehanna View                                  Camp Hill, PA                                            12/26/89
Breckenridge (1)                                  Duluth, GA                                               12/19/89
Wood Creek                                        Calcium, NY                                              12/15/89
Willow Lake (1)                                   Kansas City, MO                                          12/20/89
Ashton Heights (1)                                Bolivar, MO                                              12/15/89
Fouche Valley                                     Perryville, AR                                           05/01/90
Altheimer                                         Altheimer, AR                                            04/18/90
Kyle Hotel                                        Temple, TX                                               06/12/90
Diversey Square                                   Chicago, IL                                              12/01/90
Poplar Village                                    Cumberland, KY                                           12/30/90
Lexington (1)                                     Lexington, TN                                            12/29/90

</TABLE>


(1)   The Partnership no longer has an interest in the Local Limited Partnership
      which owns this Property.


<PAGE>


Although the Partnership's investments in Local Limited Partnerships are not
subject to seasonal fluctuations, the Partnership's equity in losses of Local
Limited Partnerships, to the extent they reflect the operations of individual
Properties, may vary from quarter to quarter based upon changes in occupancy and
operating expenses as a result of seasonal factors.

With the exception of The Temple-Kyle, L.P., each Local Limited Partnership has
as its general partners ("Local General Partners") one or more individuals or
entities not affiliated with the Partnership or its General Partners. In
accordance with the partnership agreements under which such entities are
organized ("Local Limited Partnership Agreements"), the Partnership depends on
the Local General Partners for the management of each Local Limited Partnership.
As of March 31, 2005, the following Local Limited Partnerships have a common
Local General Partner or affiliated group of Local General Partners accounting
for the specified percentage of the total capital contributions made to Local
Limited Partnerships: (i) Missouri Rural Housing of Oak Grove, L.P., Westgate
Associates I, L.P. and Altheimer Associates I, L.P., representing 1.02%, have
The Lockwood Group as Local General Partner; (ii) Elver Park Limited Partnership
II, Elver Park Limited Partnership III, Tucson Trails Limited Partnership I and
Tucson Trails Limited Partnership II, representing 11.80%, have Gorman
Associates as Local General Partner; (iii) Riverfront Apartments, L.P. and
Susquehanna View, L.P., representing 11.23%, have NCHP as Local General Partner;
(iv) West Dade LTD, A Limited Partnership and West Dade LTD II, A Limited
Partnership, representing 12.24%, have Romat, Inc. and Arbor, Inc., as Local
General Partner, respectively, both of which have Aristedes Martinez as
principal; (v) EDM Housing Associates, LTD a Limited Partnership and Fox Run
Housing, representing 7.28%, have Delwood Ventures, Inc. and R.S.F. Ventures,
Inc. as Local General Partners, respectively, both of which have Raymond Baker
as principal; and (vi) Waterfront Limited Partnership and Shoreline Limited
Partnership, representing 12.57%, have M.B. Associates as Local General Partner.
The Local General Partners of the remaining Local Limited Partnerships are
identified in the Acquisition Reports, which are incorporated herein by
reference.

The Properties owned by Local Limited Partnerships in which the Partnership has
invested are and will continue to be subject to competition from existing and
future properties in the same areas. The continued success of the Partnership
will depend on many factors, most of which are beyond the control of the
Partnership and cannot be predicted at this time. Such factors include general
economic and real estate market conditions, both on a national basis and in
those areas where the Properties are located, the availability and cost of
borrowed funds, real estate tax rates, operating expenses, energy costs and
government regulations. In addition, other risks inherent in real estate
investment may influence the ultimate success of the Partnership, including: (i)
possible reduction in rental income due to an inability to maintain high
occupancy levels or adequate rental levels; (ii) possible adverse changes in
general economic conditions and adverse local conditions, such as competitive
overbuilding, a decrease in employment rates or adverse changes in real estate
laws, including building codes; and (iii) possible future adoption of rent
control legislation which would not permit increased costs to be passed on to
the tenants in the form of rent increases or which would suppress the ability of
the Local Limited Partnership to generate operating cash flow. Since most of the
Properties benefit from some form of government assistance, the Partnership is
subject to the risks inherent in that area including decreased subsidies,
difficulties in finding suitable tenants and obtaining permission for rent
increases. In addition, any Tax Credits allocated to investors with respect to a
Property are subject to recapture to the extent that the Property or any portion
thereof ceases to qualify for the Tax Credits. Other future changes in federal
and state income tax laws affecting real estate ownership or limited
partnerships could have a material and adverse affect on the business of the
Partnership.

The Partnership is managed by Arch Street III, Inc., the Managing General
Partner of the Partnership. The other General Partner of the Partnership is Arch
Street III Limited Partnership. The Partnership, which does not have any
employees, reimburses MMA Financial, LLC ("MMA"), an affiliate of the General
Partners, for certain expenses and overhead costs. A complete discussion of the
management of the Partnership is set forth in Item 9 of this Report.






Item 2.  Properties

The Partnership owns limited partnership interests in twenty-three Local Limited
Partnerships which own and operate Properties, some of which benefit from some
form of federal, state or local assistance programs and all of which qualify for
the Tax Credits added to the Code by the Tax Reform Act of 1986. The
Partnership's ownership interest in each Local Limited Partnership is 99%.

Each of the Local Limited Partnerships has received an allocation of Tax Credits
from its relevant state tax credit agency. In general, the Tax Credit runs for
ten years from the date the Property is placed in service. The required holding
period (the "Compliance Period") of the Properties is fifteen years. During
these fifteen years, the Properties must satisfy rent restrictions, tenant
income limitations and other requirements, as promulgated by the Internal
Revenue Code, in order to maintain eligibility for the Tax Credit at all times
during the Compliance Period. Once a Local Limited Partnership has become
eligible for the Tax Credits, it may lose such eligibility and suffer an event
of recapture if its Property fails to remain in compliance with the
requirements.

In addition, some of the Local Limited Partnerships have obtained one or a
combination of different types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the Property is located at favorable terms; and iii) loans which have repayment
terms that are based on a percentage of cash flow.

The schedule on the following pages provides certain key information on the
Local Limited Partnership interests acquired by the Partnership.


<PAGE>

<TABLE>
<CAPTION>


                                                            Capital Contributions
Local Limited Partnership                               Total            Total           Mtge. Loans
Property Name                               Number of   Committed at     Paid through    payable at         Type of    Occupancy at
Property Location                           Apt. Units  March 31, 2005   March 31, 2005  December 31, 2004  Subsidy*  March 31, 2005
------------------------------------------- ----------  ---------------- --------------- ------------------ --------  -------------


West Dade LTD, A Limited Partnership
West Dade
<S>                                         <C>         <C>              <C>             <C>                <C>            <C>
Miami, FL                                   122         $1,513,936       $1,513,936      $4,069,058         Section 8      98%


West Dade LTD II, A Limited Partnership
West Dade II
Miami, FL                                   209         3,039,442        3,039,442       7,951,565          Section 8      96%


Westwood Manor Limited Dividend
    Housing Association L.P.
Westwood Manor
Flint, MI                                   144         1,165,925        1,165,925       3,022,004          Section 8      97%


Rolling Hills Associates L.P. (1)
Rolling Hills
Dayton, OH

Regency Square Limited Partnership (1)
Regency Square
Dayton, OH

Shoreline Limited Partnership
Shoreline
Buffalo, NY                                 142         1,079,318        1,079,318       9,475,509          None           68%


Waterfront Limited Partnership
Waterfront
Buffalo, NY                                 472         3,597,307        3,597,307       32,863,612         None           69%


</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                                                  Capital Contributions
Local Limited Partnership                                    Total          Total         Mtge. Loans
Property Name                               Number of      Committed at   Paid through    payable at        Type of  Occupancy at
Property Location                           Apt. Units   March 31, 2005  March 31, 2005  December 31, 2004  Subsidy* March 31, 2005
------------------------------------------- ----------  ----------------  -------------- ----------------- --------- ---------------


Fox Run Housing
Fox Run
<S>                                          <C>         <C>               <C>             <C>                      <C>    <C>
Victoria, TX                                 150         1,605,775         1,605,775       3,987,781        Section 8      90%


Boulevard Commons Limited
    Partnership II (1)
Boulevard Commons II
Chicago, IL
The Colony Apartments, L.P. (1)
    A Limited Partnership
Colony Apartments
Columbia, SC
Boulevard Commons Limited
    Partnership IIA (1)
Boulevard Commons IIA
Chicago, IL

Ashley Place, LTD
    A Florida Limited Partnership (1)
Ashley Place
Orlando, FL

Admiral Housing Limited Partnership (1)
Admiral Court
Philadelphia, PA

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                                             Capital Contributions
Local Limited Partnership                                  Total           Total         Mtge. Loans
Property Name                                Number of   Committed at    Paid through    payable at         Type of   Occupancy at
Property Location                            Apt. Units  March 31, 2005  March 31, 2005  December 31, 2004  Subsidy*  March 31, 2005
-------------------------------------------  ----------  --------------  --------------- ------------------ --------  -------------


Prarieland Property of Syracuse, L.P. (1)
Bentley Hill
Syracuse, KS

El Jardin of Davie, Ltd. (1)
El Jardin
Davie, FL

EDM Housing Associates LTD
    (A Limited Partnership)
Elmwood Delmar
<S>                                           <C>         <C>               <C>            <C>               <C>           <C>
Aurora, CO                                    95          1,102,025         1,102,025      3,038,623         Section 8     100%


Bridgeport Housing Associates, LTD (1)
Crestwood
Bridgeport, TX

Willowick Housing Associates, LTD (1)
Willowick
Gainesville, FL

Ellsworth Senior Housing, L.P. (1)
Kirkendall Heights
Ellsworth, KS

Prairieland Properties of Satanta, L.P. (1)
Ponca Manor
Satanta, KS

</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                                                            Capital Contributions
Local Limited Partnership                                 Total           Total          Mtge. Loans
Property Name                               Number of   Committed at    Paid through     payable at         Type of    Occupancy at
Property Location                           Apt. Units  March 31, 2005  March 31, 2005   December 31, 2004  Subsidy*  March 31, 2005
------------------------------------------- ----------  --------------  --------------- ------------------ ---------  -------------


Rossville Senior Housing, L.P. (1)
Pearl Place
Rossville, KS

Columbia Townhouse Associates, L.P. (1)
Columbia Townhouses
Burlington, IA

Quartermill Associates, L.P.
    (A Virginia Limited Partnership)
Quartermill
<S>                                           <C>         <C>             <C>              <C>               <c>          <C>
Richmond, VA                                  266         7,705,500       7,705,500        6,819,961         None         96%


One Main Place Housing
    Associates, LTD (1)
One Main Place
Little Elm, TX

Pilot Point Housing Associates, LTD (1)
Pilot Point
Pilot Point, TX

Sherwood Arms Housing
    Associates, LTD (1)
Sherwood Arms
Keene, TX


</TABLE>


<PAGE>

<TABLE>
<CAPTION>



                                                         Capital Contributions
Local Limited Partnership                               Total         Total          Mtge. Loans
Property Name                            Number of    Committed at   Paid through    payable at        Type of   Occupancy at
Property Location                        Apt. Units  March 31, 2005  March 31, 2005  December 31, 2004 Subsidy*  March 31, 2005
---------------------------------------- ----------  --------------  --------------- ----------------- --------  -----------------


Crown Point Housing
    Associates, LTD
    A Texas Limited Partnership (1)
Crown Point
Venus, TX

Godley Arms Housing
    Associates, LTD (1)
Godley Arms
Godley, TX

South Holyoke Limited Partnership (1)
South Holyoke
Holyoke, MA

Harbour View
    (A Limited Partnership) (1)
Harbour View
Staten Island, NY

Walker Woods Partners, L.P.
Walker Woods
<S>                                       <C>            <C>            <C>             <C>                <C>           <C>
Dover, DE                                 51             1,452,380      1,452,380       2,213,939          None          90%


Lakeway Colony Housing
    Associates, LTD (1)
Lakeway Colony
Lake Dallas, TX


</TABLE>


<PAGE>

<TABLE>
<CAPTION>



                                                            Capital Contributions
Local Limited Partnership                                  Total          Total         Mtge. Loans
Property Name                                Number of   Committed at   Paid through    payable at         Type of    Occupancy at
Property Location                            Apt. Units  March 31, 2005 March 31, 2005  December 31, 2004  Subsidy*   March 31, 2005
-------------------------------------------  ----------  -------------- --------------- ------------------ ---------  -------------


Eaglewood VIII, L.P.
    (A Limited Partnership) (1)
Eaglewood
Covington, TN

Georgetown Associates II, L.P.
Georgetown II
<S>                                           <C>          <C>              <C>             <C>              <c>           <C>
Georgetown, DE                                50           1,200,000        1,200,000       1,745,089        None          92%


Blue Mountain Associates, L.P.
    (A Massachusetts Limited Partnership) (1)
Granite V
Boston, MA

Garden Plain Senior Apts., LTD (1)
Garden Plain
Garden Plain, KS

Fulton Associates I, L.P.
    (A Limited Partnership) (1)
Fulton
Fulton, KY

Lone Oak Housing Associates, LTD (1)
Lone Oak
Graham, TX

</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                                           Capital Contributions
Local Limited Partnership                                 Total             Total         Mtge. Loans
Property Name                               Number of    Committed at     Paid through    payable at         Type of  Occupancy at
Property Location                           Apt. Units   March 31, 2005   March 31, 2005 December 31, 2004  Subsidy* March 31, 2005
------------------------------------------- -----------  ---------------- -------------- ----------------- --------- -------------


West Hallettsville Housing
    Associates, LTD (1)
Hallet West
<S>                                             <C>             <C>             <C>             <C>             <C>        <C>
Hallettsville, TX

Glenbrook Housing Associates, LTD (1)
Glenbrook
St. Jo, TX

Eagles Nest Housing
    Associates, LTD (1)
Eagles Nest
Decatur, TX

Billings Family Housing, L.P. (1)
Cedar Tree
Billings, MO

Brownsville Associates, L.P. (1)
Brownsville
Brownsville, TN

Wayne Senior Housing, L.P. (1)
Sunnyhill Villa
Wayne, NE

Longview Apartments, L.P. (1)
Longview
Humbolt, KS

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                                                       Capital Contributions
Local Limited Partnership                             Total         Total           Mtge. Loans
Property Name                            Number of   Committed at   Paid through    payable at          Type of    Occupancy at
Property Location                        Apt. Units  March 31, 2005 March 31, 2005  December 31, 2004  Subsidy*    March 31, 2005
---------------------------------------  ----------  -------------- --------------- -----------------  ---------   --------------


Horseshoe Bend Associates I, L.P. (1)
Horseshoe Bend
Horseshoe Bend, AR

Briarwood Associates II, L.P. (1)
Briarwood II
Lake Havasua, AZ

North Quail Run Housing
    Associates, LTD (1)
Quail Run
Iowa Park, TX

Smithville Rural Housing
    (A Limited Partnership) (1)
Smithville
Smithville, MO

Aurora Properties, LTD
    (A Limited Partnership) (1)
Aurora East Apartments
Denver, CO

Elver Park Limited Partnership II
Elver Park II
<S>                                         <C>     <C>                  <C>             <C>            <c>                  <C>
Madison, WI                                 56      1,246,385            1,246,385       1,885,921      None                 95%


</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                                                   Capital Contributions
Local Limited Partnership                         Total           Total         Mtge. Loans
Property Name                         Number of  Committed at    Paid through   payable at         Type of          Occupancy at
Property Location                     Apt. Units March 31, 2005  March 31, 2005 December 31, 2004  Subsidy*          March 31, 2005
------------------------------------- ---------- --------------- -------------- ----------------- -------------   ----------------


Elver Park Limited Partnership III
Elver Park III
<S>                                      <C>        <C>             <C>              <C>            <c>                 <C>
Madison, WI                              48         1,047,470       1,047,470        1,603,033      None                92%

Tuscon Trails Limited Partnership I
Tuscon Trails I
Madison, WI                              48         1,047,470       1,047,470        1,537,848      None                100%


Tuscon Trails Limited Partnership II
Tuscon Trails II
Madison, WI                              48         1,047,470       1,047,470        1,537,848      None                98%


Pleasant Plaza Housing L.P. (1)
Pleasant Plaza
Malden, MA

241 Pine Street Associates, L.P. (1)
241 Pine Street
Manchester, NH
Missouri Rural Housing of
    Oak Grove, L.P.
Heather Oaks
Oak Grove, MO                            24         118,828         118,828          557,200         FmHA               100%


Wood Creek Associates
    (A New York Limited Partnership)
Wood Creek
Calcium, NY                              104        1,850,000       1,850,000        2,646,957        None              100%



</TABLE>


<PAGE>

<TABLE>
<CAPTION>



                                                          Capital Contributions
Local Limited Partnership                              Total           Total          Mtge. Loans
Property Name                              Number of  Committed at    Paid through    payable at         Type of   Occupancy at
Property Location                          Apt. Units March 31, 2005  March 31, 2005  December 31, 2004  Subsidy*  March 31, 2005
-----------------------------------------  ---------- --------------  --------------- ----------------- ---------- --------------


Breckenridge Creste Apartments, L.P. (1)
Breckenridge
Duluth, GA

Willow Lake Partners II, L.P.
    (A Limited Partnership) (1)
Willow Lake
Kansas City, MO
Bolivar Senior Housing, L.P. (1)
Ashton Heights
Bolivar, MO

Lexington Associates I L.P.
    (A Limited Partnership) (1)
Lexington Civic
Lexington, TN

Riverfront Apartments, L.P.
Riverfront
<S>                                         <C>          <C>              <C>              <C>            <C>            <C>
Sunbury, PA                                 200          1,984,908        1,984,908        5,865,519      Section 8      99%


Susquehanna View, L.P.
Susquehanna View
Camp Hill, PA                               201          2,194,314        2,194,314        8,214,955      Section 8      99%


Westgate Associates I, L.P.
Fouche Valley
Perryville, AR                              20           131,865          131,865          914,745        FmHA           90%

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                                  Capital Contributions
Local Limited Partnership                       Total          Total          Mtge. Loans
Property Name                    Number of    Committed at    Paid through    payable at         Type of     Occupancy at
Property Location                Apt. Units   March 31, 2005  March 31, 2005  December 31, 2004  Subsidy*    March 31, 2005
-------------------------------  -----------  --------------  --------------- -----------------  ---------   ------------


Altheimer Associates I, L.P.
Altheimer
<S>                                  <C>           <C>            <C>            <C>               <c>           <C>
Altheimer, AR                        20            130,375        130,375        586,384           FmHA          100%


The Temple-Kyle L.P.
Kyle Hotel
Temple, TX                           64          1,624,100      1,624,100      1,388,829           Section 8      88%


Diversey Square Associates II
Diversey Square II
Chicago, IL                         48           1,031,825      1,031,825      2,580,857           Section 8      96%


Poplar Village, LTD
Poplar Village
Cumberland, KY                      36            283,945         283,945      1,179,537           None           92%
                                  ------      -------------    ------------    ---------------

                                  2,618       $37,200,563      $37,200,563     $105,686,774
                                  ======      ============     ============    ==============

</TABLE>

*FmHA      This subsidy, which is authorized under Section 515 of the Housing
           Act of 1949, can be one or a combination of different types of
           financing. For instance, FmHA may provide: 1) direct
           below-market-rate mortgage loans for rural rental housing; 2)
           mortgage interest subsidies which effectively lower the interest rate
           of the loan to 1%; 3) a rental assistance subsidy to tenants which
           allows them to pay no more than 30% of their monthly income as rent
           with the balance paid by the federal government; or 4) a combination
           of any of the above.

 Section   8 This subsidy, which is authorized under Section 8 of Title II of
           the Housing and Community Development Act of 1974, allows qualified
           low-income tenants to pay 30% of their monthly income as rent with
           the balance paid by the federal government.

(1) The Partnership no longer has an interest in this Local Limited Partnership.


<PAGE>
Four Local Limited Partnerships invested in by the Partnership represent more
than 20% of the Partnership's consolidated assets, equity or net losses. The
following financial information represents the Local Limited Partnerships'
performance for the years ended December 31, 2004 and 2003:
<TABLE>
<CAPTION>

     El Jardin of Davie, Ltd.                                            2004              2003
     ------------------------                                        ------------------------------
<S>                                                                  <C>              <C>
     Total Assets                                                    $   6,164,048    $   6,486,308
     Total Liabilities                                               $   6,495,236    $   6,685,140
     Revenue                                                         $   1,805,948    $   1,805,611
     Net Loss                                                        $     (94,138)   $    (156,120)

     Quartermill Associates, L.P. (A Virginia Limited Partnership)
     Total Assets                                                    $  10,051,759    $  10,521,543
     Total Liabilities                                               $   6,989,866    $   7,053,535
     Revenue                                                         $   1,876,494    $   1,829,254
     Net Loss                                                        $    (320,421)   $    (264,803)

     Blue Mountain Associates, L.P. (A Massachusetts Limited Partnership)
     Total Assets                                                    $   7,777,456    $   8,415,609
     Total Liabilities                                               $   9,697,316    $   9,839,042
     Revenue                                                         $   3,020,764    $   3,062,317
     Net Loss                                                        $    (496,427)   $    (809,831)

     Riverfront Apartments, L.P.
     Total Assets                                                    $   8,196,491    $   8,418,190
     Total Liabilities                                               $   6,151,257    $   6,257,235
     Revenue                                                         $   1,708,597    $   1,719,197
     Net Loss                                                        $    (115,721)   $     (54,304)

</TABLE>


The Partnership does not guarantee any of the mortgages or other debt of the
Local Limited Partnerships.

Duration of leases for occupancy in the Properties described above is generally
six to twelve months. The Managing General Partner believes the Properties
described herein are adequately covered by insurance.

Additional information required under this item, as it pertains to the
Partnership, is contained in Items 1, 6 and 7 of this Report.

Item 3.  Legal Proceedings

On or about July 13, 2004, Park G.P., Inc. ("Park") commenced litigation against
Boston Financial Qualified Housing Tax Credits L.P. IV (the "Partnership") and
its purported general partners (collectively, "Defendants") in Clay County,
Missouri, claiming that Defendants breached the relevant partnership agreement
and their fiduciary duties owed to Park by, among other things, failing to
permit inspection of certain alleged "books and records" of the Partnership. On
or about October 7, 2004, Park sought leave of the court to amend its petition
to include claims for inspection of the alleged "books and records" against
Boston Financial Qualified Housing Limited Partnership, Boston Financial Tax
Credit Fund Plus, A Limited Partnership, Boston Financial Qualified Housing Tax
Credits L.P. II, Boston Financial Qualified Housing Tax Credits L.P. III, Boston
Financial Qualified Housing Tax Credits L.P. V, Boston Financial Tax Credit Fund
VII, A Limited Partnership, and their purported general partners (collectively,
the "New Defendants"). The court granted the amendment on November 15, 2004, and
all defendants subsequently moved to dismiss the amended complaint in its
entirety. That motion is currently pending (along with a concurrently filed
motion for entry of a blanket protective order), and oral argument on the motion
took place on February 16, 2005. On or about October 8, 2004, Park moved the
court for entry of a temporary restraining order compelling the Defendants and
the New Defendants to turn over the alleged "books and records" in conjunction
with a transaction Park was proposing entering into. On October 12, 2004, the
court denied Park's request.

After Park served a deposition notice duces tecum that requested the production
of confidential non-public documents, defendants filed a Motion for a Protective
Order on March 23, 2005. After a short hearing on April 21, 2005, the Court
"overruled" the Motion in a brief docket entry on May 16, 2005 without any
findings of fact, conclusions of law, or other explanation. On or about June 9,
2005, defendants petitioned the Missouri Court of Appeals for a writ ordering
the Circuit Court to set aside the prior order and grant defendant's request for
a protective order.

Defendants maintain that Park is not entitled to review the materials requested
and/or use the materials in secondary market transactions because, among other
things, (i) they are not "books and records" of the partnerships, (ii) Park does
not seek to review them for a proper purpose, and (iii) that selective
disclosure of the information to Park would give it an unfair informational
advantage in secondary market transactions, and may violate federal and/or state
securities laws. Defendants accordingly intend on defending against the claims
vigorously. We have not formed an opinion that an unfavorable outcome is either
probable or remote. In addition, our counsel refrains from expressing an opinion
as to the likely outcome of the case, or the range of any loss.

On August 24, 2004, Boston Financial Qualified Housing Limited Partnership,
Boston Financial Tax Credit Fund Plus, A Limited Partnership, Boston Financial
Qualified Housing Tax Credits L.P. II, Boston Financial Qualified Housing Tax
Credits L.P. III, Boston Financial Qualified Housing Tax Credits L.P. IV, Boston
Financial Qualified Housing Tax Credits L.P. V, Boston Financial Tax Credit Fund
VII, A Limited Partnership, and Boston Financial Tax Credit Fund VIII, A Limited
Partnership (collectively, the "Partnerships"), and their general partners
commenced litigation against Everest Housing Investors 2, LLC ("Everest 2") and
three other Everest-related entities (collectively , the "Everest Entities") in
Massachusetts state court, seeking a declaratory judgment that certain materials
the Everest Entities sought to inspect are not "books and records" of the
Partnerships, and that the Everest Entities are in any case not entitled to
inspect said information under applicable partnership agreements, partnership
law or otherwise. On October 7, 2004, the Everest Entities filed an answer and
counterclaim against the Partnerships and their purported general partners,
claiming that they breached applicable partnership agreements, partnership law
and their fiduciary duties to the Everest Entities by failing to make the
purported "books and records" available. On January 12, 2005, the Partnerships
served a motion to amend their complaint to, among other things, add a claim
based on Everest 2's breach of a November 24, 2003 letter agreement which
compelled Everest 2 to keep confidential certain information contemporaneously
disseminated by four of the Partnerships to Everest 2. Having received no
opposition within the specified time, the Partnerships filed the motion to amend
with the proposed first amended complaint on January 31, 2005. The Court has
granted this Motion.

Defendants maintain that the Everest Entities are not entitled to review the
materials requested and/or use the materials in secondary market transactions
because, among other things, (i) they are not "books and records" of the
Partnerships, (ii) Everest does not seek to review them for a proper purpose,
and (iii) that selective disclosure of the information to Everest would give it
an unfair informational advantage in secondary market transactions, and may
violate federal and/or state securities laws. We have not formed an opinion that
an unfavorable outcome is either probable or remote. In addition, our counsel
refrains from expressing an opinion as to the likely outcome of the case, or the
range of any loss.

Except as noted above, the Partnership is not a party to any pending legal or
administrative proceeding, and to the best of its knowledge, no legal or
administrative proceeding is threatened or contemplated against it.

<page>

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

None.

                                     PART II

Item 5.  Market for the Registrant's Units and Related Security Holder Matters

There is no public market for the Units, and it is not expected that a public
market will develop. If a Limited Partner desires to sell Units, the buyer of
those Units will be required to comply with the minimum purchase and retention
requirements and investor suitability standards imposed by applicable federal or
state securities laws and the minimum purchase and retention requirements
imposed by the Partnership. The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers, will be subject
to negotiation by the Limited Partner seeking to sell his Units. Units will not
be redeemed or repurchased by the Partnership.

The Partnership Agreement does not impose on the Partnership or its General
Partners any obligation to obtain periodic appraisals of assets or to provide
Limited Partners with any estimates of the current value of Units.

As of March 31, 2005, there were 5,321 record holders of Units of the
Partnership.

Cash distributions, when made, are paid annually. No cash distribution was paid
in the years ended March 31, 2005 and 2004.

 Item 6. Management's Discussion and Analysis of Financial
          Condition and Results of Operations

Executive Level Overview

Boston Financial Qualified Housing Tax Credits L.P. III was formed on August 9,
1988 under the laws of the State of Delaware for the primary purpose of
investing, as a limited partner, in other limited partnerships, which own and
operate apartment complexes, most of which benefit from some form of federal,
state or local assistance program and each of which qualify for low-income
housing tax credits. The Partnership's objectives are to: (i) provide current
tax benefits in the form of tax credits which qualified investors may use to
offset their federal income tax liability; ii) preserve and protect the
Partnership's capital; iii) provide limited cash distributions which are not
expected to constitute taxable income during Partnership operations; and iv)
provide cash distributions from sale or refinancing transactions. The General
Partners of the Partnership are Arch Street III, Inc., which serves as the
Managing General Partner, and Arch Street III L.P., which also serves as the
Initial Limited Partner.

The Partnership's investment portfolio consists of limited partnership interests
in twenty-three Local Limited Partnerships, each of which owns and operates a
multi-family apartment complex and each of which has generated Tax Credits.
Since inception, the Partnership has generated Tax Credits, net of recapture, of
approximately $1,340 per Limited Partner Unit. The aggregate amount of net Tax
Credits generated by the Partnership is consistent with the objective specified
in the Partnership's prospectus.

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 years from the
date the property is completed. Failure to do so would result in recapture of a
portion of the Property's Tax Credits. Beginning in 2003 and continuing through
2006, the Compliance Period of the twenty-three Properties in which the
Partnership has an interest will expire. The Managing General Partner has
negotiated agreements that will ultimately allow the Partnership to dispose of
its interest in eleven Local Limited Partnerships. It is unlikely that the
disposition of any of these Local Limited Partnership interests will generate
any material cash distributions to the Partnership. Thirteen of the Local
Limited Partnerships in which the Partnership had an investment were sold during
the year ended March 31, 2005.

The Managing General Partner will continue to pursue the disposition of the
Partnership's remaining Local Limited Partnership interests. It is unlikely that
the Managing General Partner's efforts will result in the Partnership disposing
of all of its remaining Local Limited Partnership interests concurrently with
the expiration of each Property's Compliance Period. The Partnership shall
dissolve and its affairs shall be wound up upon the disposition of the final
Local Limited Partnership interest and other assets of the Partnership.
Investors will continue to be Limited Partners, receiving K-1s and quarterly and
annual reports, until the Partnership is dissolved.

Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The
Partnership intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements and are including this
statement for purposes of complying with these safe harbor provisions. Although
the Partnership believes the forward-looking statements are based on reasonable
assumptions, the Partnership can give no assurance that their expectations will
be attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors, including, without limitation, general economic and real
estate conditions and interest rates.

Critical Accounting Policies

The Partnership's accounting policies include those that relate to its
recognition of investments in Local Limited Partnerships using the equity method
of accounting. The Partnership's policy is as follows:

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting. Under the equity method, the investment is
carried at cost, adjusted for the Partnership's share of net income or loss and
for cash distributions from the Local Limited Partnerships; equity in income or
loss of the Local Limited Partnerships is included currently in the
Partnership's operations. Under the equity method, a Local Limited Partnership
investment will not be carried below zero. To the extent that equity in losses
are incurred when the Partnership's carrying value of the respective Local
Limited Partnership has been reduced to a zero balance, the losses will be
suspended and offset against future income. Income from Local Limited
Partnerships, where cumulative equity in losses plus cumulative distributions
have exceeded the total investment in Local Limited Partnerships, will not be
recorded until all of the related unrecorded losses have been offset. To the
extent that a Local Limited Partnership, with a carrying value of zero
distributes cash to the Partnership, that distribution is recorded as income on
the books of the Partnership and is included in "Other Revenue" in the
accompanying financial statements.

The Partnership has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. The investments are
reviewed for impairment whenever events or changes in circumstances indicate
that the Partnership may not be able to recover its carrying value. If an other
than temporary impairment in carrying value exists, a provision to reduce the
asset to fair value will be recorded in the Partnership's financial statements.

<page>


 Accounting Standard Update

In January 2003, the FASB issued Interpretation No. 46 ("Interpretation"),
"Consolidation of Variable Interest Entities", which provides new criteria for
determining whether or not consolidation accounting is required. The
Interpretation, which was modified in December 2003 in order to address certain
technical and implementation issues, requires the Partnership to consider
consolidation or provide additional disclosures of financial information for
Local Limited Partnerships meeting the definition of a Variable Interest Entity
("VIE"). The Partnership was required to apply the Interpretation to the Local
Limited Partnerships meeting the definition of a VIE as of March 31, 2005.

This Interpretation requires consolidation by the Partnership of the Local
Limited Partnerships' assets and liabilities and results of operations if the
Partnership determined that the Local Limited Partnerships were VIEs and that
the Partnership was the "Primary Beneficiary". Minority interests may be
recorded for the Local Limited Partnerships' ownership share attributable to
other investors. Where consolidation of Local Limited Partnerships is not
required, additional financial information disclosures of Local Limited
Partnerships may be required. The Partnership has assessed the Interpretation
and concluded that it is not the Primary Beneficiary of any of the Local Limited
Partnerships that meet the definition of a VIE. The Partnership is involved with
those VIEs as a non-controlling limited partner equity holder. The Partnership
is required to disclose its maximum exposure to economic and financial statement
losses as a result of its involvement with the VIEs. The Partnership's exposure
to economic and financial statement losses from the VIEs is limited to its
investment in the VIEs ($3,610,242 at March 31, 2005). The Partnership may be
subject to additional losses to the extent of any financial support that the
Partnership voluntarily provides in the future.

Liquidity and capital resources

The Partnership had an increase in cash and cash equivalents of $523,732 for the
year ended March 31, 2005. This increase is attributable to proceeds received
from sale of investments in Local Limited Partnerships and reimbursement of
advances to Local Limited Partnerships. These increases are partially offset by
cash used for operations and the repayment of a note payable.

The Managing General Partner initially designated 3.00% of the Gross Proceeds as
Reserves as defined in the Partnership Agreement. The Reserves were established
to be used for working capital of the Partnership and contingencies related to
the ownership of Local Limited Partnership interests. The Managing General
Partner may increase or decrease such Reserves from time to time, as it deems
appropriate. During the year ended March 31, 1993, the Managing General Partner
increased the Reserve level to 3.75%. At March 31, 2005, $890,729 of cash and
cash equivalents has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,297,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $534,000 also have been used to make additional
capital contributions to four Local Limited Partnerships and the Partnership has
paid approximately $452,000 (net of paydowns) to purchase the mortgage of The
Kyle Hotel. In the event a Local Limited Partnership encounters operating
difficulties requiring additional funds, the Partnership's management might deem
it in its best interest to voluntarily provide such funds in order to protect
its investment. As of March 31, 2005, the Partnership has advanced approximately
$1,578,000 to Local Limited Partnerships to fund operating deficits.

The Managing General Partner believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions. To date, the Partnership has used approximately $2,002,000 of
operating funds and proceeds from sales of investments in Local Limited
Partnerships to replenish Reserves.

<page>


Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, as of March 31, 2005, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.

Cash distributions

No cash distributions were made to Limited Partners in the two years ended March
31, 2005. It is not expected that cash available for distribution, if any, will
be significant during the 2005 calendar year. Based on the results of 2004
Property operations, the Local Limited Partnerships are not expected to
distribute significant amounts of cash to the Partnership because such amounts
will be needed to fund Property operating costs. In addition, many of the
Properties benefit from some type of federal or state subsidy and, as a
consequence, are subject to restrictions on cash distributions.

Results of operations

The Partnership's results of operations for the year ended March 31, 2005
resulted in a net income of $4,374,332 as compared to a net loss of $2,553,356
for the same period in 2004. The increase in net income is primarily due to an
increase in gain on sale of investments in Local Limited Partnerships, an
increase in recovery of prior years' provision for valuation of advances to
Local Limited Partnerships and a decrease in equity in losses of Local Limited
Partnerships. The increase in gain on sale of investments in Local Limited
Partnerships is due to the sale of investments in thirteen Local Limited
Partnerships during the year ended March 31, 2005. The increase in recovery of
prior years' provision for valuation of advances to Local Limited Partnerships,
net of advances in the year ended March 31, 2005 resulted from the reimbursement
of $977,596 of advances made to two Local Limited Partnerships in previous
years, net of $197,078 for advances made to Local Limited Partnerships in the
year ended March 31, 2005, which were fully reserved. The decrease in equity in
losses of Local Limited Partneships is primarily due to the Partnership
disposing of its interest in thirteen Local Limited Partnerships during the year
ended March 31, 2005.

Low-income housing tax credits

The 2004 and 2003 Tax Credits per Unit for individuals were $0.07 and $0.19,
respectively. The Tax Credits per Limited Partner stabilized in 1991. The
credits have decreased significantly as several Properties have reached the end
of the ten year credit period. However, because the Compliance Periods generally
extend significantly beyond the Tax Credit periods, the Partnership intends to
hold its Local Limited Partnership investments for the foreseeable future.

 Property discussions

A majority of the Properties in which the Partnership has an interest have
stabilized operations and operate above break-even. A few Properties generate
cash flow deficits that the Local General Partners of those Properties fund
through project expense loans, subordinated loans or operating escrows. However,
some Properties have had persistent operating difficulties that could either: i)
have an adverse impact on the Partnership's liquidity; ii) result in their
foreclosure; or iii) result in the Managing General Partner deeming it
appropriate for the Partnership to dispose of its interest in the Local Limited
Partnership prior to the expiration of the Compliance Period. Also, the Managing
General Partner, in the normal course of the Partnership's business, may arrange
for the future disposition of its interest in certain Local Limited
Partnerships. The following Property discussions focus only on such Properties.
<page>
As previously reported, the Managing General Partner negotiated an agreement
with an unaffiliated entity to have the ability to transfer the Partnership's
interest to the unaffiliated entity or its designee with respect to the
following Properties: Briarwood II, located in Lake Havasua, Arizona, Eaglewood,
located in Covington, Tennessee, Fulton, located in Fulton, Kentucky, Lexington
Civic, located in Lexington, Tennessee, Kirkendall Heights, located in
Ellsworth, Kansas and Poplar Village, located in Cumberland, Kentucky. Although
these Properties do not share a common Local General Partner, they are all Rural
Housing Section 515 ("FMHA") properties. The Managing General Partner has the
right to put its interest in any of the Properties at any time in exchange for a
Contingent Note that grants the Partnership 50% of all future net cash receipts
from such Local Limited Partnership interest. Effective January 2, 2004, the
Managing General Partner exercised the Briarwood II put option. This sale
resulted in taxable income of $288,483, or approximately $3 per Unit. In
addition, effective January 3, 2005, the Managing General Partner exercised the
put options on Eaglewood, Fulton, Lexington Civic and Kirkendall Heights. These
four sales resulted in taxable income projected to be approximately $805,000, or
$8 per Unit. The Partnership no longer has an interest in these five Properties.

As previously reported, the Managing General Partner negotiated an agreement
with the Local General Partner to have the ability to transfer the Partnership's
interest to the Local General Partner with respect to the following Properties:
Ashton Heights, located in Bolivar, Missouri, Bentley Hill, located in Syracuse,
Kansas, Brownsville, located in Brownsville, Tennessee, Cedar Tree, located in
Billings, Missouri, Garden Plain, located in Garden Plain, Kansas, Horseshoe
Bend, located in Horseshoe Bend, Arizona, Longview, located in Humboldt, Kansas,
Pearl Place, located in Rossville, Kansas, Ponca Manor, located in Satanta,
Kansas, Smithville, located in Smithville, Missouri and Sunnyhill Villa, located
in Wayne, Nebraska. These Properties share a common Local General Partner and
they are all Rural Housing Section 515 ("FMHA") properties. The Managing General
Partner has the right to put its interest in any of the Properties for $5,000
subsequent to the expiration of each Property's Compliance Period. The
Compliance Period expires on or before December 31, 2004 for all eleven of these
Properties. Effective January 2, 2004, the Managing General Partner exercised
the put options on Bentley Hill, Brownsville, Cedar Tree, Garden Plain,
Horseshoe Bend, Longview, Smithville and Sunnyhill Villa. The Partnership
received a total of $40,000 for its interests in these eight Local Limited
Partnerships. These eight sales resulted in taxable income of $1,325,497, or
approximately $13 per Unit. In addition, effective January 3, 2005, the Managing
General Partner exercised the put options on Ashton Heights, Pearl Place and
Ponca Manor. The Partnership received a total of $15,000 for its interests in
these three Local Limited Partnerships. These three sales resulted in taxable
income of approximately $330,000, or $3 per Unit. The Partnership no longer has
an interest in these eleven Properties. The Managing General Partner, in
accordance with and as permitted by the Partnership Agreement, retained the
entire amount of net proceeds in Reserves.



As previously reported, during the third quarter of 2002, the Massachusetts
Housing Finance Agency ("MHFA") issued a report that gave Granite V, located in
Boston, Massachusetts, a below average physical condition rating. Site
management addressed the issues listed in the report, and MHFA subsequently
rated the Property in satisfactory condition. Unfortunately, replacement reserve
levels were inadequate to meet future needs. During the first quarter of 2003,
the Managing General Partner approved a transfer of the Local General Partner
interest to a new Local General Partner. Since the Property's mortgage, which
accrues interest at a rate of 12.2%, could be prepaid without a premium
beginning in 2002, the new Local General Partner refinanced the Property's first
mortgage in December 2003 by obtaining an eighteen-month loan that reduced the
interest rate from 12% to 6.5%, and provided proceeds to pay outstanding
obligations and complete deferred maintenance repairs. To pay down current
obligations, the Local General Partner also liquidated the replacement reserves
account held by the previous lender. The Compliance Period for the Property
ended in 2003. The Managing General Partner and the Local General Partner have
entered into a put agreement whereby the Managing General Partner could sell the
Partnership's interest in the Property to the Local General Partner for a
nominal price. Effective January 1, 2005, the Partnership transferred its
interest in the Local Partnership to the Local General Partner and in February
2005, the Partnership received $1,326,000 for its interest. The sale of this
interest resulted in taxable income projected to be approximately $413,000, or
$4 per Unit. The Partnership no longer has an interest in this Property. The
Managing General Partner, in accordance with and as permitted by the Partnership
Agreement, retained the entire amount of net proceeds in Reserves.
<page>
As previously reported, Waterfront and Shoreline, both located in Buffalo, New
York, continue to have operating deficits as a result of a soft rental market,
low occupancy and deferred maintenance, which impacts the marketability of the
developments. The mortgage loans on both Properties are payable only out of
available cash flow, and neither Property has made mortgage payments in several
years. The Managing General Partner and the Local General Partner commenced
discussions regarding the options available to improve operations at, or dispose
of, the Properties. An agreement was reached whereby the Managing General
Partner would allow the Local General Partner to transfer its Local General
Partner interest to a developer that will resyndicate the Properties. In return,
the Partnership obtained both a put option allowing the Partnership to transfer
its interest in the Properties for a nominal sum and a pledge by the incoming
Local General Partner to pay any Tax Credit recapture incurred due to the
transfer of the Properties prior to the end of the Compliance Period. These
transfers of the Local General Partner interests occurred during April 2005. The
transfer of the Partnership's interest is expected to occur in 2005 and 2006 for
Shoreline and Waterfront, respectively.

Willow Lake, located in Kansas City, had experienced operating difficulties for
many years. The original Local General Partner was replaced shortly after
construction completion with an affiliate of the Managing General Partner and
the Property's first mortgage was modified several times to avoid foreclosure.
The Partnership had advanced approximately $695,000 from Partnership Reserves.
Since the Compliance Period ended on December 31, 2004, and to eliminate any
future risk to the Partnership, the Managing General Partner commenced attempts
to sell the Property. On January 10, 2005, a sale of the Property to a third
party was consummated. After payment on Property debts, expenses and closing
costs, the Partnership received approximately $1,467,000 in net sales proceeds.
This sale will result in taxable income projected to be approximately
$2,988,000, or $30 per Unit. The Managing General Partner, in accordance with
and as permitted by the Partnership Agreement, retained the entire amount of net
proceeds in Reserves.

As previously reported, during 1994, the Local General Partner at Admiral Court,
located in Philadelphia, Pennsylvania, transferred its interest in the Local
Limited Partnership. The IRS subsequently conducted a compliance audit at the
Property and took the position that the Property is subject to recapture due to
non-compliance issues. The Managing General Partner disagrees with the IRS and
is working to resolve the matter. In the opinion of the Managing General
Partner, there is a risk that the Local Limited Partnership and, consequently,
the Partnership could suffer significant Tax Credit recapture. However, it is
not possible to quantify the potential amount at this time. The Property's Tax
Credit stream ended in 1999. Further, the Property suffered from poor location
and security issues. Vandalism caused an increase in maintenance and repair
expenses and negatively affected the Property's occupancy levels and tenant
profile, causing working capital and debt service coverage to drop below
appropriate levels. In 2003, the Managing General Partner and the Local General
Partner began to pursue disposition options of the Partnership's interest in the
Property. In the fall of 2003, a put option agreement was entered into that
allowed the Partnership to transfer its interest in the Local Partnership to the
Local General Partner after the expiration of the Compliance Period on December
31, 2003. On September 21, 2004, the Property was sold and the Partnership
received $75,000 in sales proceeds. The Partnership no longer has an interest in
this Property. The sale resulted in taxable income of $220,162, or approximately
$2 per Unit. The Managing General Partner, in accordance with and as permitted
by the Partnership Agreement, retained the entire amount of net proceeds in
Reserves.

As previously reported, increased competition for Georgetown II, located in
Georgetown, Delaware, has negatively impacted the Property's operations.
Although the Property has maintained a high level of occupancy, rental rates
have stagnated while expenses have continued to increase. In an effort to reduce
fixed expenses to improve cash flow, the Local General Partner refinanced the
Property's first mortgage during the first quarter 2004, reducing the interest
rate from 8% to 6%, which should significantly improve the Property's future
operating performance. The Property operated slightly above breakeven during
2004. The Property no longer generates Tax Credits and the Compliance Period
expires on December 31, 2004. In 2003, the non-profit affiliate of the state
housing finance agency that holds the Property's long-term ground lease offered
to transfer the land at little cost to the Partnership. The Managing General
Partner gave its consent to the transfer and concurrently executed a Put
Agreement for the Partnership's interest in the Property to the Local General
Partner. The Put Agreement gives the Partnership the right to transfer its
interest to the Local General Partner for a nominal price.
<page>
As previously reported, operations at Westwood Manor, located in Flint,
Michigan, have suffered in recent quarters. Poor site management caused deferred
maintenance and curb appeal issues. The Partnership also advanced $50,000 from
Reserves to address the deferred maintenance issues at the Property during 2001.
The advance was to be repaid through operations, if available, with the Local
General Partner obligated to pay back 50% of the remaining balance should the
entire amount of the advance not be repaid by December 31, 2001. The Property
did not generate sufficient cash from operations to repay any of the
Partnership's advances. The Partnership has not yet made a demand from the Local
General Partner to meet his obligation to repay 50% of the advance. However, the
Managing General Partner and the Local General Partner have reached agreement on
an exit strategy on this Property. The Local General Partner received approval
for a refinancing of the Property from HUD and the refinanced mortgage was
closed on July 31, 2003. The Managing General Partner, in providing its approval
of the refinancing, received agreement from the Local General Partner to a put
option whereby the Partnership can dispose of its interest in the Property any
time after December 31, 2003, when the Compliance Period expires. Part of the
agreement also includes repayment of the Partnership's $50,000 loan.

As previously reported, during 1995, the Kyle Hotel, located in Temple, Texas,
defaulted on its mortgage and the lender placed the Local Limited Partnership in
bankruptcy. Under the subsequent reorganization, the Local General Partner was
replaced by an affiliate of the Managing General Partner, and the Partnership
purchased the outstanding debt on the Property. The Property makes mortgage
payments in the amount of available cash flow to the Partnership. The Property
has consistently enjoyed high occupancy over the past several months. However,
commercial rental revenue has been eliminated by the inability to lease the
commercial space due to its odd configuration. The Managing General Partner will
continue in its attempts to dispose of the Partnership's interest in the
Property. On December 30, 2004, the Managing General Partner transferred the
Local General Partner interest in the Property from an affiliate of the Managing
General Partner to an affiliate of the Temple Housing Authority and the
Partnership received net proceeds of $208,000 for this Local General Partner
interest. The Partnership will receive an additional $200,000 for this interest
in January 2006, after the Property's Compliance Period ends on December 31,
2005 and after the Partnership exercises its put agreement to transfer the
Partnership's interest in the Property to the Temple Housing Authority
affiliate.

As previously reported, South Holyoke, located in Holyoke, Massachusetts,
received a subsidy under the State Housing Assistance Rental Program ("SHARP"),
which was an important part of its annual income. As of March 1, 2003, MHFA
cancelled SHARP payments for the rest of the State's fiscal year (June 30,
2003). The State did not reinstate payments for FY 2004 (July 1, 2003 to June
30, 2004). Properties unable to make full debt service payments were declared in
default by MHFA. Due to the existing operating deficits and the dependence on
these subsidies, South Holyoke was declared in default on its mortgage
obligations. The Local General Partner of South Holyoke negotiated an agreement
with MHFA to restructure the SHARP debt as well as the mortgage on the Property.
As part of the restructuring, the Partnership contributed additional capital of
$100,000 to the Property in exchange for the right to put its interest to the
Local General Partner after the end of the Property's Compliance Period on
December 31, 2003. Effective January 4, 2004, the Managing General Partner
exercised the put option. The Partnership no longer has an interest in this
Property. This sale resulted in taxable income of $5,235,830, or approximately
$52 per Unit.

As previously reported, due to operating deficits in 2002 and 2003 at Tucson
Trails I and Tucson Trails II, located in Madison, Wisconsin, the Local General
Partner proposed a refinancing of the Properties. At the same time, the same
Local General Partner proposed a refinancing of the first mortgages of two other
Properties, Elver Park II and Elver Park III, in which the Partnership had an
interest but had enjoyed stable operations for the last several quarters. The
Managing General Partner agreed to the refinancing of all four Properties and
all four Properties closed on their new first mortgages in November 2003 with
the Partnership receiving a total of $954,098 in cash from refinancing proceeds.
The Managing General Partner and the Local General Partner also entered into a
call and put option whereby the Local General Partner received a call option at
the end of the Compliance Period for a nominal amount. If the call is not
exercised within a 6-month period, the Partnership has the option to put its
interest to the Local General Partner. The expiration of the Compliance Period
was no later than December 31, 2004 for any of the four Properties. The
Partnership's interest in all four Local Limited Partnership's were disposed of
effective May 31, 2005.

As previously reported, the Compliance Period for The Colony, located in
Columbia, South Carolina ended on December 31, 2003. The Managing General
Partner determined that there was no likelihood of any realizable cash
distributable to the Partnership from a sale of the Property. As a result, the
Managing General Partner obtained a put option agreement with the Local General
Partner that would allow the Partnership to transfer its interest in the
Property to the Local General Partner for $1. Therefore, effective January 2,
2004, the put option was exercised and the Partnership transferred its entire
interest in the Local Partnership to the Local General Partner for $1. The
Partnership no longer has an interest in this Property. This sale resulted in
taxable income of $1,056,194, or $11 per Unit.

As previously reported, Fox Run, located in Victoria, Texas experienced
operating deficits in 2003 and the first half of 2004 due to decreased revenues
and increased expenses. The Property also suffered from deferred maintenance and
failed two consecutive HUD physical inspections in February and July 2004. In
addition, the Property defaulted on its HUD-insured mortgage loan in December
2003. Since the Property generated its last Tax Credits in 1999, in order to
minimize risk to the Partnership, in late August 2004 the Managing General
Partner decided to transfer the Partnership's interest to a third party in
exchange for a Contingent Note that grants the Partnership 50% of all future net
cash receipts from such Local Limited Partnership interest. The Partnership will
no longer have an interest in this Property once the U.S. Department of Housing
and Urban Development approves the transfer, which is expected during 2005. This
sale resulted in taxable income projected to be approximately $1 million, or $10
per Unit.

As previously reported, in 2003, the Local General Partner of El Jardin, located
in Davie, Florida, expressed its desire to sell the Property to a third party
buyer. In April 2003, a realtor was hired to appraise the Property. In June
2004, the Local General Partner received an offer from a third party buyer that
was subsequently increased as a result of an updated market valuation. On March
8, 2005, the Property was sold and the Partnership will receive approximately
$2.9 million in sales proceeds during the second quarter of 2005. This sale
resulted in taxable income of approximately $3.6 million or $36 per Unit. The
Managing General Partner, in accordance with and as permitted by the Partnership
Agreement, retained the entire amount of net proceeds in Reserves.

As previously reported, Ashley Place, located in Orlando, Florida, reached the
end of its Compliance Period on December 31, 2004. As a result, the Managing
General Partner was interested in selling the Partnership's interest in the
Property. Two real estate brokers with experience in multifamily property sales
were hired to do an appraisal of the Property. Their appraisals ranged from
approximately $4.1 million to $4.34 million. The Managing General Partner and
the Local General Partner agreed that the Partnership would transfer its
interest in the Property to the Local General Partner for $210,000. This would
result in the Partnership receiving the same level of proceeds as it would if
the Property were sold to a third party at a price of $4.34 million. On December
21, 2004, the Property was sold to the Local General Partner and $210,000 was
received by the Partnership. The Partnership no longer has an interest in the
Property. The Managing General Partner, in accordance with and as permitted by
the Partnership Agreement, retained the entire amount of net proceeds in
Reserves. The sale resulted in taxable income of $899,419, or approximately $9
per Unit.

Columbia Townhouses, located in Burlington, Iowa, reached the end of its
Compliance Period on December 31, 2004. The Managing General Partner determined
that there was no likelihood of any realizable cash distributable to the
Partnership from a sale of the Property. As a result, the Managing General
Partner obtained a put option agreement with the Local General Partner that
would allow the Partnership to transfer its interest in the Local Partnership to
the Local General Partner for $1. Therefore, effective January 25, 2005, the put
option was exercised and the Partnership transferred its entire interest in the
Property to the Local General Partner for $1. The Partnership no longer has an
interest in this Property. This sale resulted in taxable income projected to be
approximately $420,000, or $4 per Unit.
<page>
Inflation and other economic factors

Inflation had no material impact on the Partnership's operations or financial
condition for the years ended March 31, 2005 and 2004.

Since most Properties benefit from some form of government assistance, the
Partnership is subject to the risks inherent in that area including decreased
subsidies, difficulties in finding suitable tenants and obtaining permission for
rent increases. In addition, the Tax Credits allocated to investors with respect
to a Property are subject to recapture to the extent that a Property or any
portion thereof ceases to qualify for Tax Credits.

Certain Properties in which the Partnership has invested are located in areas
suffering from poor economic conditions. Such conditions could have an adverse
effect on the rent or occupancy levels at such Properties. Nevertheless, the
Managing General Partner believes that the generally high demand for below
market rate housing will tend to negate such factors. However, no assurance can
be given in this regard.

Item 7. Financial Statements and Supplementary Data

Information required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.

Item 8.Changes in and Disagreements with Accountants on Accounting and Financial
       Disclosure

None.

Item 8A.  Controls and Procedures

Based on the Partnership's evaluation within 120 days prior to filing this Form
10-KSB, the Partnership's director has concluded that the Partnership's
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports that the Partnership files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.

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



Item 8B.  Other Information

No Reports on Form 8-K were filed during the fourth quarter of the year ended
March 31, 2005.


                                    PART III

Item 9.  Directors and Executive Officers of the Registrant

The Managing General Partner of the Partnership is Arch Street III, Inc., a
Massachusetts corporation (the "Managing General Partner"), an affiliate of MMA
Financial, LLC. The Managing General Partner was incorporated in August 1988.
The Investment Committee of the Managing General Partner approved all
investments. The names and positions of the principal officers and the directors
of the Managing General Partner are set forth below.

     Name                        Position

Jenny Netzer                Executive Vice President, Tax Credit Equity Group
Michael H. Gladstone        Principal, Member

The other General  Partner of the  Partnership is Arch Street III Limited
Partnership,  a  Massachusetts  limited  partnership  ("Arch Street III L.P.")
that was organized in August 1988.  The General Partner of Arch Street III L.P.
is Arch Street III, Inc.

The Managing General Partner provides day-to-day management of the Partnership.
Compensation is discussed in Item 10 of this report. Such day-to-day management
does not include the management of the Properties.

The business experience of each of the persons listed above is described below.
There is no family relationship between any of the persons listed in this
section.

Jenny Netzer, age 49, Executive Vice President, Tax Credit Equity Group - Ms.
Netzer is responsible for tax credit investment programs to institutional
clients. She joined MMA Financial, LLC as a result of the Boston Financial and
subsequent Lend Lease HCI acquisitions, starting with Boston Financial in 1987
and leading Boston Financial's new business initiatives and managing the firm's
Asset Management division. Prior to joining Boston Financial, Ms. Netzer served
as Deputy Budget Director for the Commonwealth of Massachusetts where she was
responsible for the Commonwealth's health care and public pension program's
budgets. Ms. Netzer also served as Assistant Controller at Yale University, as a
former member of Watertown Zoning Board of Appeals, as the Officer of Affordable
Housing Tax Credit Coalition and is a frequent speaker on affordable housing and
tax credit industry issues. Ms. Netzer is a graduate of Harvard University (BA)
and Harvard's Kennedy School of Government (MPP).

Michael H. Gladstone, age 48, Principal, Member - Mr. Gladstone is responsible
for capital transactions work in the Asset Management group of MMA Financial,
LLC. He joined MMA Financial, LLC as a result of the Boston Financial and Lend
Lease HCI acquisitions, starting with Boston Financial in 1985 as the firm's
General Counsel. Prior to joining Boston Financial, Mr. Gladstone was associated
with the law firm of Herrick & Smith and served on the advisory board of the
Housing and Development Reporter. Mr. Gladstone has lectured at Harvard
University on affordable housing matters and is a member of the National Realty
Committee, Cornell Real Estate Council, National Association of Real Estate
Investment Managers and Massachusetts Bar. Mr. Gladstone is a graduate of Emory
University (BA) and Cornell University (J.D. & MBA).

The Partnership is organized as a Limited Partnership solely for the purpose of
real estate investment and does not have any employees. Therefore the
Partnership has not adopted a Code of Ethics.

The Partnership is structured as a Limited Partnership that was formed
principally for real estate investment and is not a "listed" issuer as defined
by Rule 10A-3 of the Securities Exchange Act of 1934. Accordingly, neither an
audit committee nor a financial expert to serve on such a committee has been
established by the Partnership.

<page>
Item 10.  Management Remuneration

Neither the directors nor officers of Arch Street III, Inc., the partners of
Arch Street III L.P. nor any other individual with significant involvement in
the business of the Partnership receives any current or proposed remuneration
from the Partnership.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

As of March 31, 2005, the following is the only entity known to the Partnership
to be the beneficial owner of more than 5% of the total number of Units
outstanding:
                                                   Amount
Title of              Name and Address of       Beneficially        Percent
 Class                 Beneficial Owner            Owned            of Class

Limited               AMP, Incorporated         10,000 Units          10%
Partner               P.O. Box 3608
                      Harrisburg, PA

The equity securities registered by the Partnership under Section 12(g) of the
Act of 1934 consist of 100,000 Units, all of which have been sold to the public
as of March 31, 2005. Holders of Units are permitted to vote on matters
affecting the Partnership only in certain unusual circumstances and do not
generally have the right to vote on the operation or management of the
Partnership.

Arch Street III L.P. owns five (unregistered) Units not included in the 100,000
Units sold to the public.

Except as described in the preceding paragraph, neither Arch Street III, Inc.,
Arch Street III L.P., MMA Financial, LLC nor any of their executive officers,
directors, partners or affiliates is the beneficial owner of any Units. None of
the foregoing persons possesses a right to acquire beneficial ownership of
Units.

The Partnership does not know of any existing arrangement that might at a later
date result in a change in control of the Partnership.

Item 12.  Certain Relationships and Related Transactions

The Partnership was required to pay certain fees to and reimburse certain
expenses of the Managing General Partner or its affiliates in connection with
the organization of the Partnership and the offering of Units. The Partnership
is also required to pay certain fees to and reimburse certain expenses of the
Managing General Partner or its affiliates in connection with the administration
of the Partnership and its acquisition and disposition of investments in Local
Limited Partnerships. In addition, the General Partners are entitled to certain
Partnership distributions under the terms of the Partnership Agreement. Also, an
affiliate of the General Partners will receive up to $10,000 from the sale or
refinancing proceeds of each Local Limited Partnership, if it is still a limited
partner at the time of such transaction. All such fees and distributions are
more fully described in the sections entitled "Estimated Use of Proceeds",
"Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax
Credits and Cash Distributions" of the Prospectus. Such sections are
incorporated herein by reference.

The Partnership is permitted to enter into transactions involving affiliates of
the Managing General Partner, subject to certain limitations established in the
Partnership Agreement.

Information regarding the fees paid and expense reimbursements made in the two
years ended March 31, 2005 is presented as follows:

Organizational fees and expenses

In accordance with the Partnership Agreement, affiliates of the General Partners
were reimbursed by the Partnership for organizational, offering and selling
expenses advanced on behalf of the Partnership by its affiliates and for
salaries and direct expenses of certain employees of the Managing General
Partner and its affiliates in connection with the registration and organization
of the Partnership. Such expenses include printing expenses and legal,
accounting, escrow agent and depository fees and expenses. Such expenses also
include a non-accountable expense allowance for marketing expenses equal to
1.00% of Gross Proceeds. $11,832,395 of organization fees and expenses and
selling expenses incurred on behalf of the Partnership were paid and reimbursed
to an affiliate of the Managing General Partner. Total organization and offering
expenses did not exceed 5.50% of the Gross Proceeds. There were no organization
fees and offering expenses paid in the two years ended March 31, 2005.

Acquisition fees and expenses

In accordance with the Partnership Agreement, the Partnership is required to pay
acquisition fees to and reimburse acquisition expenses of the Managing General
Partner or its affiliates for selecting, evaluating, structuring, negotiating
and closing the Partnership's investments in Local Limited Partnerships.
Acquisition fees totaled 7.50% of the Gross Proceeds. Acquisition expenses,
which include such expenses as legal fees and expenses, travel and
communications expenses, costs of appraisals, accounting fees and expenses did
not exceed 2.00% of the Gross Proceeds. Acquisition fees totaling $7,500,000 for
the closing of the Partnership's Local Limited Partnership investments have been
paid to an affiliate of the Managing General Partner. Acquisition expenses
totaling $1,587,834 were incurred and have been reimbursed to an affiliate of
the Managing General Partner. There were no acquisition fees or expenses paid in
the two years ended March 31, 2005.

Asset management fees

In accordance with the Partnership Agreement, an affiliate of the Managing
General Partner is paid an annual fee for services in connection with the
administration of the affairs of the Partnership. The affiliate receives the
base amount of $5,000 (annually adjusted by the CPI factor) per Local Limited
Partnership as the annual Asset Management Fee. Asset Management Fees incurred
in each of the two years ended March 31, 2005 are as follows:

                                                   2005             2004
                                               --------------   --------------

     Asset management fees                     $   235,554      $   383,316

Salaries and benefits expense reimbursements

An affiliate of the Managing General Partner is reimbursed for the cost of the
Partnership's salaries and benefits expenses. The reimbursements are based upon
the size and complexity of the Partnership's operations. Reimbursements paid or
payable in each of the two years ended March 31, 2005 are as follows:


                                                        2004             2003
                                                     ---------      -----------

     Salaries and benefits expense reimbursements  $   420,610      $   449,153

Cash distributions paid to the General Partners

In accordance with the Partnership Agreement, the General Partners of the
Partnership, Arch Street III, Inc. and Arch Street III L.P., receive 1% of cash
distributions paid to partners. No cash distributions were paid to the General
Partners in the two years ended March 31, 2005.

Additional information concerning cash distributions and other fees paid or
payable to the Managing General Partner and its affiliates and the reimbursement
of expenses paid or payable to MMA Financial, LLC and its affiliates for the two
years ended March 31, 2005 is presented in Note 4 to the Financial Statements.


Item 13 Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Documents filed as a part of this Report

In response to this portion of Item 13, the financial statements and the
auditors' reports relating thereto are submitted as a separate section of this
Report. See Index to the Financial Statements on page F-1 hereof.

All other financial statement schedules and exhibits for which provision is made
in the applicable accounting regulations of the Securities and Exchange
Commission are not required under related instructions or are inapplicable and
therefore have been omitted.

(b)   Exhibits

       31.1   Certification of Principal Executive Officer pursuant to section
              302 of the Sarbanes-Oxley Act of 2002
       31.2   Certification of Principal Financial Officer pursuant to section
              302 of the Sarbanes-Oxley Act of 2002
       32.1   Certification of Principal Executive Officer and Principal
              Financial Officer pursuant to section 906 of the Sarbanes-Oxley
              Act of 2002







Item 14.   Principal Accountant Fees and Services

The Partnership paid or accrued fees for services rendered by the principal
accountant for the two years ended March 31, 2005 as follows:
                                                  2005              2004
                                                ---------         --------

     Audit fees                                 $  23,750         $ 26,320
     Tax fees                                   $   1,950         $  1,850

No other fees were paid or accrued to the principal accountants during the two
years ended March 31, 2005.


<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.

      BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III

     By:   Arch Street III, Inc.
           its Managing General Partner


     By:   /s/Jenny Netzer                              Date:    July 13, 2005
           ---------------------------------------               -------------
           Jenny Netzer
           Executive Vice President
           MMA Financial, LLC



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Managing General
Partner of the Partnership and in the capacities and on the dates indicated:

     By:   /s/Jenny Netzer                             Date:    July 13, 2005
           ---------------------------------------              -------------
           Jenny Netzer
           Executive Vice President
           MMA Financial, LLC


     By:   /s/Michael H. Gladstone                     Date:   July 13, 2005
           -----------------------------                       -------------
           Michael H. Gladstone
           Principal
           MMA Financial, LLC








<PAGE>









             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                          Annual Report on Form 10-KSB
                        For the Year Ended March 31, 2005

                                      Index
<TABLE>
<CAPTION>


                                                                             Page No.

Report of Independent Registered Public Accounting Firm
<S>                                                                               <C>
    For the years ended March 31, 2005 and 2004                                   F-2

Financial Statements

     Balance Sheet - March 31, 2005                                               F-3

     Statements of Operations - For the years ended
       March 31, 2005 and 2004                                                    F-4

     Statements of Changes in Partners' Equity
       (Deficiency) - For the years ended March 31, 2005 and 2004                 F-5

     Statements of Cash Flows - For the years ended
       March 31, 2005 and 2004                                                    F-6

     Notes to the Financial Statements                                            F-7
</TABLE>


<PAGE>






  Report of Independent Registered Public Accounting Firm


To the Partners of
Boston Financial Qualified Housing Tax Credits Limited Partnership III


In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Boston
Financial Qualified Housing Tax Credits Limited Partnership III ("the
Partnership") at March 31, 2005, and the results of its operations and its cash
flows for each of the two years in the period ended March 31, 2005 in conformity
with accounting principles generally accepted in the United States of America.
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 of these statements 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.



/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
July 13, 2005




<PAGE>


             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

<TABLE>
<CAPTION>



                                  BALANCE SHEET
                                 March 31, 2005



Assets

<S>                                                                                              <C>
Cash and cash equivalents                                                                        $     890,729
Investments in Local Limited Partnerships (Note 3)                                                   3,610,242
Accounts receivable (Note 3)                                                                         2,948,404
                                                                                                 -------------
     Total Assets                                                                                $   7,449,375
                                                                                                 =============

Liabilities and Partners' Equity

Due to affiliate (Note 4)                                                                        $   2,250,409
Accrued expenses                                                                                       369,844
                                                                                                 -------------
     Total Liabilities                                                                               2,620,253

General, Initial and Investor Limited Partners' Equity                                               4,829,122
                                                                                                 -------------
     Total Liabilities and Partners' Equity                                                      $   7,449,375
                                                                                                 =============

</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)


                            STATEMENTS OF OPERATIONS
                   For the Years Ended March 31, 2005 and 2004

<TABLE>
<CAPTION>


                                                                                     2005             2004
                                                                                -------------    -------------
Revenue:
<S>                                                                             <C>              <C>
   Investment                                                                   $      11,154    $      10,613
   Other                                                                              114,745          109,416
                                                                                -------------    -------------
     Total Revenue                                                                    125,899          120,029
                                                                                -------------    -------------

Expenses:
   Asset management fees, affiliate  (Note 4)                                         235,554          383,316
   Provision for valuation of advances to Local Limited Partnerships,
     net of recovery (Note 3)                                                               -          161,748
   General and administrative (includes reimbursements
     to affiliates of $420,610 and $449,153 in 2005 and
     2004, respectively) (Note 4)                                                     711,247          651,923
   Recovery of prior years' provision for valuation of advances to
     Local Limited Partnerships, net of current year provision (Note 3)              (780,518)                -
   Amortization                                                                        25,465           45,520
   Interest                                                                             4,500            6,000
                                                                                -------------    -------------
     Total Expenses                                                                   196,248        1,248,507
                                                                                -------------    -------------

Loss before equity in losses of Local Limited Partnerships and
   gain on sale of investments in Local Limited Partnerships                          (70,349)      (1,128,478)

Equity in losses of Local Limited Partnerships (Note 3)                              (901,753)      (1,464,878)

Gain on sale of investments in Local Limited Partnerships (Note 3)                  5,346,434           40,000
                                                                                -------------    -------------

Net Income (Loss)                                                               $   4,374,332    $  (2,553,356)
                                                                                =============    =============

Net Income (Loss) Allocated:
   General Partners                                                             $      43,743    $     (25,534)
   Limited Partners                                                                 4,330,589       (2,527,822)
                                                                                -------------    -------------
                                                                                $   4,374,332    $  (2,553,356)
                                                                                =============    =============

Net Income (Loss) per Limited Partner Unit
    (100,000 Units)                                                             $       43.31    $      (25.28)
                                                                                =============    =============

</TABLE>



The accompanying notes are an integral part of these financial statements.

<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)


             STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                   For the Years Ended March 31, 2005 and 2004

<TABLE>
<CAPTION>


                                                           Initial     Investor          Net
                                             General       Limited      Limited      Unrealized
                                            Partners      Partners     Partners         Gains          Total
                                          -----------     --------   -------------   -----------  -------------

<S>                                       <C>             <C>        <C>             <C>          <C>
Balance at March 31, 2003                 $  (845,763)    $  5,000   $   3,848,909   $     2,551  $   3,010,697
                                          -----------     --------   -------------   -----------  -------------

Comprehensive Loss:
   Change in net unrealized gains
     on marketable securities
     available for sale                             -            -               -        (2,551)        (2,551)
   Net Loss                                   (25,534)           -      (2,527,822)            -     (2,553,356)
                                          -----------     --------   -------------   -----------  -------------
Comprehensive Loss                            (25,534)           -      (2,527,822)       (2,551)    (2,555,907)
                                          -----------     --------   -------------   -----------  -------------

Balance at March 31, 2004                    (871,297)       5,000       1,321,087             -        454,790

Net Income                                     43,743            -       4,330,589             -      4,374,332
                                          -----------     --------   -------------   -----------  -------------

Balance at March 31, 2005                 $  (827,554)    $  5,000   $   5,651,676   $         -  $   4,829,122
                                          ===========     ========   =============   ===========  =============

</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>


             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)




                            STATEMENTS OF CASH FLOWS
                   For the Years Ended March 31, 2005 and 2004

<TABLE>
<CAPTION>


                                                                                 2005            2004
                                                                           -------------     -------------
Cash flows from operating activities:
<S>                                                                        <C>               <C>
   Net Income (Loss)                                                       $   4,374,332     $  (2,553,356)
   Adjustments to reconcile net income (loss) to net
     cash used for operating activities:
     Equity in losses of Local Limited Partnerships                              901,753         1,464,878
     Gain on sale of investments in Local Limited Partnerships                (5,346,434)          (40,000)
     Provision for valuation of advances to Local Limited Partnerships,
       net of recovery                                                                 -           161,748
     Recovery of prior years' provision for valuation of advances to
       Local Limited Partnerships, net of current year provision                (780,518)                -
     Amortization                                                                 25,465            45,520
     Cash distributions included in net income/loss                             (113,829)         (109,416)
     Other non-cash item                                                            (916)            2,856
     Increase (decrease) in cash arising from changes in operating
       assets and liabilities:
       Other assets                                                                  127             4,139
       Due to affiliate                                                       (1,843,836)         (367,530)
       Accrued expenses                                                          (37,752)            1,511
                                                                           -------------     -------------
Net cash used for operating activities                                        (2,821,608)       (1,389,650)
                                                                           -------------     -------------

Cash flows from investing activities:
   Proceeds from maturities of marketable securities                                   -           200,000
   Advances to Local Limited Partnerships                                       (197,078)         (163,018)
   Reimbursement of advances to Local Limited Partnerships                       977,596             1,270
   Cash distributions received from Local
     Limited Partnerships                                                        228,356         1,198,124
   Proceeds received from sale of investments in Local
     Limited Partnerships                                                      2,438,030                 -
                                                                           -------------     -------------
Net cash provided by investing activities                                      3,446,904         1,236,376
                                                                           -------------     -------------

Cash flows from financing activities:
   Repayment of note payable, affiliate                                         (101,564)         (413,404)
                                                                           -------------     -------------
Net cash used for financing activates                                           (101,564)         (413,404)
                                                                           -------------     -------------

Net increase (decrease) in cash and cash equivalents                             523,732          (566,678)

Cash and cash equivalents, beginning                                             366,997           933,675
                                                                           -------------     -------------

Cash and cash equivalents, ending                                               $890,729    $     366,997
                                                                                ========    =============

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                       $4,500      $     6,000
                                                                                ======      ===========

</TABLE>


The accompanying notes are an integral part of these financial statements.



<PAGE>


             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)




                        NOTES TO THE FINANCIAL STATEMENTS


1.   Organization

Boston Financial Qualified Housing Tax Credits L.P. III (the "Partnership") was
formed on August 9, 1988 under the laws of the State of Delaware for the primary
purpose of investing, as a limited partner, in other limited partnerships
("Local Limited Partnerships"), which own and operate apartment complexes, most
of which benefit from some form of federal, state or local assistance program
and each of which qualify for low-income housing tax credits. The Partnership's
objectives are to: (i) provide current tax benefits in the form of tax credits
which qualified investors may use to offset their federal income tax liability;
ii) preserve and protect the Partnership's capital; iii) provide limited cash
distributions which are not expected to constitute taxable income during
Partnership operations; and iv) provide cash distributions from sale or
refinancing transactions. The General Partners of the Partnership are Arch
Street III, Inc., which serves as the Managing General Partner, and Arch Street
III L.P., which also serves as the Initial Limited Partner. Both of the General
Partners are affiliates of MMA Financial, LLC ("MMA"). The fiscal year of the
Partnership ends on March 31.

The Certificate and Agreement of Limited Partnership ("Partnership Agreement")
authorized the sale of up to 100,000 units of Limited Partnership Interest
("Units") at $1,000 per Unit (Gross Proceeds is $100,000,000), adjusted for
certain discounts. The Partnership raised $99,610,000, net of discounts of
$390,000, through the sale of 100,000 Units. Such amounts exclude five
unregistered Units previously acquired for $5,000 by the Initial Limited
Partner, which is also one of the General Partners. The offering of Units
terminated on May 30, 1989. No further sale of Units is expected.

Under the terms of the Partnership Agreement, the Partnership originally
designated 3% of the Gross Proceeds from the sale of Units as a reserve for
working capital of the Partnership and contingencies related to ownership of
Local Limited Partnership interests. During the year ended March 31, 1993, the
Managing General Partner increased the Reserve level to 3.75%. At March 31,
2005, $890,729 of cash and cash equivalents has been designated as Reserves.

Generally, profits, losses, tax credits and cash flow from operations are
allocated 99% to the Limited Partners and 1% to the General Partners. Net
proceeds from a sale or refinancing will be allocated 95% to the Limited
Partners and 5% to the General Partners, after certain priority payments. The
General Partner has an obligation to fund deficits in its capital account,
subject to limits set forth in the Partnership Agreement.

2.       Significant Accounting Policies

Cash Equivalents

Cash equivalents represent short-term, highly liquid instruments with original
maturities of 90 days or less.

Concentration of Credit Risk

The Partnership invests its cash primarily in money market funds with commercial
banks. At times, cash balances at a limited number of banks and financial
institutions may exceed federally insured amounts. Management believes it
mitigates its credit risk by investing in major financial institutions.

Marketable Securities

The Partnership's marketable securities are classified as "Available for Sale"
securities and are reported at fair value as reported by the brokerage firm at
which the securities are held.  All marketable securities have fixed maturities.
Realized gains and losses from the sales of securities are based on the specific
identification method.  unrealized gains and losses are excluded from earnings
and reported as  aseperate component of partners' equity.


<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


2. Significant Accounting Policies (continued)

Investments in Local Limited Partnerships

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting. Under the equity method, the investment is
carried at cost, adjusted for the Partnership's share of net income or loss and
for cash distributions from the Local Limited Partnerships; equity in income or
loss of the Local Limited Partnerships is included currently in the
Partnership's operations. Under the equity method, a Local Limited Partnership
investment will not be carried below zero. To the extent that equity in losses
are incurred when the Partnership's carrying value of the respective Local
Limited Partnership has been reduced to a zero balance, the losses will be
suspended and offset against future income. Income from Local Limited
Partnerships, where cumulative equity in losses plus cumulative distributions
have exceeded the total investment in Local Limited Partnerships, will not be
recorded until all of the related unrecorded losses have been offset. To the
extent that a Local Limited Partnership, with a carrying value of zero
distributes cash to the Partnership, that distribution is recorded as income on
the books of the Partnership and is included in "Other Revenue" in the
accompanying financial statements.

The Tax Credits generated by Local Limited Partnerships are not reflected on the
books of the Partnership as such credits are allocated to partners for use in
offsetting their federal income tax liability.

Excess investment costs over the underlying net assets acquired have arisen from
acquisition fees paid and expenses reimbursed to an affiliate of the
Partnership. These fees and expenses are included in the Partnership's
investment in Local Limited Partnerships and are being amortized on a
straight-line basis over 35 years until a Local Limited Partnership's respective
investment balance has been reduced to zero.

The Partnership may provide advances to the Local Limited Partnerships to
finance operations or to make debt service payments. The Partnership assesses
the collectibility of any advances at the time the advance is made and records a
reserve if collectibility is not reasonably assured.

The Partnership does not guarantee any of the mortgage or other debt of the
Local Limited Partnerships.

The Managing General Partner has elected to report results of the Local Limited
Partnerships on a 90-day lag basis because the Local Limited Partnerships report
their results on a calendar year basis. Accordingly, the financial information
of the Local Limited Partnerships that is included in the accompanying financial
statements is as of December 31, 2004 and 2003 and for the years then ended.

The Partnership, as a limited partner in the Local Limited Partnerships, is
subject to risks inherent in the ownership of property which are beyond its
control, such as fluctuations in occupancy rates and operating expenses,
variations in rental schedules, proper maintenance of facilities and continued
eligibility of tax credits. If the cost of operating a property exceeds the
rental income earned thereon, the Partnership may deem it in its best interest
to voluntarily provide funds in order to protect its investment.

The Partnership has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. The investments are
reviewed for impairment whenever events or changes in circumstances indicate
that the Partnership may not be able to recover its carrying value. If an other
than temporary impairment in carrying value exists, a provision to reduce the
asset to fair value will be recorded in the Partnership's financial statements.


<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


2. Significant Accounting Policies (continued)

Use of Estimates

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

Fair Value of Financial Instruments

Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"),
Disclosures About Fair Value of Financial Instruments, requires disclosure for
the fair value of most on- and off-balance sheet financial instruments for which
it is practicable to estimate that value. The scope of SFAS No. 107 excludes
certain financial instruments, such as trade receivables and payables when the
carrying value approximates the fair value and investments accounted for under
the equity method, and all nonfinancial assets, such as real property. Unless
otherwise described, the fair values of the Partnership's assets and liabilities
which qualify as financial instruments under SFAS No. 107 approximate their
carrying amounts in the accompanying balance sheet.

Income Taxes

No provision for income taxes has been made as the liability for such taxes is
the obligation of the partners of the Partnership.

Accounting Standard Update

In January 2003, the FASB issued Interpretation No. 46 ("Interpretation"),
"Consolidation of Variable Interest Entities", which provides new criteria for
determining whether or not consolidation accounting is required. The
Interpretation, which was modified in December 2003 in order to address certain
technical and implementation issues, requires the Partnership to consider
consolidation or provide additional disclosures of financial information for
Local Limited Partnerships meeting the definition of a Variable Interest Entity
("VIE"). The Partnership was required to apply the Interpretation to the Local
Limited Partnerships meeting the definition of a VIE as of March 31, 2005.

This Interpretation requires consolidation by the Partnership of the Local
Limited Partnerships' assets and liabilities and results of operations if the
Partnership determined that the Local Limited Partnerships were VIEs and that
the Partnership was the "Primary Beneficiary". Minority interests may be
recorded for the Local Limited Partnerships' ownership share attributable to
other investors. Where consolidation of Local Limited Partnerships is not
required, additional financial information disclosures of Local Limited
Partnerships may be required. The Partnership has assessed the Interpretation
and concluded that it is not the Primary Beneficiary of any of the Local Limited
Partnerships that meet the definition of a VIE. The Partnership is involved with
those VIEs as a non-controlling limited partner equity holder. The Partnership
is required to disclose its maximum exposure to economic and financial statement
losses as a result of its involvement with the VIEs. The Partnership's exposure
to economic and financial statement losses from the VIEs is limited to its
investment in the VIEs ($3,610,242 at March 31, 2005). The Partnership may be
subject to additional losses to the extent of any financial support that the
Partnership voluntarily provides in the future.


<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


3.       Investments in Local Limited Partnerships

The Partnership has limited partnership interests in twenty-three Local Limited
Partnerships which were organized for the purpose of owning and operating
multi-family housing complexes, all of which are government-assisted. The
Partnership's ownership interest in each Local Limited Partnership is 99%. The
Partnership may have negotiated or may negotiate options with the local general
partners to purchase or sell the Partnership's interests in the Local Limited
Partnerships at the end of the Compliance Period at nominal prices. In the event
that Properties are sold to third parties, or upon dissolution of the Local
Limited Partnerships, proceeds will be distributed according to the terms of
each Local Limited Partnership agreement.

The following is a summary of investments in Local Limited Partnerships at March
31, 2005:
<TABLE>
<CAPTION>

Capital contributions and advances paid to Local Limited Partnerships
<S>                                                                                              <C>
   and purchase price paid to withdrawing partners of Local Limited Partnerships                 $  38,561,858

Cumulative equity in losses of Local Limited Partnerships
   (excluding cumulative unrecognized losses of $54,242,578)                                       (29,548,704)

Cumulative cash distributions received from Local Limited Partnerships                              (3,945,903)
                                                                                                 ---------------

Investments in Local Limited Partnerships before adjustments                                         5,067,251

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                                     2,943,483

   Cumulative amortization of acquisition fees and expenses                                           (962,486)
                                                                                                 -------------

Investments in Local Limited Partnerships before impairment allowance                                7,048,248

Impairment allowance on investments in Local Limited Partnerships                                   (3,438,006)
                                                                                                 ---------------

Investments in Local Limited Partnerships                                                        $   3,610,242
                                                                                                 =============

</TABLE>
<page>

For the year ended March 31, 2005, the Partnership advanced $197,078 to two of
the Local Limited Partnerships, all of which was impaired. In addition, $977,596
was reimbursed from two Local Limited Partnerships relating to advances made in
previous years. The Partnership has also recorded an impairment allowance for
its investments in certain Local Limited Partnerships in order to appropriately
reflect the estimated net realizable value of these investments.

Summarized combined financial information of the Local Limited Partnerships in
which the Partnership has invested as of December 31, 2004 and 2003 (due to the
Partnership's policy of reporting the financial information of its Local Limited
Partnership interests on a 90 day lag basis) is as follows:
<TABLE>
<CAPTION>

Summarized Balance Sheets - as of December 31,
                                                                                  2004                2003
                                                                           ---------------     ---------------
Assets:
<S>                                                                        <C>                 <C>
   Investment property, net                                                $    68,103,190     $    86,714,637
   Other assets                                                                  8,977,766          12,139,087
                                                                           ---------------     ---------------
       Total Assets                                                        $    77,080,956     $    98,853,724
                                                                           ===============     ===============

Liabilities and Partners' Deficiency:
   Mortgage notes payable                                                  $   115,821,509     $   135,033,966
   Other liabilities                                                            13,503,983          21,088,894
                                                                           ---------------     ---------------
       Total Liabilities                                                       129,325,492         156,122,860
                                                                           ---------------     ---------------

Partnership's deficiency                                                       (53,556,990)        (56,916,075)
Other partners' equity (deficiency)                                              1,312,454            (353,061)
                                                                           ---------------     ---------------
       Total Partners' Deficiency                                              (52,244,536)        (57,269,136)
                                                                           ---------------     ---------------
       Total Liabilities and Partners' Deficiency                          $     77,080,956    $     98,853,724
                                                                           ================    ================

</TABLE>



<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)


                  NOTES TO THE FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>


3. Investments in Local Limited Partnerships (continued)

Summarized Income Statements - for
the year ended December 31,
                                                                                  2004                2003
                                                                           ---------------     ---------------

<S>                                                                        <C>                 <C>
Rental and other revenue                                                   $    21,421,414     $    24,693,421
                                                                           ---------------     ---------------

Expenses:
   Operating                                                                    15,366,517          16,710,801
   Interest                                                                      7,248,465           9,351,009
   Depreciation and amortization                                                 4,787,883           5,848,969
                                                                           ---------------     ---------------
     Total Expenses                                                             27,402,865          31,910,779
                                                                           ---------------     ---------------

Net Loss                                                                   $    (5,981,451)    $    (7,217,358)
                                                                           ===============     ===============

Partnership's share of Net Loss                                            $    (5,897,987)    $    (6,865,190)
                                                                           ===============     ===============
Other partners' share of Net Loss                                          $       (85,992)    $      (354,688)
                                                                           ===============     ===============

</TABLE>


For the years ended March 31, 2005 and 2004, the Partnership has not recognized
$5,018,254 and $5,409,349, respectively, of equity in losses relating to certain
Local Limited Partnerships in which cumulative equity in losses and
distributions exceeded its total investment in these Local Limited Partnerships.
Previously unrecognized losses of $22,020 and $9,037 were included in losses
recognized in the years ended March 31, 2005 and 2004, respectively.

The Partnership's deficiency as reflected by the Local Limited Partnerships of
($53,556,990) differs from the Partnership's investments in Local Limited
Partnerships before adjustments of $5,067,251 primarily because of cumulative
unrecognized losses as described above, advances and notes receivable to Local
Limited Partnerships which the Partnership included in investments in Local
Limited Partnerships and eleven Local Limited Partnerships whose investments
were sold in the quarter ended March 31, 2005 are included in the summarized
balance sheets of the Local Limited Partnerships at December 31, 2004.

The Partnership's interests in thirteen of its investments in Local Limited
Partnerships were sold during the year ended March 31, 2005, resulting in a gain
of $5,346,434. Proceeds relating to these transactions in the amounts of
$2,948,404 remain outstanding at March 31, 2005. The amount outstanding at March
31, 2005 was paid on April 20, 2005.

4.   Transactions with Affiliates

An affiliate of the Managing General Partner receives the base amount of $5,000
(annually adjusted by the CPI factor) per Local Limited Partnership as the
annual Asset Management Fee for administering the affairs of the Partnership.
Included in the Statements of Operations are Asset Management Fees of $235,554
and $383,316 for the years ended March 31, 2005 and 2004, respectively. As of
March 31, 2005, $594,914 is payable for Asset Management Fees. During the years
ended March 31, 2005 and 2004, $2,500,000 and $800,000, respectively, were paid
out of available cash flow for Asset Management Fees.

An affiliate of the Managing General Partner is reimbursed for the cost of the
Partnership's salaries and benefits expenses. Included in general and
administrative expenses for the years ended March 31, 2005 and 2004 is $420,610
and $449,153, respectively, that the Partnership has incurred for these
expenses. As of March 31, 2005, $1,655,495 is payable to an affiliate of the
Managing General Partner for salaries and benefits.

An affiliate of the Managing General Partner has made a commitment to defer
collection of past or future Asset Management Fees and reimbursement of
operating expenses to the extent necessary to cover operating deficits of the
Partnership.


<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)


5.   Federal Income Taxes

The following schedule reconciles the reported financial statement net income
(loss) for the fiscal years ended March 31, 2005 and 2004 to the net income
(loss) reported on the Form 1065, U.S. Partnership Return of Income for the
years ended December 31, 2004 and 2003:

<TABLE>
<CAPTION>

                                                                                     2005              2004
                                                                                --------------   --------------

<S>                                                                             <C>              <C>
Net Income (Loss) per financial statements                                      $    4,374,332   $   (2,553,356)

Equity in losses of Local Limited Partnerships for financial reporting (tax)
   purposes in excess of equity in losses
   for tax (financial reporting) purposes                                             (487,473)         182,363

Equity in losses of Local Limited Partnerships not recognized
   for financial reporting purposes                                                 (4,996,234)      (5,400,312)

Adjustment to reflect March 31 fiscal year end to December 31
   taxable year end                                                                    (27,637)         (31,442)

Amortization not deductible for tax purposes                                            25,465           45,520

Provision for valuation of advances to Local Limited Partnerships,
   net of recovery not deductible for tax purposes                                           -          161,748

Recovery of prior years' provision for valuation of advances to Local Limited
   Partnerships, net of current year provision not
   deductible for tax purposes                                                        (780,518)               -

Gain on sale of investments in Local Limited Partnerships for tax
   purposes in excess of gain on sale for financial reporting purposes               3,679,151          839,605

Cash distributions included in net income (loss) for financial
   reporting purposes                                                                 (113,829)        (109,416)
                                                                                --------------   --------------

Net Income (Loss) per tax return                                                $    1,673,257   $   (6,865,290)
                                                                                ==============   ==============

</TABLE>


The differences in the assets and liabilities of the Partnership for financial
reporting purposes and tax purposes as of March 31, 2005 and December 31, 2004,
respectively are as follows:

<TABLE>
<CAPTION>


                                                          Financial
                                                          Reporting              Tax
                                                          Purposes            Purposes            Differences
                                                       ------------        --------------      ---------------

<S>                                                    <C>                 <C>                 <C>
   Investments in Local Limited Partnerships           $  3,610,242        $  (37,986,985)     $   41,597,227
                                                       ============        ==============      ==============
   Other assets                                        $  3,839,133        $   12,414,710      $   (8,575,577)
                                                       ============        ==============      ==============
   Liabilities                                         $  2,620,253        $    5,073,993      $   (2,453,740)
                                                       ============        ==============      ==============

</TABLE>


The differences in the assets and liabilities of the Partnership for financial
reporting and tax purposes are primarily attributable to: (i) the cumulative
equity in losses of Local Limited Partnerships for tax purposes is approximately
$59,435,000 greater than for financial reporting purposes, including
approximately $54,243,000 of losses the Partnership has not recognized for
financial reporting purposes relating to Local Limited Partnerships whose
cumulative equity in losses exceeded their total investments; (ii) the
Partnership has provided an impairment allowance of approximately $3,438,000
against its investments in Local Limited Partnerships for financial reporting
purposes; (iii) the cumulative amortization of acquisition fees and expenses for
financial reporting purposes is approximately $962,000; (iv) the sale of
investments in eleven Local Limited Partnerships during the quarter ended March
31, 2005 resulted in the removal from investments in Local Limited Partnerships
of approximately $12,964,000 for financial reporting purposes (v) organizational
and offering costs of approximately $11,832,000 that have been capitalized for
tax purposes are charged to Limited Partners' equity for financial reporting
purposes; and (vi) the payment of $2,500,000 in Asset Management Fees in the
quarter ended March 31, 2005.