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

                                    FORM 10-K
(Mark One)

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

For the fiscal year ended March 31, 2009
                         ----------------

                                       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          Name of each exchange on which registered
            None                                  None

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

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of Class)


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


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



<PAGE>


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.
                                   |X| Yes   |_|  No

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T
(ss. 229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
                                   |_| Yes |_| 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-K or any amendment to this Form 10-K.
       |X|

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer"
and "smaller reporting company" in Rule 12b -2 of the Exchange Act.

Large accelerated filer |_|     Accelerated Filer |_|
Non-accelerated filer    |_|    Smaller reporting company |X|
(Do not check if a smaller reporting company)

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

State the aggregate sales price of Fund units held by nonaffiliates of the
registrant:  $99,610,000 as of March 31, 2009.



<PAGE>


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

                           ANNUAL REPORT ON FORM 10-K
                        FOR THE YEAR ENDED MARCH 31, 2009


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                   <C>

PART I                                                               Page No.

   Item 1    Business                                                  K-4
   Item 2    Properties                                                K-7
   Item 3    Legal Proceedings                                         K-10
   Item 4    Submission of Matters to a
             Vote of Security Holders                                  K-11

PART II

   Item 5     Market for the Registrant's Units
              and Related Security Holder Matters                      K-11
   Item 7     Management's Discussion and Analysis of
              Financial Condition and Results of Operations            K-11
   Item 8     Financial Statements and Supplementary Data              K-16
   Item 9     Changes in and Disagreements with
              Accountants on Accounting and Financial
              Disclosure                                               K-16
   Item 9A    Controls and Procedures                                  K-16
   Item 9B    Other Information                                        K-17

PART III

   Item 10    Directors and Executive Officers
              of the Registrant                                        K-17
   Item 11    Management Remuneration                                  K-18
   Item 12    Security Ownership of Certain Beneficial
              Owners and Management                                    K-18
   Item 13    Certain Relationships and Related
              Transactions                                             K-18
   Item 14    Principal Accountant Fees and Services                   K-20
   Item 15    Exhibits, Financial Statement Schedules, and
              Director Independence                                    K-20


SIGNATURES                                                             K-21
----------

CERTIFICATIONS                                                        K-22
--------------
</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 originally invested as a limited partner in sixty-nine 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 7 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 A

                             SELECTED LOCAL LIMITED
                                PARTNERSHIP DATA

<TABLE>
<CAPTION>
<S>                              <C>                                 <C>                              <C>

                                                                                                      Date
                              Properties owned by                                                   Interest
                         Local Limited Partnerships                Location                         Acquired

West Dade (1)                                            Miami, FL                                  12/31/88
West Dade II (1)                                         Miami, FL                                  12/31/88
Regency Square (1)                                       Dayton, OH                                 03/13/89
Westwood Manor (1)                                       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  (1)                                     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 (1)                                       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 (1)                                          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 (1)                                         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 (1)                                        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
Glenbrook (1)                                            St. Jo, TX                                 10/06/89
Eagles Nest (1)                                          Decatur, TN                                10/06/89
Billings Family (1)                                      Billings, MO                               08/09/89

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                             <C>                                 <C>                               <C>


                                                                                                      Date
                              Properties owned by                                                   Interest
                         Local Limited Partnerships                Location                         Acquired

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 (1)                                        Madison, WI                                11/09/89
Elver Park III (1)                                       Madison, WI                                11/09/89
Tucson Trails I (1)                                      Madison, WI                                11/22/89
Tucson Trails II (1)                                     Madison, WI                                11/23/89
Pleasant Plaza (1)                                       Malden, MA                                 12/01/89
241 Pine Street (1)                                      Manchester, NH                             12/04/89
Heather Oaks (1)                                         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 (1)                                           Calcium, NY                                12/15/89
Willow Lake (1)                                          Kansas City, MO                            12/20/89
Ashton Heights (1)                                       Bolivar, MO                                12/15/89
Fouche Valley (1)                                        Perryville, AR                             05/01/90
Altheimer (1)                                            Altheimer, AR                              04/18/90
Kyle Hotel (1)                                           Temple, TX                                 06/12/90
Diversey Square (1)                                      Chicago, IL                                12/01/90
Poplar Village (1)                                       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.

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, 2009, 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) Riverfront Apartments, L.P. and Susquehanna View, L.P.,
representing 47.19%, have AIMCO Properties as Local General Partner; (ii)
Waterfront Limited Partnership and Shoreline Limited Partnership, representing
52.81%, have Norstar as Local General Partner.

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, Inc. ("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.

On June 26, 2009, Municipal Mortgage & Equity, LLC (the parent company of MMA
Financial, Inc.) entered into a purchase and sale agreement with JEN I, L.P. for
the sale of substantially all of its low-income housing tax credit business,
including the Partnership and its General Partners. Upon the consummation of the
sale transaction (expected to occur on or before August 31, 2009), the General
Partners will be owned or controlled by JEN I, L.P. The sale is not expected to
impact the Limited Partners of the Partnership.

Item 2.  Properties

The Partnership currently owns limited partnership interests in four 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 Credits run 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 Code, in order
to maintain eligibility for the Tax Credits, 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.
<PAGE>
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 page provides certain key information on the Local
Limited Partnership interests acquired by the Partnership.


<PAGE>

<TABLE>
<CAPTION>
<S>                              <C>                   <C>             <C>            <C>               <C>            <C>

                                                      Capital Contributions
  Local Limited Partnership       Total                Paid            Mtge. Loans                                   Occupancy at
  Property Name                 Number of          Committed at        Through        Payable at         Type of       March 31,
  Property Location            Apts Units        March 31, 2009      March 31, 2009  December 31, 2008   Subsidy *       2009
 ----------------------------------------------------- ------------   -------------  ----------------  -----------   -----------

Shoreline Limited Partnership
Shoreline
Buffalo, NY                         142            1,079,318          1,079,318           9,478,406          None         33%

Waterfront Limited Partnership
Waterfront
Buffalo, NY                         472            3,597,307          3,597,307           32,950,984         None         61%

Riverfront Apartments, L.P.
Riverfront
Sunbury, PA                         199            1,984,908          1,984,908            5,165,214         Section 8    100%

Susquehanna View, L.P.
Susquehanna View. L.P.
Camp Hill, PA                       201            2,194,314          2,194,314            7,509,298         Section 8     99%
                                  -------       --------------        -------------   ---------------

                                   1,014       $   8,855,847        $ 8,855,847         $ 55,103,902
                                  ======       ==============      =============       ==============
</TABLE>


 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.





<PAGE>




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, 7 and 8 of this Report.

Item 3.  Legal Proceedings

As described in previous periodic reports, in February, 2007, various Boston
Financial public funds (the "Fund" or "Funds"), including Boston Financial
Qualified Housing Tax Credits L.P. III (the "Partnership"), reached an agreement
to resolve several lawsuits and pending disputes between the Partnership and the
Funds and their general partners on the one hand, and a group of limited partner
unit investors on the other hand. The group of investors included Park G.P.,
Inc., Bond Purchase, L.L.C. and various other entities related to David L.
Johnson (the "Johnson Group") and Everest Housing Investors 2, LLC and various
other Everest-related entities (the "Everest Group"; the Johnson Group and the
Everest Group are hereinafter collectively referred to as the "Johnson and
Everest Groups"). Per the terms of the parties' agreement, these lawsuits were
then dismissed. The Johnson and Everest Groups further agreed at that time to
refrain from interfering in various ways with the conduct of the business of the
Partnership and the business of another Fund, Boston Financial Qualified Housing
Tax Credits L.P. IV ("QH4").

Also as previously reported, beginning in November, 2007, the Johnson and
Everest Groups filed new lawsuits against QH4 and its general partners in
various jurisdictions, as part of an effort to replace the existing general
partners with parties related to the Everest Group, to prevent QH4 from selling
any of its assets without limited partner consent, and to interfere with
specific arms length sales by QH4 of certain of its assets. QH4 responded with
its own lawsuits against the Johnson and Everest Groups to block these efforts
as well as to claim damages arising from the Johnson and Everest Groups'
conduct. The following lawsuits concerning QH4 (collectively, the
"Johnson/Everest Lawsuits"), were filed in the November 2007 through April 2008
time period:

o                 On November 29, 2007, QH4 and its general partners were sued
                  in Superior Court for the County of Los Angeles, California by
                  a Limited Partner named Danford Baker and companies named
                  Everest Housing Investors 2, LP and Everest Management, LLC
                  with which Mr. Baker is affiliated (collectively, "Everest").
                  Everest dismissed this lawsuit without prejudice on April 17,
                  2008.

o                 On or about, May 6, 2008, the same Everest parties referenced
                  above in the 1st California lawsuit filed a nearly identical
                  Complaint against QH4 and its general partners in the same
                  Superior Court for the County of Los Angeles, California.
                  Everest dismissed this 2nd California lawsuit without
                  prejudice on November 11, 2008.

o                 On January 22, 2008, QH4 and its general partners were sued in
                  the District Court of Johnson County, Kansas by a Limited
                  Partner named McDowell Investments, L.P. ("McDowell").

o                 On January 29, 2008, QH4 and its general partners filed suit
                  against McDowell in the Superior Court for Suffolk County,
                  Massachusetts.

o                 On April 22, 2008,  QH4 and its general  partners  filed suit
                  against the  following  defendants:  Everest Housing Investors
                  2,  L.P.;   Everest  Management  LLC;  Everest   Properties,
                  Inc.;  Everest Properties,  LLC; McDowell Investments,  L.P.;
                  MGM Holdings, LLC; Park G.P., Inc., Bond Purchase,L.L.C.;
                  Anise L.L.C.; Paco Development,  L.L.C.;  Maxus Realty Trust,
                  Inc.; David L. Johnson; W. Robert  Kohorst;  Danford M. Baker;
                  Monte G. McDowell;  and Kevan D. Acord in the Superior Court
                  for Suffolk County, Massachusetts.

Effective April 24, 2009, the Partnership, along with QH4 and several of the
other Funds, reached an agreement with the Johnson and Everest Groups to resolve
their disputes and the Johnson/Everest Lawsuits (the "Settlement Agreement").
The Settlement Agreement provides, among other things, that (a) the parties
exchange mutual releases and covenant not to bring lawsuits against each other
in the future, (b) the parties dismiss claims and counterclaims asserted in the
various lawsuits without prejudice, and (c) the Johnson and Everest Groups agree
not to take a variety of actions which could interfere with the conduct of the
business of the Partnership and other Funds. The Settlement Agreement also sets
out a schedule for future cash distributions to the limited partners and for the
eventual dissolution of the Partnership and QH4. The Settlement Agreement was
attached as Exhibit 99-1 to the Partnership's Form 8-K filed on May 21, 2009.
<PAGE>
In addition, effective April 24, 2009, the Partnership and QH4 entered into
purchase agreements (the "Purchase Agreements") with certain members of the
Johnson and Everest Groups permitting them to purchase, subject to various
conditions and at specified prices which the Partnership believes represent fair
market value, certain interests held by the Partnership and by QH4 in Local
Limited Partnerships. The Settlement Agreement remains effective regardless of
whether any of the Local Limited Partnership interests are purchased.

With respect to the Partnership, the Purchase Agreements provide for the
purchase by affiliates of the Everest Group, for the total price of $200,000, of
the Partnership's interests in:

         River Front Apartments, L.P., which owns a property in Sunbury, PA; and
         Susquehanna View, L.P., which owns a property in Camp Hill, PA.

The sale of these Partnership interests is expected to close in November 2009.

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, 2009, there were 4,923 record holders of Units of the
Partnership.

Cash distributions, when made, are paid annually. During the year ended March
31, 2009, no cash distributions were paid. A cash distribution of $9,772,329 was
paid in the year ended March 31, 2008.

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

Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The use of
words like "anticipate," "estimate," "intend," "project," "plan," "expect,"
"believe," "could," and similar expressions are intended to identify such
forward-looking statements. The Partnership intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements and is 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 and current expectations, the
Partnership can give no assurance that its 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.
<PAGE>
Executive Level Overview

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 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, Inc. ("MMA"). The fiscal year of the
Partnership ends on March 31.

As of March 31, 2009, the Partnership's investment portfolio consisted of
limited partnership interests in four Local Limited Partnerships, each of which
owns and operates a multi-family apartment complex and each of which has
generated Tax Credits. As of June 15, 2009, the Partnership's investment
portfolio consisted of limited partnership interests in three Local Limited
Partnerships. Since inception, the Partnership generated Tax Credits, net of
recapture, of approximately $1,340 per Limited Partner Unit. The aggregate
amount of Tax Credits generated by the Partnership is consistent with the
objective specified in the Partnership's prospectus.

In May 2009, the Partnership distributed $2,403,000, or $24.03 per Unit to
Limited Partners, representing a distribution from the proceeds of previously
reported property sales. In October 2007, the Partnership distributed
$9,674,581, or $96.75 per Unit to Limited Partners, representing a distribution
from the proceeds of previously reported dispositions of sixty-three Properties
and/or the Partnership's investment in the Local Limited Partnerships owning
these Properties. The Managing General Partner anticipates making additional
distributions in the future.

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 calendar years
from the date the Property is placed in service. Failure to do so would result
in recapture of a portion of the Property's Tax Credits. The Compliance Period
of the four Properties in which the Partnership has an interest expired by
December 31, 2006. The Managing General Partner has negotiated agreements that
will ultimately allow the Partnership to dispose of its interest in all three
remaining Local Limited Partnerships.

The Partnership disposed of two Local Limited Partnership interests during the
year ending March 31, 2009. Further, the Partnership disposed of one Local
Limited Partnership interest in June 2009. The Managing General Partner will
continue to pursue the disposition of the Partnership's remaining Local Limited
Partnership interests. 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.

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:
<PAGE>
The Local Limited Partnerships in which the Partnership invests are Variable
Interest Entities ("VIE"s). The Partnership is involved with the VIEs as a
non-controlling limited partner equity holder. The investments in the Local
Limited Partnerships are made primarily to obtain tax credits on behalf of the
Partnership's investors. The general partners of the Local Limited Partnerships,
who are considered to be the primary beneficiaries, control the day-to-day
operations of the Local Limited Partnerships. The general partners are also
responsible for maintaining compliance with the tax credit program and for
providing subordinated financial support in the event operations cannot support
debt and property tax payments. The Partnership, through its ownership
percentages, may participate in property disposition proceeds. The timing and
amounts of these proceeds are unknown but can impact the Partnership's financial
position, results of operations or cash flows. Because the Partnership is not
the primary beneficiary of these VIEs, it accounts for its investments in the
Local Limited Partnerships using the equity method of accounting. As a result of
its involvement with the VIEs, the Partnership's exposure to economic and
financial statement losses is limited to its investments in the VIEs (zero and
$116,428 at March 31, 2009 and 2008, respectively). The Partnership may be
subject to additional losses to the extent of any financial support that the
Partnership voluntarily provides in the future. 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. A liability is recorded for delayed equity
capital contributions to Local Limited Partnerships. 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.

The Partnership has implemented policies and practices for assessing
other-than-temporary declines in the values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are tested
for other-than-temporary impairment. If an other-than-temporary decline in
carrying value exists, a provision to reduce the investment to the sum of the
estimated remaining benefits will be recorded in the Partnership's financial
statements. The estimated remaining benefits for each Local Limited Partnership
consist of estimated future tax losses and tax credits over the estimated life
of the investment and estimated residual proceeds at disposition. Included in
the estimated residual proceeds calculation is current net operating income
capitalized at a regional rate specific to each Local Limited Partnership less
the debt of the Local Limited Partnership. Generally, the carrying values of
most Local Limited Partnerships will decline through losses and distributions in
amounts sufficient to prevent other-than-temporary impairments. However, the
Partnership may record similar impairment losses in the future if the expiration
of tax credits outpaces losses and distributions from any of the Local Limited
Partnerships.

Liquidity and Capital Resources

At March 31, 2009, the Partnership has cash and cash equivalents of $3,014,508
as compared with $1,424,937 at March 31, 2008. The increase is mainly
attributable to the proceeds from the sale of investments in Local Limited
Partnerships, offset by cash used for operations.

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, 2009 and 2008, approximately
$2,940,000 and $1,425,000, respectively, has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,386,000 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, 2009, 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 $4,140,000 of
operating funds and proceeds from sales of investments in Local Limited
Partnerships to replenish Reserves.

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, 2009, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.
<PAGE>
Cash Distributions

No cash distributions were made during the year ended March 31, 2009. A cash
distribution of $9,772,329 was made during the year ended March 31, 2008. The
Partnership is currently working on disposing of its interest in certain Local
Limited Partnerships during the next twelve months. These dispositions may
result in cash available for distribution, but due to the uncertainty of the
sales, no guarantees can be made as to the extent of their outcome on
distributions. Based on the results of 2008 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, 2009
resulted in net income of $1,539,139 compared to net loss of $884,571 for the
year ended March 31, 2008. The change to net income is primarily due to an
increase in gain on sale of investments in Local Limited Partnerships and a
decrease in impairment on investments in Local Limited Partnerships. The
increase in gain on sale of investments in Local Limited Partnerships is due to
the sale of one Local Limited Partnerships during the prior year compared to the
sale of two Local Limited Partnerships during the current year with large
proceeds. Impairment on investments in Local Limited Partnerships decreased due
to the Partnership recording an impairment for its investments in one Local
Limited Partnership in the prior year. No impairment was recorded in the current
year.

Low-Income Housing Tax Credits

The Tax Credits per Limited Partner stabilized in 1991. The credits have ended
as all Properties have reached the end of the ten year credit period.

Property Discussions

Two Properties in which the Partnership currently has an interest had stabilized
operations and operated above breakeven as of December 31, 2008. Two Properties
are operating below break even that the Local General Partner funds 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. 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.

As previously reported, the Managing General Partner anticipated the Fund's
interest in the Local Limited Partnership that owns Walker Woods, located in
Dover, Delaware, would be terminated upon the sale of the Property in late 2008.
On September 12, 2008 the underlying Property was sold, effectively terminating
the Partnership's interest in the Local Limited Partnership that owned Walker
Woods. The Partnership received $424,239, or $4.24 per Unit, for its interest in
this Local Limited Partnership. The Managing General Partner, in accordance with
and as permitted by the Partnership Agreement, has retained the sales proceeds
in Reserves for the time being until it deems a subsequent distribution to be
prudent. The sale resulted in 2008 taxable loss of $97,952, or about $0.98, per
Unit. The Partnership no longer has an interest in this Local Limited
Partnership.

As previously reported, the Managing General Partner and Local General Partner
of Wood Creek, located in Calcium, New York, were exploring an exit strategy
that would result in a mid-2008 disposal of the Partnership's interest in the
Local Limited Partnership. On September 12, 2008 the underlying Property was
sold, effectively terminating the Partnership's interest in the Local Limited
Partnership that owned Wood Creek. The Partnership received $1,413,851, or about
$14.14 per Unit, for its interest. The Managing General Partner, in accordance
with and as permitted by the Partnership Agreement, has retained the sales
proceeds in Reserves for the time being until it deems a subsequent distribution
to be prudent. The sale resulted in 2008 taxable loss of $224,885, or about
$2.25, per Unit. The Partnership no longer has an interest in this Local Limited
Partnership.
<PAGE>
As previously reported, the Managing General Partner planned to exercise the
Partnership's put option and transfer its interest in the Local Limited
Partnership that owns and operates Fourche Valley, located in Perryville,
Arkansas, in January 2008. Effective January 1, 2008, the Managing General
Partner exercised the Partnership's right to transfer the Partnership's interest
in Fourche Valley, for $5,000, or $.05 per Unit. The proceeds from this transfer
have been retained in Reserves in accordance with and as permitted by the
Partnership Agreement. The transaction resulted in 2008 taxable income of
$206,467, or $2.06 per Unit. The Partnership no longer has an interest in this
Local Limited Partnership.

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 re-syndicate the Properties. In
return, the Partnership obtained both a put option allowing the Partnership to
transfer its interests in the Local Limited Partnerships 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 Local Limited Partnerships 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 in
Shoreline occurred June 8, 2009. The transaction did not result in any net sales
proceeds to the Partnership. This transaction is expected to result in 2009
taxable income projected to be approximately $10,300,000, or about $103 per
Unit. The transfer of the Partnership's interests in Waterfront is currently
expected to occur in the fiscal year ending March 31, 2011. The Managing General
Partner does not expect this transaction to result in any net sales proceeds to
the Partnership. This transaction is expected to result in taxable income
projected to be approximately $36,400,000, or $364 per Unit.

As previously reported, in accordance with the terms of their respective
Partnership Agreements, the Managing General Partner, effective November 28,
2007, transferred the Partnership's interest in the Local Limited Partnerships
that owned River Front Apartments, L.P., located in Sunbury, PA, and Susquehanna
View, L.P., located in Camp Hill, PA. The interests in the aforementioned Local
Limited Partnerships were transferred to MMA River Front, L.P., and MMA
Susquehanna View, L.P. (together, the "Transferee Partnerships"). The
Partnership is the sole Limited Partner of each of the Transferee Partnerships.
An affiliate of the Partnership is the general partner of each of the Transferee
Partnerships and has obtained a 1% interest in each of the Transferee
Partnerships in exchange for a promissory note in favor of the Partnership.

In processing these transactions, the Managing General Partner acted out of
necessity, due to the impending expiration of the Partnership's ability to
transfer its interest in the above-mentioned Local Limited Partnerships without
the Local General Partner's consent. As previously disclosed, these Local
Limited Partnership Interests were originally expected to be sold as part of a
settlement between the Partnership, QH IV, several of the Funds, and certain of
their affiliates on the one hand, and the Johnson and Everest Groups on the
other hand. When the Johnson and Everest Groups failed to exercise their option
to purchase these Local Limited Partnership Interests, the above-described
transfers were carried out. The Managing General Partner may now have
flexibility in being able to dispose of the Partnership's interest in the Local
Limited Partnerships without the Local General Partners' consent, expediting the
Managing General Partner's ability to liquidate the assets of, and dissolve, the
Partnership. It is possible that such Local General Partner may contest this
right to free transferability.

Effective April 24, 2009, contemporaneously with signing the Settlement
Agreement of the same date, the Managing General Partner and certain members of
the Johnson and Everest Groups have entered into Purchase Agreements which
create rights for the Johnson and Everest Groups to acquire the Partnership's
interests in River Front Apartments, L.P., located in Sunbury, PA, and
Susquehanna View, L.P., located in Camp Hill, PA, for cash at fair market
prices, for an aggregate price of $200,000, or $2.00 per Unit. Currently this
interest transfer is expected in November 2009.
<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, 2009 and 2008.

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

None.

Item 9A.  Controls and Procedures

Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
Exchange Commission's rules and forms, including to ensure that information
required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is accumulated and communicated to management to allow timely
decisions regarding required disclosure. Based on that evaluation, management
has concluded that as of March 31, 2009, our disclosure controls and procedures
were effective.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f) and 15d-15(f). Our management conducted an assessment of the
effectiveness of our internal control over financial reporting. This assessment
was based upon the criteria for effective internal control over financial
reporting established in Internal Control -- Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

The Partnership's internal control over financial reporting involves a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Internal control over
financial reporting includes the controls themselves, as well as monitoring of
the controls and internal auditing practices and actions to correct deficiencies
identified. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.
<PAGE>
Management assessed the effectiveness of the Partnership's internal control over
financial reporting as of March 31, 2009. Based on this assessment, management
concluded that, as of March 31, 2009, the Partnership's internal control over
financial reporting was effective.

Item 9B.  Other Information

     None.

                                    PART III

Item 10.  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. 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

Greg Judge                                       Executive Vice President
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 11 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.

Greg Judge, age 44, Executive Vice President, Head of the Affordable Housing
Group of MMA Financial since February, 2008. As head of the Company's Affordable
Housing Group, Mr. Judge is responsible for both the affordable tax exempt and
taxable lending and equity businesses. Prior to his appointment as EVP, Mr.
Judge was responsible for tax credit equity investments and underwriting of
equity and debt investments for the Affordable Housing Group. Mr. Judge joined
MMA as a result of the Boston Financial and Lend Lease HCI acquisitions,
starting with Boston Financial in 1989 as an asset manager. Mr. Judge is a
frequent speaker on affordable housing and tax credit industry issues. Mr. Judge
is a graduate of Colorado College (BA) and Boston University (MBA).

Michael H. Gladstone, age 52, Senior Vice President. Mr. Gladstone is
responsible for capital transactions work in the Asset Management group of MMA
Financial. He joined MMA 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 and
Cornell University on affordable housing matters and is a member of the Cornell
Real Estate Council and the 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 11.  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 12.  Security Ownership of Certain Beneficial Owners and Management

As of March 31, 2009, 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:
<TABLE>
<CAPTION>
<S>                                      <C>                                        <C>                <C>

                                                                                  Amount
      Title of                          Name and Address of                    Beneficially
        Class                            Beneficial Owner                          Owned           Percent of Class
_______________                  _________________________                     _____________       _________________
   Limited                      Paco Development, LLC                             5,315.5 Units           5.32%
   Partner                      P.O. Box 34729
                                N.Kansas City MO 64116

   Limited                      Everest Management, LLC                           10,005 Units           10.01%
   Partner                      155 North Lake Avenue
                                Suite 1000
                                Pasadena, CA  91101
</TABLE>

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, 2009. 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 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 13.  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.
<PAGE>
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, 2009 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. Organization fees and expenses and selling expenses
incurred on behalf of the Partnership of $11,832,395 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, 2009.

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, 2009.

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, 2009 are as follows:
<TABLE>
<CAPTION>
<S>                                                                                 <C>                  <C>

                                                                                   2009                  2008
                                                                             --------------        --------------

                                                      Asset management fees     $  56,523            $  61,427

 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, 2009 are as follows:

                                                                                   2009                  2008
                                                                             --------------        --------------

                                                      Salaries and benefits
                                                      expense reimbursements    $  49,390            $  65,255
</TABLE>

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 made during the year
ended March 31 ,2009. A cash distribution of $97,748 was made to the General
Partners during the year ended March 31, 2008.
<PAGE>
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 and its affiliates for the two years ended
March 31, 2009 is presented in Note 4 to the Financial Statements.

Item 14.   Principal Accountant Fees and Services

The Partnership paid or accrued fees for services rendered by the principal
accountants for the two years ended March 31, 2009 as follows:
<TABLE>
<CAPTION>
<S>                                                                                <C>                  <C>

                                                                                   2009                  2008
                                                                             --------------        --------------

                                                                   Audit fees    $   59,786           $  70,268
                                                                    Tax fees     $    2,500           $   2,500
</TABLE>

No other fees were paid or accrued to the principal accountants during the two
years ended March 31, 2009.

Item 15.   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 15, 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 and Principal Financial
            Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   31.2     Certification of Principal Executive Officer and 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.
   32.2     Certification of Principal Executive Officer and Principal Financial
            Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




<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/Greg Judge                                Date:    July 15, 2009
           -------------------------------------                 -------------
           Greg Judge
           President
           Arch Street III, Inc.



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/ Greg Judge                               Date:    July 15, 2009
           --------------------------------------                -------------
           Greg Judge
           President
           Arch Street III, Inc.


     By:   /s/Michael H. Gladstone                       Date:   July 15, 2009
           -----------------------------                         -------------
           Michael H. Gladstone
           Vice President
           Arch Street III, Inc.









<PAGE>





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

                           Annual Report on Form 10-K
                        For the Year Ended March 31, 2009

                                      Index


                                                                    Page No.

Report of Independent Registered Public Accounting Firm
   for the years ended March 31, 2009 and 2008                         F-2

Financial Statements

     Balance Sheets - March 31, 2009 and 2008                          F-3

     Statements of Operations - For the years ended
       March 31, 2009 and 2008                                         F-4

     Statements of Changes in Partners' Equity
       (Deficiency) - For the years ended March 31, 2009 and 2008      F-5

     Statements of Cash Flows - For the years ended
       March 31, 2009 and 2008                                         F-6

     Notes to the Financial Statements                                 F-7



<PAGE>
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Partners of
Boston Financial Qualified Housing Tax Credits L.P. III

         We have audited the accompanying balance sheets of Boston Financial
Qualified Housing Tax Credits L.P. III as of March 31, 2009 and 2008, and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of two operating limited partnerships as of and for the year ended
March 31, 2008 in which the Partnership owns limited partnership interest. The
investment in such partnerships is stated at $100,463 at March 31, 2008 and the
Partnership's equity in loss in those operating limited partnerships is stated
at $619,613 for the year then ended. The financial statements of these operating
limited partnerships were audited by other auditors whose report has been
furnished to us, an our opinion, insofar as it relates to the information
relating to these operating limited partnerships, is based solely on the reports
of the other auditors.

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

         In our opinion, based on our audits and the reports of the other
auditors, the financial statements referred to above present fairly, in all
material respects, the financial position of Boston Financial Qualified Housing
Tax Credits L.P. III as of March 31, 2009 and 2008, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.


/s/ Reznick Group, P.C.

Vienna, Virginia
July 15, 2009

..



<PAGE>


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



                                 BALANCE SHEETS
                             March 31, 2009 and 2008



<TABLE>
<S>                                                                               <C>                      <C>

                                                                                2009                      2008
                                                                          ---------------          ----------------
Assets

Cash and cash equivalents                                                  $  3,014,508               $   1,424,937
Investments in Local Limited Partnerships (Note 3)                                    -                     116,428
Due from affiliate (Note 3)                     -                                     -                       5,000
                                                                        ---------------               -------------

   Total Assets                                                            $  3,014,508               $   1,546,365
                                                                           ============               =============

Liabilities and Partners' Equity

Due to affiliate (Note 4)                                                  $       34,248             $      108,876
Accrued expenses                                                                   49,019                     45,387
                                                                            --------------             -------------
   Total Liabilities                                                               83,267                    154,263

General, Initial and Investor Limited Partners' Equity                          2,931,241                   1,392,102
                                                                             ------------               -------------
   Total Liabilities and Partners' Equity                                  $    3,014,508               $   1,546,365
                                                                           ==============               =============
</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, 2009 and 2008


<TABLE>
<S>                                                                                <C>                   <C>

                                                                                 2009                    2008
                                                                           ----------------        --------------
Revenue:
   Investment                                                              $         36,381        $        447,853
   Other                                                                                  -                     895
                                                                           ----------------        ----------------
     Total Revenue                                                                   36,381                 448,748
                                                                           ----------------        ----------------

Expense:
   Asset management fees, affiliate  (Note 4)                                        56,523                  61,427
    Impairment  on investments in Local
       Limited Partnership (Note 3)                                                       -                 770,476
   General and administrative (includes reimbursements
     to an affiliate in the amount of  $49,390
     and  $65,255 in 2009 and 2008, respectively) (Note 4)                          167,195                 234,711
   Amortization                                                                          -                    2,157
                                                                           ----------------        ----------------
     Total Expenses                                                                 223,718               1,068,771
                                                                           ----------------        ----------------

Loss before equity in income (losses) of Local Limited
    Partnerships and gain on sale of investments in
   Local Limited Partnerships                                                      (187,337)               (620,023)

Equity in income (losses) of Local
    Limited Partnerships (Note 3)                                                   901,803                (269,548)

Gain on sale of investments in Local Limited Partnerships (Note 3)                  824,673                   5,000
                                                                           ----------------        ----------------

Net Income (Loss)                                                          $      1,539,139        $       (884,571)
                                                                           ================        ================

Net Income (Loss) allocated:
   General Partners                                                        $         15,391        $         (8,846)
   Limited Partners                                                               1,523,748                (875,725)
                                                                           ----------------        ----------------
                                                                           $      1,539,139        $       (884,571)
                                                                           ================        ================
Net Income (Loss) per Limited Partner Unit
   (100,000 Units)                                                         $          15.24        $          (8.76)
                                                                           ================        ================
</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
                   For the Years Ended March 31, 2009 and 2008




<TABLE>
<CAPTION>
<S>                                                <C>                <C>                <C>                 <C>

                                                                     Initial           Investor
                                                  General            Limited            Limited
                                                 Partners           Partners           Partners             Total

Balance at March 31, 2007                      $     120,449     $        5,000     $   11,923,553    $   12,049,002

Cash distribution                                    (97,748)                 -         (9,674,581)       (9,772,329)

Net Loss                                              (8,846)                 -           (875,725)         (884,571)
                                               -------------     --------------     --------------    --------------

Balance at March 31, 2008                             13,855              5,000          1,373,247         1,392,102

Net Income                                            15,391                  -          1,523,748         1,539,139
                                               -------------     --------------     --------------    --------------

Balance at March 31, 2009                      $      29,246     $        5,000     $    2,896,995    $    2,931,241
                                               =============     ==============     ==============    ==============

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

<PAGE>


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



                            STATEMENTS OF CASH FLOWS
                   For the Years Ended March 31, 2009 and 2008

<TABLE>
<CAPTION>
<S>                                                                               <C>                    <C>


                                                                                 2009                    2008
                                                                           ----------------        ---------------
Cash flows from operating activities:
   Net Income (Loss)                                                       $      1,539,139        $       (884,571)
   Adjustments to reconcile net income (loss) to net
     cash provided by (used for) operating activities:
     Equity in income (losses) of Local Limited Partnerships                       (901,803)                269,548
     Gain on sale of investments in Local Limited Partnerships                     (824,673)                 (5,000)
       Impairment on investments in Local Limited
        Partnerships                                                                      -                 770,476
     Amortization                                                                         -                   2,157
     Increase (decrease) in cash arising from changes
       in operating assets and liabilities:
       Due from affiliate                                                             5,000                       -
       Due to affiliate                                                             (74,628)                 93,675
       Accrued expenses                                                               3,632                 (18,258)
                                                                           ----------------        ----------------
Net cash provided by (used for) operating activities                               (253,333)                228,027
                                                                           -----------------       ----------------

Cash flows from investing activities:
   Proceeds received from sale of investments in Local
     Limited Partnerships                                                         1,842,904                       -
                                                                           ----------------        ----------------
Net cash provided by investing activities                                         1,842,904                       -
                                                                           ----------------        ----------------

Cash flows from financing activities:
   Cash distribution                                                                      -              (9,772,329)
                                                                           ----------------        ----------------
Net cash provided by (used for) financing activities                                      -              (9,772,329)
                                                                           ----------------        ----------------

Net increase (decrease) in cash and cash equivalents                              1,589,571              (9,544,302)

Cash and cash equivalents, beginning                                              1,424,937              10,969,239
                                                                           ----------------        ----------------

Cash and cash equivalents, ending                                          $      3,014,508        $      1,424,937
                                                                           ================        ================

</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, Inc. ("MMA"). The fiscal year of the
Partnership ends on March 31. On June 26, 2009, Municipal Mortgage & Equity, LLC
(the parent company of MMA Financial, Inc.) entered into a purchase and sale
agreement with JEN I, L.P. for the sale of substantially all of its low-income
housing tax credit business, including the Partnership and its General Partners.
Upon the consummation of the sale transaction (expected to occur on or before
August 31, 2009), the General Partners will be owned or controlled by JEN I,
L.P.

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, 2009
and 2008, the Managing General Partner has designated approximately $2,940,000
and $1,425,000, respectively, 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 Partners may have an obligation to fund deficits in their capital
accounts, subject to limits set forth in the Partnership Agreement. However, to
the extent that the General Partners' capital accounts are in deficit positions,
certain items of net income may be allocated to the General Partners in
accordance with 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.



<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 Local Limited Partnerships in which the Partnership invests are Variable
Interest Entities ("VIE"s). The Partnership is involved with the VIEs as a
non-controlling limited partner equity holder. The investments in the Local
Limited Partnerships are made primarily to obtain tax credits on behalf of the
Partnership's investors. The general partners of the Local Limited Partnerships,
who are considered to be the primary beneficiaries, control the day-to-day
operations of the Local Limited Partnerships. The general partners are also
responsible for maintaining compliance with the tax credit program and for
providing subordinated financial support in the event operations cannot support
debt and property tax payments. The Partnership, through its ownership
percentages, may participate in property disposition proceeds. The timing and
amounts of these proceeds are unknown but can impact the Partnership's financial
position, results of operations or cash flows. Because the Partnership is not
the primary beneficiary of these VIEs, it accounts for its investments in the
Local Limited Partnerships using the equity method of accounting. As a result of
its involvement with the VIEs, the Partnership's exposure to economic and
financial statement losses is limited to its investments in the VIEs (zero and
$116,428 at March 31, 2009 and 2008, respectively). The Partnership may be
subject to additional losses to the extent of any financial support that the
Partnership voluntarily provides in the future. 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. A liability is recorded for delayed equity
capital contributions to Local Limited Partnerships. 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.

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 or 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, 2008 and 2007 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.



<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 (continued)

The Partnership has implemented policies and practices for assessing
other-than-temporary declines in the values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are tested
for other-than-temporary impairment. If an other-than-temporary decline in
carrying value exists, a provision to reduce the investment to the sum of the
estimated remaining benefits will be recorded in the Partnership's financial
statements. The estimated remaining benefits for each Local Limited Partnership
consist of estimated future tax losses and tax credits over the estimated life
of the investment and estimated residual proceeds at disposition. Included in
the estimated residual proceeds calculation is current net operating income
capitalized at a regional rate specific to each Local Limited Partnership less
the debt of the Local Limited Partnership. Generally, the carrying values of
most Local Limited Partnerships will decline through losses and distributions in
amounts sufficient to prevent other-than-temporary impairments. However, the
Partnership may record similar impairment losses in the future if the expiration
of tax credits outpaces losses and distributions from any of the Local Limited
Partnerships.

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 sheets.

Income Taxes

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

In December 2008, the Financial Accounting Standards Board (`FASB") issued
Interpretation No. 48-3 "Effective Date of FASB Interpretation No. 48 for
Certain Nonpublic Enterprises" ("FIN48-3"). FIN48-3 deferred the effective date
of FIN48 for certain nonpublic organizations. The deferred effective date is
intended to give the FASB additional time to develop guidance on the application
of FIN48 by pass-through and not-for-profit entities. The General Partner may
modify the Partnership's disclosures if the FASB's guidance regarding the
application of FIN48 to pass-through entities changes.

Effect of New Accounting Principles

SFAS No. 157

In  September  2006,  the  Financial  Accounting  Standards  Board  ("FASB")
issued  SFAS  No.  157,  "Fair  Value Measurements"  ("SFAS No.  157"),  which
provides  enhanced  guidance  for using fair value to measure  assets and
liabilities.  SFAS No. 157 establishes a common  definition of fair value,
provides a framework for measuring fair value under U.S. generally  accepted
accounting  principles and expands  disclosure  requirements about fair value
measurements.  SFAS No. 157 is effective for financial  statements  issued in
fiscal years beginning after November 15, 2007,  and interim  periods  within
those fiscal years.  In February  2008, the FASB issued FASB Staff Position
157-2, "Effective Date of FASB Statement No. 157", which delays the effective
date of SFAS No. 157 for all nonfinancial assets and liabilities except those
that are recognized or disclosed at fair value in the financial statements on at
least an annual basis until November 15, 2008. The Partnership adopted the
provisions of SFAS


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


                  NOTES TO THE FINANCIAL STATEMENTS (continued)


2. Significant Accounting Policies (continued)

SFAS No. 157 (continued)

No. 157 for financial assets and liabilities recognized at fair value on a
recurring basis effective April 1, 2008. The partial adoption of SFAS No. 157
did not have a material impact on the Partnership's Financial Statements. The
Partnership does not expect the adoption of the remaining provisions of SFAS No.
157 to have a material effect on the Partnership's financial position,
operations or cash flow. This standard requires that a Partnership measure its
financial assets and liabilities using inputs from the three levels of the fair
value hierarchy. A financial asset or liability classification within the
hierarchy is determined based on the lowest level input that is significant to
the fair value measurement. The three levels are as follows:

     Level      1 - Inputs are unadjusted quoted prices in active markets for
                identical assets or liabilities that the Partnership has the
                ability to access at the measurement date.

     Level      2 - Inputs include quoted prices for similar assets and
                liabilities in active markets, quoted prices for identical or
                similar assets or liabilities in markets that are not active,
                inputs other than quoted prices that are observable for the
                asset or liability and inputs that are derived principally from
                or corroborated by observable market data by correlation or
                other means (market corroborated inputs).

     Level      3 - Unobservable inputs reflect the Partnership's judgments
                about the assumptions market participants would use in pricing
                the asset or liability since limited market data exists. The
                Partnership develops these inputs based on the best information
                available, including the Partnership's own data.

Financial assets accounted for at fair value on a recurring basis at March 31,
2009 include cash equivalents of $3,014,508.

SFAS No. 159

In February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("SFAS No. 159"), which permits entities to choose to measure many financial
assets and financial liabilities at fair value. Unrealized gains and losses on
items for which the fair value option has been elected are reported in earnings.
SFAS No. 159 is effective for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Partnership has not elected
to measure any financial assets and financial liabilities at fair value under
the provisions of SFAS No. 159.

3.       Investments in Local Limited Partnerships

The Partnership currently owns limited partnership interests in four 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.



<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 (continued)

The following is a summary of investments in Local Limited Partnerships at March
31, 2009 and 2008:
<TABLE>
<CAPTION>
<S>                                                                                 <C>                <C>

                                                                                   2009                2008
                                                                             ----------------    ---------------
Capital contributions paid to Local Limited Partnerships and purchase
   price paid to withdrawing partners of Local Limited Partnerships          $       8,855,847   $     12,158,227

Cumulative equity in losses of Local Limited Partnerships
(excluding  cumulative unrecognized losses of $58,573,097
and $56,474,725 at March 31, 2009 and 2008, respectively)                          (6,655,895)         (8,931,366)

Cumulative cash distributions received from Local Limited Partnerships               (954,292)         (1,168,959)
                                                                             ----------------    ----------------

Investments in Local Limited Partnerships before adjustments                        1,245,660           2,057,902

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                      189,984             622,467

   Cumulative amortization of acquisition fees and expenses                           (54,168)           (209,754)
                                                                             ----------------    ----------------

Investments in Local Limited Partnerships before valuation allowance                1,381,476           2,470,615

Valuation allowance on investments in Local Limited Partnerships                   (1,381,476)         (2,354,187)
                                                                             ----------------    ----------------

Investments in Local Limited Partnerships                                    $              -    $        116,428
                                                                             ================    ================
</TABLE>

The Partnership has recorded a valuation allowance for its investments in
certain Local Limited Partnerships in order to appropriately reflect the
estimated net realizable value of these investments.




<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 (continued)

Summarized combined financial information of the Local Limited Partnerships in
which the Partnership has invested as of December 31, 2008 and 2007 (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:

Summarized Balance Sheets - as of December 31,
<TABLE>
<CAPTION>
<S>                                                                                <C>                 <C>

                                                                                   2008                2007
                                                                             ----------------    -----------------
Assets:
   Investment property, net                                                  $     13,584,238    $     19,630,346
   Other assets                                                                     2,760,691           3,352,225
                                                                             ----------------    ----------------
     Total Assets                                                            $     16,344,929    $     22,982,571
                                                                             ================    ================

Liabilities and Partners' Deficiency:
   Mortgage notes payable                                                    $     55,103,902    $     61,454,447
   Other liabilities                                                               18,835,142          16,104,205
                                                                             ----------------    ----------------
     Total Liabilities                                                             73,939,044          77,558,652
                                                                             ----------------    ----------------

Partnership's deficiency                                                          (57,398,504)        (54,743,344)
Other partners' equity (deficiency)                                                  (195,611)            167,263
                                                                             -----------------   ----------------
     Total Partners' Deficiency                                                   (57,594,115)        (54,576,081)
                                                                             -----------------   ----------------
     Total Liabilities and Partners' Deficiency                              $     16,344,929    $     22,982,571
                                                                             ================    ================
</TABLE>
<TABLE>
<CAPTION>
<S>                                                                                 <C>                <C>

Summarized Statements of Operations - for
the year ended December 31,

                                                                                   2008                2007
                                                                             ----------------    ----------------

Rental and other income                                                      $      8,258,265    $      6,812,165
                                                                             ----------------    ----------------

Expenses:
   Operating                                                                        5,373,724           5,480,692
   Interest                                                                         3,394,292           3,492,197
   Depreciation and amortization                                                    1,149,544           1,286,200
                                                                             ----------------    ----------------
     Total Expenses                                                                 9,917,560          10,259,089
                                                                             ----------------    ----------------

Net Loss                                                                     $     (1,659,295)   $     (3,446,927)
                                                                             =================   ================

Partnership's share of Net Loss                                              $     (1,816,529)   $     (3,412,455)
                                                                             =================   ================
Other partners' share of Net Loss                                            $        157,234    $        (34,469)
                                                                             ================    ================
</TABLE>

For the years ended March 31, 2009 and 2008, the Partnership has not recognized
$3,155,728 and $3,142,907, 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 $437,396 were included in losses recognized in
the year ended March 31, 2009.

The Partnership's deficiency as reflected by the Local Limited Partnerships of
($57,398,504) and ($54,743,344) at March 31, 2009 and 2008, respectively,
differs from the Partnership's investments in Local Limited Partnerships before
adjustments of $1,245,660 and $2,057,902 at March 31, 2009 and 2008,
respectively, primarily due to cumulative unrecognized losses as described
above.

<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 (continued)

For the year end March 31, 2009, two of the Local Limited Partnerships with a
carrying value of zero were considered to have operating issues significant
enough to warrant audit reports that raised substantial doubt about the Local
Limited Partnership's ability to continue as a going concern. However, the
Partnership believes Local General Partner obligations and adequate reserve
levels will likely mitigate substantial risk to the Partnership.

The Partnership's investments in two Local Limited Partnerships were sold during
the year ended March 31, 2009 resulting in a gain of $824,673. During the year
ended March 31, 2008, the Partnership's investment in one Local Limited
Partnership was sold resulting in a gain of $5,000. Proceeds from this sale of
$5,000 were received in April, 2008.

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 $56,523
and $61,427 for the years ended March 31, 2009 and 2008, respectively. During
the years ended March 31, 2009 and 2008, $63,296 and $60,804, respectively, were
paid out of available cash flow for Asset Management Fees. As of March 31, 2009
and 2008, $9,051 and $15,824, respectively, is payable 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, 2009 and 2008 is $49,390
and $65,255, respectively, that the Partnership has incurred for these expenses.
During the years ended March 31, 2009 and 2008, salaries and benefits of $64,859
and $35,657, respectively, were paid to the affiliate of the Managing General
Partner. As of March 31, 2009 and 2008, $14,128 and $29,598, respectively, is
payable for salaries and benefits.

An affiliate of the General Partner is reimbursed for the actual cost of the
Partnership's operating expenses. As of March 31, 2009 and 2008, $11,069 and
$63,454, respectively, is reimbursable to the affiliate.




<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, 2009 and 2008 to the net income
(loss) reported on the Form 1065, U.S. Partnership Return of Income for the
years ended December 31, 2008 and 2007:
<TABLE>
<CAPTION>
<S>                                                                                   <C>                      <C>

                                                                                      2009                    2008
                                                                               --------------       --------------

Net Income (Loss)  per financial statements                                      $   1,539,139       $    (884,571)

Equity in income (losses) of Local Limited Partnerships for financial reporting
   (tax) purposes in excess of equity in losses for
    tax (financial reporting) purposes                                                 56,240             (928,365)

Equity in losses of Local Limited Partnerships not recognized
   for financial reporting purposes                                                (2,718,332)          (3,142,907)

Adjustment to reflect March 31 fiscal year end to December 31
   taxable year end                                                                   (21,715)             (31,356)

Amortization not deductible for tax purposes                                                -                2,157

 Impairment on investments in Local Limited Partnership
   not deductible for tax purposes                                                          -              770,476

Gain on sale of investments in Local Limited Partnerships for financial
   reporting purposes in excess of loss on sale for
   tax purposes                                                                      (941,043)              (4,105)
                                                                               ---------------      ---------------

Net Loss  per tax return                                                       $   (2,085,711)      $   (4,218,671)
                                                                               ===============      ---------------
</TABLE>

The differences in the assets and liabilities of the Partnership for financial
reporting purposes and tax purposes as of March 31, 2009 and December 31, 2008,
respectively, are as follows:
<TABLE>
<CAPTION>
<S>                                                             <C>                 <C>               <C>


                                                                Financial
                                                                Reporting            Tax
                                                                Purposes          Purposes           Differences

Investments in Local Limited Partnerships                   $            -     $  (52,221,180)     $   52,221,180
                                                            ==============     ==============      ==============
Other assets                                                $    3,014,508     $   14,880,889      $  (11,866,381)
                                                            ==============     ==============      ==============
Liabilities                                                 $       83,267     $       77,297      $        5,970
                                                            ==============     ==============      ==============
</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
$53,688,000 greater than for financial reporting purposes, including
approximately $58,573,000 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 a valuation allowance of approximately $1,381,000
against its investments in Local Limited Partnerships for financial purposes;
(iii) the cumulative amortization of acquisition fees and expenses for financial
reporting purposes is approximately $54,000; and (iv) 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.



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


                  NOTES TO THE FINANCIAL STATEMENTS (continued)


5. Federal Income Taxes (continued)

The differences in the assets and liabilities of the Partnership for financial
reporting purposes and tax purposes as of March 31, 2008 and December 31, 2007,
respectively, are as follows:
<TABLE>
<CAPTION>
<S>                                                             <C>                 <C>              <C>

                                                                Financial
                                                                Reporting            Tax
                                                                Purposes          Purposes           Differences

Investments in Local Limited Partnerships                   $      116,428     $  (48,501,425)     $   48,617,853
                                                            ==============     ==============      ==============
Other assets                                                $    1,429,937     $   13,315,411      $  (11,885,474)
                                                            ==============     ==============      ==============
Liabilities                                                 $      154,263     $      145,587      $        8,676
                                                            ==============     ==============      ==============
</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
$51,324,000 greater than for financial reporting purposes, including
approximately $56,475,000 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 a valuation allowance of approximately $2,354,000
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 $210,000; and (iv) 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.