February 14, 2002




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


Re:    Boston Financial Qualified Housing Tax Credits L.P. III
       Report on Form 10-QSB for Quarter Ended December 31, 2001
       File Number 01-18462


Dear Sir/Madam:

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


Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller





QH3-Q3.DOC



<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB


(Mark One)

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

For the quarterly period ended     December 31, 2001
                              --------------------------------------------


                                       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
                                                 ------------------------------


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


<PAGE>


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

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                        <C>
PART I - FINANCIAL INFORMATION                                                              Page No.
------------------------------                                                              --------

Item 1.  Financial Statements

         Balance Sheet (Unaudited) - December 31, 2001                                        1

         Statements of Operations (Unaudited) - For the Three and Nine
           Months Ended December 31, 2001 and 2000                                            2

         Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Nine Months Ended December 31, 2001                          3

         Statements of Cash Flows (Unaudited) - For the
           Nine Months Ended December 31, 2001 and 2000                                       4

         Notes to the Financial Statements (Unaudited)                                        5

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                                6

PART II - OTHER INFORMATION

Items 1-6                                                                                    11

SIGNATURE                                                                                    12

</TABLE>


<PAGE>


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

                                  BALANCE SHEET
                                December 31, 2001
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                                             <C>
Assets

Cash and cash equivalents                                                                        $     737,820
Marketable securities, at fair value                                                                   515,905
Investments in Local Limited Partnerships, net  (Note 1)                                             9,563,846
Note receivable, affiliate                                                                           1,388,829
Interest receivable, affiliate                                                                          56,787
Other asset                                                                                              8,223
                                                                                                 -------------

     Total Assets                                                                                $  12,271,410
                                                                                                 =============


Liabilities and Partners' Equity

Accounts payable to affiliate                                                                    $   3,695,702
Accrued expenses                                                                                       367,812
Note payable, affiliate                                                                                514,968
                                                                                                 -------------

     Total Liabilities                                                                               4,578,482
                                                                                                 -------------


General, Initial and Investor Limited Partners' Equity                                               7,682,222
Net unrealized gains on marketable securities                                                           10,706
                                                                                                 --------------
     Total Partners' Equity                                                                          7,692,928
                                                                                                 -------------
     Total Liabilities and Partners' Equity                                                      $  12,271,410
                                                                                                 =============

</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 Three and Nine Months Ended December 31, 2001 and 2000
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                             <C>              <C>               <C>              <C>
                                                        Three Months Ended                  Nine Months Ended
                                                  December 31,      December 31,      December 31,    December 31,
                                                      2001              2000              2001            2000
                                                 --------------   ---------------   --------------   --------------
Revenue:
   Investment                                    $       11,287   $        12,169   $       40,979   $       34,979
   Recovery of bad debt                                 136,422            15,719          146,117           16,674
   Other                                                 16,399            23,288          114,945           78,295
                                                 --------------   ---------------   --------------   --------------

     Total Revenue                                      164,108            51,176          302,041          129,948
                                                 --------------   ---------------   --------------   --------------

Expenses:
   Asset management fees, related party                  91,673            95,938          284,374          286,004
   General and administrative (includes
     reimbursements to affiliate of $290,456
     and $428,609 in 2001 and 2000, respectively)       131,745           413,252          443,994          633,163
   Interest                                               1,500             2,000            4,500            4,500
   Amortization                                          26,239            15,685           62,479           60,347
                                                 --------------   ---------------   --------------   --------------
     Total Expenses                                     251,157           526,875          795,347          984,014
                                                 --------------   ---------------   --------------   --------------

Loss before equity in losses of Local
   Limited Partnerships                                 (87,049)         (475,699)        (493,306)        (854,066)

Equity in losses of Local Limited Partnerships
   (Note 1)                                             (51,129)         (179,468)        (874,205)      (1,127,438)
                                                 --------------   ---------------   --------------   --------------

Net Loss                                         $     (138,178)  $      (655,167)  $   (1,367,511)  $   (1,981,504)
                                                 ==============   ===============   ==============   ==============

Net Loss allocated:
   To General Partners                           $       (1,382)  $        (6,552)  $      (13,675)  $      (19,815)
   To Limited Partners                                 (136,796)         (648,615)      (1,353,836)      (1,961,689)
                                                 --------------   ---------------   --------------   --------------
                                                 $     (138,178)  $      (655,167)  $   (1,367,511)  $   (1,981,504)
                                                 ==============   ===============   ==============   ==============

Net Loss per Limited Partnership Unit
   (100,000 Units)                               $        (1.37)  $         (6.49)  $      (13.54)   $       (19.62)
                                                 ==============   ===============   =============    ==============

</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)

              STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                   For the Nine Months Ended December 31, 2001
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                  <C>             <C>            <C>             <C>           <C>
                                                        Initial        Investor          Net
                                        General         Limited         Limited      Unrealized
                                       Partners        Partners        Partners         Gains           Total
                                      -----------     ---------------  -----------   -----------   -------------

Balance at March 31, 2001             $  (785,347)    $   5,000      $   9,830,080   $     7,674   $   9,057,407
                                      -----------     ---------      -------------   -----------   -------------

Comprehensive Income (Loss):
   Change in net unrealized gains
     on marketable securities
     available for sale                         -             -                  -         3,032           3,032
   Net Loss                               (13,675)            -         (1,353,836)            -      (1,367,511)
                                      -----------     ---------      -------------   -----------   -------------
Comprehensive Income (Loss)               (13,675)            -         (1,353,836)        3,032      (1,364,479)
                                      -----------     ---------      -------------   -----------   -------------

Balance at December 31, 2001          $  (799,022)    $   5,000      $   8,476,244   $    10,706   $   7,692,928
                                      ===========     =========      =============   ===========   =============

</TABLE>


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

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

                            STATEMENTS OF CASH FLOWS
              For the Nine Months Ended December 31, 2001 and 2000
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                         <C>                <C>
                                                                                   2001                2000
                                                                             ---------------     --------------

Net cash used for operating activities                                       $      (210,785)    $     (114,942)

Net cash provided by investing activities                                            582,564            188,736
                                                                             ---------------     --------------

Net increase in cash and cash equivalents                                            371,779             73,794

Cash and cash equivalents, beginning                                                 366,041            172,793
                                                                             ---------------     --------------

Cash and cash equivalents, ending                                            $       737,820     $      246,587
                                                                             ===============     ==============

Supplemental Disclosure:
    Cash paid for interest                                                   $         4,500     $        4,500
                                                                             ===============     ==============

</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
                                   (Unaudited)


The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Partnership's Form 10-KSB for the year ended March 31, 2001. In the opinion of
management, these financial statements include all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the Partnership's
financial position and results of operations. The results of operations for the
period may not be indicative of the results to be expected for the year.

The Managing General Partner of the Partnership has elected to report results of
the Local Limited Partnerships of which the Partnership has a limited
partnership interest 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 September 30, 2001 and 2000.

1.   Investments in Local Limited Partnerships

The Partnership uses the equity method to account for its limited partnership
interests in fifty Local Limited Partnerships which own and operate multi-family
housing complexes, all of which are government-assisted. Upon dissolution of the
Local Limited Partnerships, proceeds will be distributed according to each
respective partnership agreement.

The following is a summary of investments in Local Limited Partnerships at
December 31, 2001:
<TABLE>
<CAPTION>
<S>                                                                                           <C>
Capital contributions and advances paid to Local Limited Partnerships
   and purchase price paid to withdrawing partners of Local Limited Partnerships               $  65,265,537

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $60,688,966)                                                           (52,624,695)

Cumulative cash distributions received from Local Limited Partnerships                            (3,621,282)
                                                                                               -------------

Investments in Local Limited Partnerships before adjustment                                        9,019,560

Excess investment costs over the underlying net assets acquired:

   Acquisition fees and expenses                                                                   5,921,863

   Accumulated amortization of acquisition fees and expenses                                      (1,696,326)
                                                                                               -------------

Investments in Local Limited Partnerships prior to reserve for valuation                          13,245,097

Reserve for valuation of investments in Local Limited Partnerships                                (3,681,251)
                                                                                               -------------

Investments in Local Limited Partnerships                                                      $   9,563,846
                                                                                               =============

</TABLE>


The Partnership has recorded a reserve for valuation for its investment in Local
Limited Partnerships because there is evidence of non-temporary declines in the
recoverable amount of these investments.

The Partnership's share of the net losses of the Local Limited Partnerships for
the nine months ended December 31, 2001 is $4,948,297. For the nine months ended
December 31, 2001, the Partnership has not recognized $4,074,092 of equity in
losses relating to certain Local Limited Partnerships in which cumulative equity
in losses and distributions exceeded its total investments in these Local
Limited Partnerships.


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

                     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
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, 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.

Liquidity and Capital Resources

At December 31, 2001, the Partnership had cash and cash equivalents of $737,820
compared with $366,041 at March 31, 2001. This increase is primarily due to
proceeds from sales and maturities of marketable securities, cash distributions
received from Local Limited Partnerships and reimbursements of advances to a
Local Limited Partnership. These increases are partially offset by cash used for
operations, and purchases of marketable securities.

The Managing General Partner initially designated 3% of the Gross Proceeds as
Reserves. 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%. Professional fees relating to various property issues totaling
approximately $2,107,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $434,000 have also been used to make additional
capital contributions to three Local Limited Partnerships, and the Partnership
has paid approximately $745,000 (net of paydowns) to purchase the mortgage of a
Local Limited Partnership. To date, the Partnership has used approximately
$2,616,000 of operating funds to replenish Reserves. At December 31, 2001,
approximately $1,254,000 of cash, cash equivalents and marketable securities
have been designated as Reserves. 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.

In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Partnership might deem it in its best interests
to provide such funds, voluntarily, in order to protect its investment. The
Partnership has advanced approximately $1,825,000 to Local Limited Partnerships
to fund operating deficits.

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, at December 31, 2001, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.

Cash Distributions

No cash distributions were made during the nine months ended December 31, 2001.


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

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)


Results of Operations

Three Month Period

For the three months ended December 31, 2001, the Partnership's operations
resulted in a net loss of $138,178 as compared to a net loss of $655,167 for the
same period in 2000. The decrease in net loss is primarily due to a decrease in
equity in losses of Local Limited Partnerships, a decrease in general and
administrative expenses and a recovery of bad debt recognized in the 2001
period. The decrease in equity in losses of Local Limited Partnerships is
primarily due to the Partnership not recognizing losses relating to Local
Limited Partnerships where cumulative equity in losses and cumulative
distributions have exceeded its total investment. The decrease in general and
administrative expense is primarily due to increased charges from an affiliate
of the General Partner for operational and administrative expenses necessary for
the operation of the Partnership which occurred in the three months ended
December 31, 2000. The recovery of bad debt was recognized in the 2001 period
because reimbursements were received for advances previously made to a Local
Limited Partnership. These advances had previously been reserved for by the
Partnership.

Nine Month Period

For the nine months ended December 31, 2001, the Partnership's operations
resulted in a net loss of $1,367,511 as compared to a net loss of $1,981,504 for
the same period in 2000. The decrease in net loss is due to a decrease in equity
in losses of Local Limited Partnerships, a decrease in general and
administrative expenses and a recovery of bad debt recognized in the 2001
period. The decrease in equity in losses of Local Limited Partnerships is
primarily due to the Partnership not recognizing losses relating to Local
Limited Partnerships where cumulative equity in losses and cumulative
distributions have exceeded its total investment. The decrease in general and
administrative expense is primarily due to increased charges from an affiliate
of the General Partner for operational and administrative expenses necessary for
the operation of the Partnership which occurred in the three months ended
December 31, 2000. The recovery of bad debt was recognized in the 2001 period
because reimbursements were received for advances previously made to a Local
Limited Partnership. These advances had previously been reserved for by the
Partnership.

Property Discussions

The Partnership's investment portfolio consists of limited partnership interests
in fifty Local Limited Partnerships, each of which own and operate a
multi-family apartment complex. A majority of the Properties have stabilized
operations and operate above break-even. A few Properties generate cash flow
deficits that the Local General Partners of those Properties fund through
project expenses loans, subordinated loans or operating escrows. However, some
Properties have 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 Property. Also, the Managing
General Partner, in the normal course of the Partnership's business, may desire
to dispose of the Partnership's interest in certain Properties. The following
Property discussion focuses only on such Properties.

Boulevard Commons IIA, located in Chicago, Illinois continuously to generated
operating deficits. Expense levels at the Property were higher due to increasing
maintenance, capital needs, security issues and high turnover. The Managing
General Partner developed a plan with the Local General Partner to transfer
ownership of the Property to the Local General Partner. The plan includes
provisions to minimize the risk of recapture. The Partnership transferred 99% of
its interest in Boulevard Commons IIA over two years beginning in 1999. During
August 2001, the Partnership transferred its remaining 1% interest in the
Property. Therefore, the Partnership no longer has an interest in the Property.

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

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)


Property Discussions (continued)
-------------------------------

Operations at Breckenridge Creste, located in Duluth, Georgia, which
historically has operated at a deficit, have slightly improved as a result of
ongoing capital improvements made to the Property. However, the Property
continues to experience occupancy fluctuations. Based upon the Property's
persistent operating challenges, the Managing General Partner expressed concerns
regarding the long-term viability of the Property and believed it was in the
best interest of the Partnership to dispose of its interest. Effective December
31, 2000, the Managing General Partner, on behalf of the Partnership, entered
into an agreement to transfer the Partnership's interest in the Local Limited
Partnership to an unaffiliated entity. The agreement includes provisions to
minimize the risk of recapture. The Partnership has the right to fully dispose
of its interest in the Local Limited Partnership by January 1, 2003.

As previously reported, Harbour View, located in Staten Island, New York, had
defaulted on its HUD-insured loan. Subsequently, the lender assigned the loan to
HUD. In December 1996, the mortgage was sold at auction to an unaffiliated
buyer. The Managing General Partner and Local General Partner diligently
attempted to reach a workout with the new lender but were unsuccessful.
Effective April 24, 2001, the lender took possession of the Property. This
transaction will result in recapture of credits of approximately $7 per unit and
the allocation of taxable income to the Partnership during the 2001 tax year.

As previously reported, Pleasant Plaza, located in Malden, Massachusetts, and
South Holyoke, located in Holyoke, Massachusetts, receive a subsidy under the
State Housing Assistance Rental Program (SHARP), which is an important part of
their annual income. As originally conceived, the SHARP subsidy was scheduled to
decline over time to match increases in net operating income. However, increases
in net operating income failed to keep pace with the decline in the SHARP
subsidy. Many of the SHARP properties (including Pleasant Plaza and South
Holyoke) structured workouts that included additional subsidies in the form of
Operating Deficit Loans (ODL's). Effective October 1, 1997, the Massachusetts
Housing Finance Agency (MHFA), which provided the SHARP subsidies, withdrew
funding of the ODL's. Properties unable to make full debt service payments were
declared in default by MHFA. The Managing General Partner, separate from its
responsibilities to Pleasant Plaza or South Holyoke, joined a group of SHARP
property owners called the Responsible SHARP Owners, Inc. (RSO) and is
negotiating with MHFA to find a solution to the problems that will result from
the withdrawal of these subsidies. Given existing operating deficits and the
dependence on these subsidies by Pleasant Plaza and South Holyoke, both
Properties are in default on their mortgage obligations. On September 16, 1998,
the Partnership also joined with the RSO and about 20 other SHARP property
owners and filed suit against the MHFA (Mass. Sup. Court Civil Action #98-4720).
Among other things, the suit seeks to enforce the MHFA's previous financial
commitments to the SHARP properties. The lawsuit is complex, so no predications
can be made at this time as to the ultimate outcome. In the meantime, the
Managing General Partner intends to continue to participate in the RSO's efforts
to negotiate a resolution of this matter with MHFA. Pleasant Plaza was included
in a "Dilution Pool" composed of approximately 20 of the 77 SHARP properties.
MHFA made an offering to Wall Street that consisted primarily of an effort to
sell the tax losses generated by the 20 partnerships, assuming restructured
mortgages. As a result, a new limited partner was admitted to the Local Limited
Partnership that owns Pleasant Plaza and the Partnership 's interest in the
Local Limited Partnership was diluted to 4%. The Partnership has the right to
put the Partnership's remaining interest in the Local Limited Partnership to the
Local General Partner one-year from the effective date of admitting the new
investor limited partner. Effective October 8, 2001 the Partnership transferred
its remaining interest in the Property. Therefore, the Partnership no longer has
an interest in Pleasant Plaza.

Waterfront and Shoreline, both located in Buffalo, New York, continue to have
operating deficits as a result of a soft rental market, deferred maintenance and
security issues. The mortgage loans on both Properties are payable only out of
available cash flow and neither Property has made any payments towards the
mortgage during 2001. The Managing General Partner will continue to closely
monitor Property operations.


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

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)


Property Discussions (continued)
-------------------------------

Operations at Willow Lake, located in Kansas City, Missouri, have improved over
the past year. Several years ago the Property entered into a loan workout
agreement that allowed the Property to defer the payment of some of the interest
on the loan. The loan workout agreement expired on May 31, 2001 and the lender
is seeking full repayment of the deferred interest in the amount of
approximately $230,000. The Property is unable to make the payment required
under the loan workout agreement and continues to negotiate with the lender to
find a mutually acceptable solution to the issue.

During 1994, the Local General Partner at Admiral Court, located in
Philadelphia, Pennsylvania, transferred its interest in the Local Limited
Partnership. The IRS subsequently conducted a compliance audit at the Property
and has taken the position that the Property is subject to recapture due to
non-compliance issues. The Managing General Partner disagrees with the IRS and
is working to resolve the matter. However, in the opinion of the Managing
General Partner, there is a substantial risk that the Admiral Court Partnership
and consequently, the Partnership could suffer significant tax credit recapture
or tax credit disallowance. However, it is not possible to quantify the
potential amount at this time. The Property's tax credit stream ended in 1999.

Increased competition for Georgetown Apartments, located in Georgetown,
Delaware, has negatively impacted the Property's operations. Although the
Property has maintained a high level of occupancy, rental rates have stagnated
while expenses have continued to increase and the local taxing authority is
contemplating a 300% increase in the real estate tax rate. The Property no
longer generates tax credits and the compliance period expires in 2005.
Recently, the non-profit organization that holds the Property's long term ground
lease offered to transfer the land at little cost. The Managing General Partner
gave its consent to the transfer and concurrently executed a Put Agreement for
the Partnership's interest in the Property to the Local General Partner. The Put
Agreement gives the Partnership the right to transfer its interest at a time of
its choosing to the Local General Partner after the compliance period has ended.

Operations at Westwood Manor, located in Flint, Michigan, have suffered
recently. Poor site management has caused occupancy issues, deferred maintenance
and curb appeal issues. As a result, the site management company was replaced
during the first quarter of 2001. The Partnership also advanced $50,000 from
Reserves to address the deferred maintenance issues at the Property, which will
be repaid through operations. Should the entire amount of the advance not be
repaid by December 31, 2001, the Local General Partner is obligated to pay back
50% of the remaining balance. As of December 31, 2001, the Property had not
generated sufficient cash from operations to repay any of the Partnership's
advance. The Partnership has not yet made a demand from the Local General
Partner to meet his obligation to repay 50% of the advance. The Managing General
Partner believes that the Property's operations will stabilize in the near
future.

During 1995, the Kyle Hotel, located in Temple, Texas, defaulted on its mortgage
and the lender placed the Local Limited Partnership in bankruptcy. Under the
subsequent reorganization, the Local General Partner was replaced by an
affiliate of Lend Lease and the Partnership purchased the outstanding debt on
the Property. The Property makes mortgage payments in the amount of available
cash flow to the Partnership. Recently, the site management company at the
Property informed Lend Lease that it would like to terminate its management
contract. The Managing General Partner attempted to select an entity to assume
management of the Property as well as to assume the Local General Partner
interest. Unfortunately a buyer could not be identified. The Managing General
Partner will continue its attempts to dispose of the Partnership's interest in
the Property.

Elmwood/Delmar, located in Aurora, Colorado, continues to maintain high
occupancy as demand for affordable housing in the area remains strong. However,
a site visit conducted in June 2001 found the Property was in poor maintenance.
Improving the condition of the Property will be essential to long term viability
of the Property. The Property generated its last year of tax credits during 1999
and a Housing Assistance Payment ("HAP") contract is scheduled to expire in
2002, pending extensions. It is unlikely that the property will be able to
support operations if the HAP contract is not extended.


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

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)


Property Discussions (continued)
-------------------------------

The Partnership has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. Real estate experts
analyze the investments to determine if impairment indicators exist. If so, the
carrying value is compared to the undiscounted future cash flows expected to be
derived from the asset. If there is a significant impairment in carrying value,
a provision to write down the asset to fair value will be recorded in the
Partnership's financial statements.


<PAGE>




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





PART II       OTHER INFORMATION

Items 1-5     Not applicable

Item 6        Exhibits and reports on Form 8-K

                (a)Exhibits - None

                (b)Reports on Form 8-K - No reports on Form 8-K were filed
                   during the quarter ended December 31, 2001.


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

                                    SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


DATED: February 14, 2002               BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                       CREDITS L.P. III

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





                                               /s/Jenny Netzer
                                               --------------------------------
                                               Jenny Netzer
                                               Principal, Head of Housing and
                                               Community Investment

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