August 14, 2007


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 the Quarter Ended June 30, 2007
       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/Patricia Olsen-Goldberg
Patricia Olsen-Goldberg
Controller





QH3-Q1.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                 June 30, 2007
                                  ---------------------------------

                                       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>                                                                                <C>

PART I - FINANCIAL INFORMATION                                                              Page No.
------------------------------                                                              --------

Item 1.  Financial Statements

         Balance Sheet (Unaudited) - June 30, 2007                                            1

         Statements of Operations (Unaudited) - For the Three
           Months Ended June 30, 2007 and 2006                                                2

         Statement of Changes in Partners' Equity
           (Unaudited) - For the Three Months Ended June 30, 2007                             3

         Statements of Cash Flows (Unaudited) - For the
           Three Months Ended June 30, 2007 and 2006                                          4

         Notes to the Financial Statements (Unaudited)                                        5

Item 2.  Management's Discussion and Analysis of Financial                                    7
           Condition and Results of Operations

Item 3.  Controls and Procedures                                                             12

PART II - OTHER INFORMATION

Items 1-6                                                                                    13

SIGNATURE                                                                                    14

CERTIFICATIONS                                                                               15

</TABLE>

<PAGE>


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



                                        4
                                  BALANCE SHEET
                                  June 30, 2007
                                   (Unaudited)


<TABLE>
<CAPTION>


<S>     <C>                                                                                      <C>

         Assets

Cash and cash equivalents                                                                         $    10,911,469
Investment in Local Limited Partnerships (Note 1)                                                       1,102,117
                                                                                                  ---------------
   Total Assets                                                                                   $    12,013,586
                                                                                                  ===============

Liabilities and Partners' Equity

Due to affiliate                                                                                  $        30,402
Accrued expenses                                                                                           48,464
                                                                                                  ---------------
   Total Liabilities                                                                                       78,866

General, Initial and Investor Limited Partners' Equity                                                 11,934,720
                                                                                                  ---------------
   Total Liabilities and Partners' Equity                                                         $    12,013,586
                                                                                                  ===============
</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 Months Ended June 30, 2007 and 2006
                                   (Unaudited)

<TABLE>
<CAPTION>


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

                                                                                 2007                     2006
                                                                           ----------------         ----------
Revenue:
   Investment                                                              $         10,652        $        143,067
                                                                           -----------------       ----------------

Expenses:
   Asset management fees, affiliate                                                  15,201                  27,541
   General and administrative (includes reimbursements
     to an affiliate in the amount of $19,049 and
     $36,823 in 2007 and 2006, respectively)                                         53,241                (105,081)
   Amortization                                                                         539                     539
                                                                           ----------------         ----------------
     Total Expenses                                                                  68,981                 (77,001)
                                                                           ----------------         ----------------

Income (Loss) before equity in losses of Local Limited Partnerships
   and gain on disposal of investments in Local Limited Partnerships                (58,329)                220,068

Equity in losses of Local Limited Partnerships (Note 1)                             (55,953)                (34,998)

Gain on disposal of investments in Local Limited
   Partnerships                                                                           -               1,504,860
                                                                           ----------------        ----------------

Net Income (Loss)                                                          $       (114,282)       $      1,689,930
                                                                           ================        ================

Net Income (Loss) allocated:
   General Partners                                                        $         (1,143)       $         16,899
   Limited Partners                                                                (113,139)              1,673,031
                                                                           ----------------        ----------------
                                                                           $       (114,282)       $      1,689,930
                                                                           ================        ================
Net Income (Loss) per Limited Partner Unit
   (100,000 Units)                                                         $          (1.13)       $          16.73
                                                                           ================        ================


</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
                    For the Three Months Ended June 30, 2007
                                   (Unaudited)



<TABLE>
<CAPTION>


<S> <C>                                           <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

Net Loss                                              (1,143)                 -           (113,139)          (114,282)
                                               -------------     --------------     --------------      --------------

Balance at June 30, 2007                       $     119,306     $        5,000     $   11,810,414     $   11,934,720
                                               =============     ==============     ==============      ==============
</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 Three Months Ended June 30, 2007 and 2006
                                   (Unaudited)


<TABLE>
<CAPTION>

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

                                                                                  2007                 2006
                                                                              -------------       ---------

Net cash provided by (used for) operating activities                          $     (57,770)      $      64,082

Net cash provided by investing activities                                                 -           1,727,777
                                                                              -------------       -------------

Net increase (decrease) in cash and cash equivalents                                (57,770)          1,791,859

Cash and cash equivalents, beginning                                             10,969,239           8,394,272
                                                                              -------------       -------------

Cash and cash equivalents, ending                                             $  10,911,469       $  10,186,131
                                                                              =============       =============
</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, 2007. In the opinion of
the Managing General Partner, 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 in 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 March 31, 2007 and 2006.

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 a deficit
position, certain items of net income may be allocated to the General Partners
in accordance with the Partnership Agreement.

1.   Investments in Local Limited Partnerships

The Partnership currently owns limited partnership interests in seven 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.
<TABLE>
<CAPTION>
<S>   <C>                                                                                       <C>

The following is a summary of investments in Local Limited Partnerships at June
30, 2007:

Capital contributions paid to Local Limited Partnerships and purchase
   price paid to withdrawing partners of Local Limited Partnerships                                 $    12,290,092

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $54,363,013)                                                                   (8,857,748)

Cumulative cash distributions received from Local Limited Partnerships                                   (1,174,471)
                                                                                                     ---------------

Investments in Local Limited Partnerships before adjustments                                              2,257,873

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                                            638,496

   Cumulative amortization of acquisition fees and expenses                                                (210,541)
                                                                                                     ---------------

Investments in Local Limited Partnerships before valuation allowance                                      2,685,828

Valuation allowance on investments in Local Limited Partnerships                                         (1,583,711)
                                                                                                     ---------------

Investments in Local Limited Partnerships                                                           $     1,102,117
                                                                                                    ===============

</TABLE>

<PAGE>
                 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


1. Investments in Local Limited Partnerships (continued)

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.

The Partnership's share of the net losses of the Local Limited Partnerships for
the three months ended June 30, 2007 is $827,045. For the three months ended
June 30, 2007, the Partnership has not recognized $771,092 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.

2.   Significant Subsidiaries

The following Local Limited Partnership invested in by the Partnership represent
more than 20% of the Partnership's total assets or equity as of June 30, 2007 or
2006 or net losses for the three months ended either June 30, 2007 or 2006. The
following financial information represents the performance of these Local
Limited Partnerships for the three months ended March 31, 2007 and 2006:

Riverfront Apartments, L.P.                    2007                     2006
---------------------------               ---------------           --------

Revenue                              $       433,550           $     432,591
Net Loss                             $       (56,518)          $     (35,352)




<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.

Critical Accounting Policies

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

The 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. 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 ($1,102,117
at June 30, 2007). 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. Under the
equity method, a Local Limited Partnership investment will not be carried below
zero. To the extent that equity in losses are incurred when the Partnership's
carrying value of the respective Local Limited Partnership has been reduced to a
zero balance, the losses will be suspended and offset against future income.
Income from Local Limited Partnerships, where cumulative equity in losses plus
cumulative distributions have exceeded the total investment in Local Limited
Partnerships, will not be recorded until all of the related unrecorded losses
have been offset. To the extent that a Local Limited Partnership with a carrying
value of zero distributes cash to the Partnership, that distribution is recorded
as income on the books of the Partnership and is included in "other revenue" in
the accompanying financial statements.

The Partnership has implemented policies and practices for assessing
other-than-temporary declines in values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are compared
to their respective fair values. If an other-than-temporary decline in carrying
value exists, a provision to reduce the asset to fair value, as calculated based
primarily on remaining tax benefits, will be recorded in the Partnership's
financial statements. Generally, the carrying value 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 June 30, 2007, the Partnership has cash and cash equivalents of $10,911,469,
as compared with $10,969,239 at March 31, 2007. This decrease is attributable to
cash used for 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)


Liquidity and Capital Resources (continued)

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 June 30, 2007, $10,911,469 has been
designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,379,000 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 Managing General Partner might deem
it in its best interest to voluntarily provide such funds in order to protect
its investment. As of June 30, 2007, 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 $12,104,000 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 June 30, 2007, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.

Cash Distributions

No cash distributions were made to Limited Partners during the three months
ended June 30, 2007. 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 to Limited Partners. Based on the results of 2006
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

For the three months ended June 30, 2007, the Partnership's operations resulted
in a net loss of $114,282 as compared to net income of $1,689,930 for the same
period in 2006. The decrease in net income is primarily due to a gain on sale of
investments in Local Limited Partnerships recognized in the 2006 period, a
decrease in investment income and an increase in general and administrative
expenses. The decrease in investment income is primarily attributable to the
Partnership depositing cash in to a non-interest bearing account for part of the
three months ended June 30, 2007. The increase in general and administrative
expenses is due to a reversal of an accrual for monitoring fees in the same
period in 2006.


<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)


Portfolio Update

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 June 30, 2007, the Partnership's investment portfolio consisted of limited
partnership interests in seven Local Limited Partnerships, each of which owns
and operates a multi-family apartment complex and each of which has generated
Tax Credits. Since inception, the Partnership generated Tax Credits, net of
recapture, of approximately $1,342 per Limited Partner Unit. The aggregate
amount of Tax Credits generated by the Partnership was consistent with the
objective specified in the Partnership's prospectus.

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 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 seven Properties in which the Partnership has an interest expired by
December 31, 2004. The Managing General Partner has negotiated agreements that
will ultimately allow the Partnership to dispose of its interest in four Local
Limited Partnerships. The Partnership did not dispose of any Local Limited
Partnership interests during the three months ended March 31, 2007.

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.

As previously reported, for the past several years the following three
litigation proceedings had been pending between certain investors and various
affiliates of the General Partners, including the Partnership, concerning, among
other things, those investors' requests to inspect certain alleged "books and
records" of the Partnership and the affiliates: Park G.P., Inc. ("Park") brought
a lawsuit against the Partnership and various affiliates of the General Partner
and their purported general partners (collectively, the "Fund Parties") in state
court in Missouri (the "Missouri Lawsuit"); the Fund Parties brought a
declaratory judgment lawsuit against Everest Housing Investors 2, LLC and
several other Everest-related entities (collectively, the "Everest Entities") in
Massachusetts state court (the "Everest Massachusetts Lawsuit"); and Boston
Financial Qualified Housing Tax Credits L.P. IV ("Partnership IV") and its
general partners brought a lawsuit against Park and its affiliate Bond Purchase,
L.L.C. ("Bond") in Massachusetts state court (the "Park and Bond Massachusetts
Lawsuit").

As of April 21, 2007, the Fund Parties and Partnership IV reached an agreement
with Park, Bond and the Everest Entities to resolve these lawsuits (the
"Settlement Agreement"). Under the terms of the Settlement Agreement, the claims
and counterclaims asserted in the Everest Massachusetts Lawsuit have been
dismissed with prejudice and the claims in the Missouri Lawsuit and the Park and
Bond Massachusetts Lawsuit have been dismissed without prejudice, all in
exchange for options, subject to various conditions, to purchase certain Local
Limited Partnership interests held by Partnership IV, Boston Financial Qualified
Housing Tax Credits L.P. III, Boston Financial Qualified Housing Tax Credits
L.P. V and Boston Financial Tax Credit Fund VII, A Limited Partnership at
specified prices.


<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)


Portfolio Update (continued)

With respect to the Partnership, the Settlement Agreement provides options,
subject to various conditions, to purchase 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 an aggregate price of $1,500,000.

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

Property Discussions

Four Properties in which the Partnership has an interest have stabilized
operations and operated above break-even as of March 31, 2007. Three Properties
generate cash flow deficits 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, Elmwood Delmar, located in Aurora, Colorado, has a first
mortgage with a prohibition of prepayment prior to December 2008. Given this
major impediment to sale and the Partnership's desire to transfer its interest
in the Local Limited Partnership since the Property's Compliance Period ended on
December 31, 2003, the Managing General Partner entered into a put option
agreement with an unaffiliated entity that would allow for the transfer of the
Partnership's interest in the Local Limited Partnership to the unaffiliated
entity for a nominal amount. On September 15, 2005, the Partnership effectively
disposed of its interest in Elmwood Delmar when the fund received $2,083 in
exchange for the sale of a Contingent Note that was created in conjunction with
the put option entered into with the unaffiliated third party. Based on the
operating performance of the Property, the Managing General Partner determined
that there was very little value above debt in the Property. The Managing
General Partner, in accordance with and as permitted by the Partnership
Agreement, retained the entire amount of net proceeds from this transfer in
Reserves. HUD's June 6, 2006 approval to a Transfer of Physical Assets
application completed the transfer of the Partnership's interest in this Local
Limited Partnership to the third party. This transfer of Partnership interest
resulted in 2006 taxable income of $829,245, or $8.29 per Unit. The Partnership
no longer has an interest in this Local Limited Partnership.

As previously reported, the Managing General Partner had reached an agreement
with the Local General Partner of West Dade and West Dade II, located in Miami,
Florida, to sell the Partnership's interests in both Local Limited Partnerships,
pending HUD's approval to a Modified Transfer of Physical Assets application.
Upon further review, HUD's approval was not required. In June 2006, the
Partnership received $1,502,777, or $15 per Unit, in exchange for the
Partnership's interest in these Local Limited Partnerships. The proceeds from
this transfer have been retained in Reserves in accordance with and as permitted
by the Partnership Agreement. These transfer of interests resulted in 2006
taxable income of $3,040,190, or $30.40 per Unit. The Partnership no longer has
an interest in these two Local Limited Partnerships.

As previously reported, increased competition for Georgetown II, located in
Georgetown, Delaware, negatively impacted the Property's operations. Although
the Property maintained a high level of occupancy, the Property's chronic below
breakeven status was attributable to stagnant rental rates and high maintenance
expenses. In 2003, the non-profit affiliate of the state housing finance agency
that holds the Property's long-term ground lease offered to transfer the land at
little cost to the Partnership. The Managing General Partner gave its consent to
the transfer and,


<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)

in order to reduce potential risk to the Partnership and provide an exit
strategy, concurrently executed a put agreement for the Partnership's interest
in the Local Limited Partnership with the Local General Partner. The Partnership
executed its put option on August 18, 2006, effectively transferring its
interest to the Local General Partner for $5,000. This transfer resulted in a
2006 taxable loss of $1,340,871 or $13.41 per Unit. The Compliance Period
expired on December 31, 2004. 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 interest 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 is
currently expected to occur in the fiscal years ending March 31, 2008 and 2009
for Shoreline and Waterfront, respectively. The Managing General Partner does
not expect these transactions to result in net sales proceeds to the
Partnership. These transactions are expected to result in taxable income
projected to be approximately $44,000,000 or $440 per Unit.

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 may result in the 2007 disposal of the Partnership's interest in the Local
Limited Partnership. The Managing General Partner has reached a tentative
agreement with the Local General Partner to begin marketing the Property for
sale in August of 2007. In accordance with the terms of the listing agreement,
the Managing General Partner estimates this transaction will result in net
proceeds to the Partnership of approximately $750,000, or $7.50, per Unit. The
Managing General Partner estimates that a sale, under the proposed terms, will
result in taxable income projected to be approximately $800,000, or $8.00, per
Unit.

In connection with the Settlement Agreement described in the "Legal Proceedings"
section above, the Partnership has granted an option, subject to various
conditions, to sell its interests in River Front Apartments, L.P., located in
Sunbury, PA, and Susquehanna View, L.P., located in Camp Hill, PA, for a price
of $1,500,000 specified in the Settlement Agreement.
                BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)
                            Controls and Procedures



(a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this report, with the participation of
the Partnership's management, the Partnership's principal executive officer and
principal financial officer conducted an evaluation of the Partnership's
disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule
15d-15(e) under the Exchange Act). Based on this evaluation, our PEO and PFO
concluded that our disclosure controls and procedures were effective as of June
30, 2007, to provide reasonable assurance that information required to be
disclosed in our reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

(b) Changes in Internal Control over Financial Reporting.

There have been no significant changes in the Partnership's internal control
over financial reporting identified in connection with the evaluation required
by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that
occurred during the Partnership's last fiscal quarter that has materially
affected, or is reasonably likely to affect, the Partnership's internal control
over financial reporting.


<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

31.1     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

(b)      Reports on Form 8-K - No reports on Form 8-K were filed during
         the quarter ended June 30, 2007


<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: August 14, 2007  BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                CREDITS L.P. III

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



                                            /s/Gary Mentesana
                                             Gary Mentesana
                                             President
                                             Arch Street III, Inc.