August 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 the Quarter Ended June 30, 2002
       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-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, 2002
                               ------------------------------------------------

                                    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



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

Item 1.  Financial Statements

         Balance Sheet (Unaudited) - June 30, 2002                       1

         Statements of Operations (Unaudited) - For the Three
           Months Ended June 30, 2002 and 2001                           2

         Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Three Months Ended June 30, 2002        3

         Statements of Cash Flows (Unaudited) - For the
           Three Months Ended June 30, 2002 and 2001                     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



<PAGE>


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


                                  BALANCE SHEET
                                  June 30, 2002
                                   (Unaudited)

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

Cash and cash equivalents                                                                        $     899,150
Marketable securities, at fair value                                                                   512,407
Investments in Local Limited Partnerships, net (Note 1)                                              9,319,597
Other asset                                                                                              7,178
                                                                                                 -------------
   Total Assets                                                                                  $  10,738,332
                                                                                                 =============

Liabilities and Partners' Equity

Accounts payable to affiliates                                                                   $   4,168,149
Accrued expenses                                                                                       380,822
Note payable, affiliate                                                                                514,968
                                                                                                 -------------
   Total Liabilities                                                                                 5,063,939
                                                                                                 -------------

General, Initial and Investor Limited Partners' Equity                                               5,667,185
Net unrealized gains on marketable securities                                                            7,208
                                                                                                 -------------
   Total Partners' Equity                                                                            5,674,393
                                                                                                 -------------
   Total Liabilities and Partners' Equity                                                        $  10,738,332
                                                                                                 =============
</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, 2002 and 2001
                                   (Unaudited)


<TABLE>
<CAPTION>
<S>                                                                       <C>                   <C>
                                                                                2002                  2001
                                                                           -------------         -------------
Revenue:
   Investment                                                              $      10,037         $      17,628
   Other                                                                          64,289                29,543
                                                                           -------------         -------------
     Total Revenue                                                                74,326                47,171
                                                                           -------------         -------------

Expenses:
   Asset management fees, related party                                           96,852                95,415
   General and administrative (includes
     reimbursements to affiliates of $190,507 and
     $128,411 in 2002 and 2001, respectively)                                    237,409               182,295
   Provision for valuation of advances to Local
     Limited Partnerships                                                         10,000                     -
   Interest                                                                        1,500                 1,500
   Amortization                                                                   14,247                18,466
                                                                           -------------         -------------
     Total Expenses                                                              360,008               297,676
                                                                           -------------         -------------

Loss before equity in losses of Local Limited
   Partnerships                                                                 (285,682)             (250,505)

Equity in losses of Local Limited Partnerships (Note 1)                         (306,492)             (203,302)
                                                                           -------------         -------------

Net Loss                                                                   $    (592,174)        $    (453,807)
                                                                           =============         =============

Net Loss allocated:
   General Partners                                                        $      (5,922)        $      (4,538)
   Limited Partners                                                             (586,252)             (449,269)
                                                                           -------------         -------------
                                                                           $    (592,174)        $    (453,807)
                                                                           =============         =============
Net Loss per Limited Partner Unit
   (100,000 Units)                                                         $      (5.86)         $       (4.49)
                                                                           ============          =============

</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 Three Months Ended June 30, 2002
                                   (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, 2002             $  (813,251)    $   5,000      $   7,067,610   $     5,707   $   6,265,066
                                      -----------     ---------      -------------   -----------   -------------

Comprehensive Income (Loss):
   Change in net unrealized gains
     on marketable securities
     available for sale                         -             -                  -         1,501           1,501
   Net Loss                                (5,922)            -           (586,252)            -        (592,174)
                                      -----------     ---------      -------------   -----------   -------------
Comprehensive Income (Loss)                (5,922)            -           (586,252)        1,501        (590,673)
                                      -----------     ---------      -------------   -----------   -------------

Balance at June 30, 2002              $  (819,173)    $   5,000      $   6,481,358   $     7,208   $   5,674,393
                                      ===========     =========      =============   ===========   =============

</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, 2002 and 2001
                                   (Unaudited)



<TABLE>
<CAPTION>
<S>                                                                  <C>                      <C>
                                                                          2002                     2001
                                                                      ------------             ------------

Net cash used for operating activities                                $    (40,649)            $   (222,552)

Net cash provided by investing activities                                  134,863                  211,473
                                                                      ------------             ------------

Net increase (decrease) in cash and cash equivalents                        94,214                  (11,079)

Cash and cash equivalents, beginning                                       804,936                  366,041
                                                                      ------------             ------------

Cash and cash equivalents, ending                                     $    899,150             $    354,962
                                                                      ============             ============

Supplemental Disclosure:
   Cash paid for interest                                             $      1,500             $      1,500
                                                                      ============             ============

</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, 2002. 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 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, 2002 and 2001.

1.   Investments in Local Limited Partnerships

The Partnership has limited partnership interests in forty-nine Local Limited
Partnerships, which were organized for the purpose of owning and operating
multi-family housing complexes, all of, which are government-assisted. Upon
dissolution of the Local Limited Partnerships, proceeds will be distributed
according to the respective Local Limited Partnership agreements.

The following is a summary of investments in Local Limited Partnerships at June
30, 2002:
<TABLE>
<CAPTION>
<S>                                                                                           <C>
Capital contributions and advances paid to Local Limited Partnerships
   and purchase price paid to withdrawing partners of Local Limited Partnerships               $  63,426,665

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   Unrecognized losses of $52,635,318)                                                           (49,230,853)

Cumulative cash distributions received from Local Limited Partnerships                            (3,814,474)
                                                                                               -------------

Investments in Local Limited Partnerships before adjustment                                       10,381,338

Excess investment costs over the underlying net assets acquired:

   Acquisition fees and expenses                                                                   5,805,631

   Cumulative amortization of acquisition fees and expenses                                       (1,713,052)
                                                                                               -------------

Investments in Local Limited Partnerships before reserve for valuation                            14,473,917

Reserve for valuation of investments in Local Limited Partnerships                                (5,154,320)
                                                                                               -------------

Investments in Local Limited Partnerships                                                      $   9,319,597
                                                                                               =============
</TABLE>

For the three months ended June 30, 2002, the Partnership advanced $10,000 to
one of the Local Limited Partnerships, all of which was reserved. The
Partnership has recorded a reserve for valuation for its investment in Local
Limited Partnerships because there is evidence of a non-temporary decline in the
recoverable amounts of four of the Local Limited Partnerships.

The Partnership's share of the net losses of the Local Limited Partnerships for
the three months ended June 30, 2002 is $1,173,032. For the three months ended
June 30, 2002, the Partnership has not recognized $929,806 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. The Partnership recognized $63,266 of previously unrecognized
losses in the three months ended June 30, 2002.


<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.

Accounting Polices

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

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting because the Partnership does not have control
over the major operating and financial policies of the Local Limited
Partnerships in which it invests. 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 Partnership investments
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.

Liquidity and Capital Resources

The Partnership had an increase in cash and cash equivalents of $94,214 for the
three months ended June 30, 2002. This increase is attributable to cash
distributions received from Local Limited Partnerships partially offset by cash
used for operations and advances paid to Local Limited Partnerships.

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, 2002, approximately $1,412,000
of cash, cash equivalents and marketable securities has been designated as
Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,114,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $434,000 also have been used to make additional
capital contributions to three Local Limited Partnerships and the Partnership
has paid approximately $734,000 (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, 2002, the Partnership has advanced approximately
$1,835,000 to Local Limited Partnerships to fund operating deficits.



<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 believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions. To date, the Partnership has used approximately $2,779,000 of
operating funds 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, at June 30, 2002, 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 three months ended June 30, 2002.

Results of Operations

For the three months ended June 30, 2002, Partnership's operations resulted in a
net loss of $592,174 as compared to a net loss of $453,807 for the same period
in 2001. The increase in net loss is primarily due to an increase in equity in
losses of Local Limited Partnerships and an increase in general and
administrative expenses. The increase in equity in losses is due to a decrease
in unrecognized losses of Local Limited Partnerships. The increase in general
and administrative expense is primarily due to charges from an affiliate of the
General Partner for operational and administrative expenses necessary for the
operation of the Partnership related to thee year ended March 31, 2002, which
are being expensed in the three months ended June 30, 2002.

Property Discussions

The Partnership's investment portfolio consists of limited partnership interests
in forty-nine 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 continues to generate an
operating deficit. Expense levels at the Property are high 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 in 1999 and 2000. During August 2001, the
Partnership transferred its remaining 1% interest in the Property. The
Partnership no longer has an interest in the Property.

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

<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)
-------------------------------

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.

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 House, 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 had
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.

The Local General Partner of South Holyoke is negotiating with MHFA to
restructure the SHARP and ODL debt as well as the mortgage on the Property. The
Managing General Partner believes an opportunity may exist to for the
Partnership to put cash into the Local Limited Partnership in order to secure an
exit strategy as part of the debt restructuring.


<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 MHFA recently issued a report that gave Granite V-Blue Mountain, located in
Boston Massachusetts, a below average rating in physical condition. The Local
General Partner is in the process of addressing MHFA's concerns; however,
current replacement reserve levels are inadequate to meet current and future
needs. Due to the fact that the Property's mortgage, which accrues interest at a
rate of 12.2%, may be prepaid without a premium in 2002, the opportunity may
exist for the Property to be re-capitalized. The Managing General Partner will
also begin to identify possible disposition options with respect to the
Partnership's interest in the Property.

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 mortgage payments in several
years.

With respect to Shoreline, the IRS has issued Form 8823 for one of the
Property's units, indicating that it was not leased to a qualified occupant at
initial occupancy. This will result in recapture for all credits taken for that
unit. The Managing General Partner has not yet been informed of the amount of
the recapture but it is not expected to exceed $25,000, or approximately $0.25
per Unit.

Several years ago Willow Lake, located in Kansas City, Missouri 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 Property was unable to make the payment required under the loan workout
agreement. After a long negotiating period, a mutually acceptable workout plan
was agreed upon, whereby the Property used its Operating Deficit Escrow of
approximately $78,000 to pay down the loan and will continue to make monthly
payments on the loan. Although the Property's operations improved during 2001,
occupancy has recently declined due to a slowing economy and an excess of supply
over demand for rental units. Rental rates are declining as a result.

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.
Further, the Property suffers from poor location and security issues. Vandalism
has caused an increase in maintenance and repair expenses and has negatively
affected the Property's occupancy levels and tenant profile.

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. 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. It is unlikely the Partnership will transfer its
interest until the end of the compliance period.


<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 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. The property did not generate 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.

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. 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 poorly maintained.
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 would be able to
support operations if the HAP contract is not extended. The Managing General
Partner has begun to identify possible disposition strategies with respect to
its interest in the Property.

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 June 30, 2002.



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             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, 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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