November 14, 2005


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 September 30, 2005
       File Number 01-18462


Dear Sir/Madam:

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


Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller









<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-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            September 30, 2005
                                       ----------------------------------------

                                                         OR

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


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


                         Commission file number 01-18462

                  Boston Financial Qualified Housing Tax Credits L.P. III
-------------------------------------------------------------------------------
                     (Exact name of registrant as specified in its charter)


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


   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>
<CAPTION>


                                TABLE OF CONTENTS



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

Item 1.  Financial Statements

<S>                                                                                         <C>
         Balance Sheet (Unaudited) - September 30, 2005                                       1

         Statements of Operations (Unaudited) - For the Three and Six
           Months Ended September 30, 2005 and 2004                                           2

         Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Six Months Ended September 30, 2005                          3

         Statements of Cash Flows (Unaudited) - For the
           Six Months Ended September 30, 2005 and 2004                                       4

         Notes to the Financial Statements (Unaudited)                                        5

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

PART II - OTHER INFORMATION

Items 1-6                                                                                    15

SIGNATURE                                                                                    16

CERTIFICATIONS                                                                               17

</TABLE>

<PAGE>


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


                                  BALANCE SHEET
                               September 30, 2005
                                   (Unaudited)


<TABLE>
<CAPTION>



Assets

<S>                                                                                               <C>
Cash and cash equivalents                                                                         $     1,468,756
Investment securities, at fair value (Note 1)                                                             719,503
Investments in Local Limited Partnerships (Note 2)                                                      2,901,505
Other assets                                                                                                3,230
                                                                                                  ---------------
   Total Assets                                                                                   $     5,092,994
                                                                                                  ===============

Liabilities and Partners' Equity

Due to affiliate                                                                                  $       688,663
Accrued expenses                                                                                          394,028
Deposit on sale                                                                                             2,083
                                                                                                  ---------------
   Total Liabilities                                                                                    1,084,774

General, Initial and Investor Limited Partners' Equity                                                  4,009,667
Net unrealized losses on investment securities                                                             (1,447)
                                                                                                  ---------------
   Total Partners' Equity                                                                               4,008,220
                                                                                                  ---------------
   Total Liabilities and Partners' Equity                                                         $     5,092,994
                                                                                                  ===============

</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 Six Months Ended September 30, 2005 and 2004
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                  Three Months Ended             Six Months Ended
                                                  September 30,       September 30,       September 30,       September 30,
                                                      2005                2004                2005                2004
                                                ----------------   ----------------     ---------------     ----------------
Revenue
<S>                                             <C>                <C>                  <C>                 <C>
   Investment                                   $         36,985   $            896     $        52,619     $          1,738
   Other                                                       -             51,263              16,778               94,806
                                                ----------------   ----------------     ---------------     ----------------
       Total Revenue                                      36,985             52,159              69,397               96,544
                                                ----------------   ----------------     ---------------     ----------------

Expenses:
   Asset management fees, affiliate                       47,124             63,470              94,248              117,027
   Provision for valuation of advances to
     Local Limited Partnerships                                              31,845                   -               63,690
   General and administrative
     (includes reimbursement to affiliate
     in the amounts of $98,563 and
     $241,180 in 2005 and 2004,
     respectively)                                       115,559            161,333             246,982              326,866
   Amortization                                            1,347              1,353               3,378               12,733
   Interest                                                    -              1,500                   -                3,000
                                                ----------------   ----------------     ---------------     ----------------
       Total Expense                                     164,030            259,501             344,608              523,316
                                                ----------------   ----------------     ---------------     ----------------

Loss before equity in losses of
   Local Limited Partnerships and gain
   (loss) on disposal of investments in
   Local Limited Partnerships                           (127,045)          (207,342)           (275,211)            (426,772)

Equity in losses of Local Limited
   Partnerships (Note 2)                                  (1,900)          (115,108)           (127,671)            (454,939)

Gain (loss) on disposal of investments in
   Local Limited Partnerships (Note 2)                    24,505             75,000            (416,573)              75,000
                                                ----------------   ----------------     ---------------     ----------------

Net Loss                                        $       (104,440)  $       (247,450)    $      (819,455)    $       (806,711)
                                                ================   ================     ===============     ================

Net Loss allocated:
   General Partners                             $         (1,045)  $         (2,474)    $        (8,195)    $         (8,067)
   Limited Partners                                     (103,395)          (244,976)           (811,260)            (798,644)
                                                ----------------   ----------------     ---------------     -----------------
                                                $       (104,440)  $       (247,450)    $      (819,455)    $       (806,711)
                                                ================   ================     ===============     ================

Net Loss Per Limited Partner
   Unit (100,000) Units                         $         (1.03)   $          (2.45)    $        (8.11)     $          (7.99)
                                                ===============    ================     ==============      ================


</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 Six Months Ended September 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                          Net
                                                               Initial           Investor                Unrealized
                                            General            Limited            Limited                Gains
                                           Partners            Partner           Partners                (Losses)         Total

<S>                                     <C>                <C>                <C>                         <C>        <c>
Balance of March 31, 2005               $     (827,554)    $        5,000     $    5,651,676       $            -    $    4,829,122
                                        --------------     --------------     --------------       --------------   --------------


Comprehensive Loss:
  Change in net unrealized
     gains on investment
     securities available for sale                   -                  -                  -               (1,447)          (1,447)
  Net Loss                                      (8,195)                 -           (811,260)                   -         (819,455)
                                        --------------     --------------     --------------       --------------     -------------
  Comprehensive Loss                            (8,195)                 -           (811,260)              (1,447)        (820,902)
                                        --------------     --------------     --------------       --------------     -------------

Balance at September 30, 2005           $     (835,749)    $        5,000     $    4,840,416       $       (1,447)    $   4,008,220
                                        ==============     ==============     ==============       ==============     =============
</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 Six Months Ended September 30, 2005 and 2004
                                   (Unaudited)


<TABLE>
<CAPTION>



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

<S>                                                                           <C>             <C>
Net cash used for operating activities                                        $  (1,829,403)  $      (23,411)

Net cash provided by investing activities                                         2,407,430          115,952

Net cash used for financing activates                                                     -         (101,564)
                                                                              -------------   --------------

Net increase (decrease) in cash and cash equivalents                                578,027          (9,023)

Cash and cash equivalents, beginning                                                890,729          366,997
                                                                              -------------   --------------

Cash and cash equivalents, ending                                             $   1,468,756   $      357,974
                                                                              =============   ==============

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                     $           -   $        3,000
                                                                              =============   ==============

</TABLE>


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



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


                        NOTES TO THE FINANCIAL STATEMENTS
                                   (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, 2005. 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 June 30, 2005 and 2004.

1.   Investment Securities

The Partnership's investment securities are classified as "Available for Sale"
and are carried at fair value as reported by the brokerage firms at which they
are held, with unrealized gains or losses excluded from earnings and reported as
a separate component of partner's equity.

2.   Investments in Local Limited Partnerships

The Partnership has limited partnership interests in eighteen 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 Local Limited Partnerships are sold to third parties, or upon dissolution
of the Local Limited Partnerships, proceeds will be distributed according to the
terms of each Local Limited Partnership agreement.

The following is a summary of investments in Local Limited Partnerships at
September 30, 2005:

<TABLE>
<CAPTION>


Capital contributions paid to Local Limited Partnerships and purchase
<S>                                                                                                 <C>
   price paid to withdrawing partners of Local Limited Partnerships                                 $    32,567,288

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $55,359,662)                                                                  (24,943,797)

Cumulative cash distributions received from Local Limited Partnerships                                   (2,765,104)
                                                                                                    ---------------

Investments in Local Limited Partnerships before adjustments                                              4,858,387

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                                          2,137,546

   Cumulative amortization of acquisition fees and expenses                                                (656,422)
                                                                                                    ---------------

Investments in Local Limited Partnerships before impairment allowance                                     6,339,511

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

Investments in Local Limited Partnerships                                                           $     2,901,505
                                                                                                    ===============
</TABLE>

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

                  NOTES TO THE FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


2. Investments in Local Limited Partnerships (continued)

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

The Partnership's share of the net losses of the Local Limited Partnerships for
the six months ended September 30, 2005 is $2,229,986. For the six months ended
September 30, 2005, the Partnership has not recognized $2,147,769 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. Previously unrecognized losses of $45,454 were included in
losses recognized in the six months ended September 30, 2005.

The Partnership's interests in five of its investments in Local Limited
Partnerships were sold during the six months ended September 30, 2005, resulting
in a net loss of $445,977. In addition, the Partnership received additional
proceeds from the sale of its interests in Local Limited Partnerships which
occurred during the year ended March 31, 2005, resulting in the recognition of a
net gain of $29,404.

3.   Significant Equity Investee

Two Local Limited Partnerships invested in by the Partnership represent more
than 20% of the Partnership's consolidated assets, equity or net losses. The
following financial information represents the Local Limited Partnerships'
performance for the six months ended September 30, 2005 and 2004:

                                                2005              2004
                                                -------------    -------------
         Quartermill
         Revenue                                $     975,905    $     902,691
         Net Loss                               $     (59,147)   $    (111,911)

         Riverfront
         Revenue                                $     856,239    $     854,771
         Net Loss                               $     (55,468)   $     (37,374)

4.   Reclassifications

Certain reclassifications have been made to prior year financial statements to
conform to the current year presentation.


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

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

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

This Interpretation requires consolidation by the Partnership of the Local
Limited Partnerships' assets and liabilities and results of operations if the
Partnership determined that the Local Limited Partnerships were VIEs and that
the Partnership was the "Primary Beneficiary". Minority interests may be
recorded for the Local Limited Partnerships' ownership share attributable to
other investors. Where consolidation of Local Limited Partnerships is not
required, additional financial information disclosures of Local Limited
Partnerships may be required. The Partnership has


<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)


Critical Accounting Policies (continued)

assessed the Interpretation and concluded that it is not the Primary Beneficiary
of any of the Local Limited Partnerships that meet the definition of a VIE. The
Partnership is involved with those VIEs as a non-controlling limited partner
equity holder. The Partnership is required to disclose its maximum exposure to
economic and financial statement losses as a result of its involvement with the
VIEs. The Partnership's exposure to economic and financial statement losses from
the VIEs is limited to its investment in the VIEs ($2,901,505 at September 30,
2005). The Partnership may be subject to additional losses to the extent of any
financial support that the Partnership voluntarily provides in the future.

Liquidity and Capital Resources

The Partnership had an increase in cash and cash equivalents of $578,027 for the
six months ended September 30, 2005. This increase is attributable to proceeds
received from the sales of investments in Local Limited Partnerships in the
previous year and cash distributions received from Local Limited Partnerships,
offset by cash used for operation and purchases of investment securities.

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 September 30, 2005, $2,188,259 of cash,
cash equivalents and investment securities has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,343,000 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 September 30, 2005, the Partnership has advanced
approximately $1,578,000 to Local Limited Partnerships to fund operating
deficits.

The Managing General Partner believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions. To date, the Partnership has used approximately $3,345,000 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, at September 30, 2005, the Partnership
had no contractual or other obligation to any Local Limited Partnership which
had not been paid or provided for.

Cash Distributions

No cash distributions were made during the six months ended September 30, 2005.


<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 September 30, 2005, the Partnership's operations
resulted in a net loss of $104,440 as compared to a net loss of $247,450 for the
same period in 2004. The decrease in net loss is due to a decrease in equity in
losses of Local Limited Partnerships and a decrease in provision for valuation
of advances to Local Limited Partnerships, which is partially offset by a
decrease in other income. 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 provision for
valuation of advances to Local Limited Partnerships is due to a decrease in
advances made to Local Limited Partnership during the six months ended September
30, 2005. The decrease in other income is due to a decrease in distributions
from Local Limited Partnerships with carrying values of zero.

Six Month Period

For the six months ended September 30, 2005, the Partnership's operations
resulted in a net loss of $819,455 as compared to a net loss of $806,711 for the
same period in 2004. The increase in net loss is due to an increase in loss on
sale of investments in Local Limited Partnerships and a decrease in other
income, which is offset by a decrease in equity in losses of Local Limited
Partnerships and a decrease in provision for valuation of advances to Local
Limited Partnerships. The increase in loss on sale of investments in Local
Limited Partnerships is due to the sale of five Local Limited Partnerships
during the current year. The decrease in other income is due to a decrease in
distributions from Local Limited Partnerships with carrying values of zero. 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 provision for valuation of advances to Local
Limited Partnerships is due to a decrease in advances made to Local Limited
Partnership during the six months ended September 30, 2005.

Portfolio Update

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

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 years from the
date the property is completed. Failure to do so would result in recapture of a
portion of the property's Tax Credits. Beginning in 2003 and continuing through
2006, the Compliance Period of the eighteen Properties in which the Partnership
has an interest will expire. The Managing General Partner has negotiated
agreements that will ultimately allow the Partnership to dispose of its interest
in seven Local Limited Partnerships. It is unlikely that the disposition of any
of these Local Limited Partnership interests will generate any material cash
distributions to the Partnership. Five of the Local Limited Partnerships in
which the Partnership had an investment were sold during the six months ended
September 30, 2005

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

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

On or about October 3, 2005, Boston Financial Qualified Housing Tax Credits L.P.
IV and its general partners ("BFQH IV") commenced litigation against Park in
Suffolk Superior Court, Massachusetts and requested the court to issue a
declaration that BHQH IV was not in violation of section 5.4.2 of its
partnership agreement by virtue of its periodic disposition of interests in
Local Limited Partnerships following expiration of the Properties' applicable
Compliance Period(s). On or about October 11, 2005, Park sought leave of the
court in the Missouri Action to amend its petition again and moved the court for
entry of a temporary restraining order prohibiting the Defendants from entering
into any agreement to sell, transfer or otherwise convey any interest in Local
Limited Partnerships. On October 14, 2005 the court denied Park's request.

The Defendants and New Defendants maintain that Park is not entitled to review
the alleged "books and records" requested and/or use the materials in secondary
market transactions because, among other things: (i) they are not "books and
records" of the relevant partnerships; (ii) Park does not seek to review them
for a proper purpose; and (iii) selective disclosure of the information to Park
would give it an unfair informational advantage in secondary market transactions
and may violate federal and/or state securities laws. Likewise, the Defendants
maintain that they may continue to periodically dispose of interests in Local
Limited Partnerships because, among other things, said dispositions do not
constitute the sale "at one time" of "all or substantially all of the assets of
the partnership" pursuant to Section 5.4.2 of their partnership agreement. The
Defendants and New Defendants accordingly intend on defending against all of the
aforementioned claims vigorously. These entities have not, however, formed an
opinion that an unfavorable outcome is either probable or remote. Therefore,
their counsel refrains from expressing an opinion as to the likely outcome of
the case or the range of any loss.

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

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

A majority of the Properties in which the Partnership has an interest have
stabilized operations and operate above break-even. A few Properties generate
cash flow deficits that the Local General Partners of those Properties fund
through project expense loans, subordinated loans or operating escrows. However,
some Properties have had persistent operating difficulties that could either: i)
have an adverse impact on the Partnership's liquidity; ii) result in their
foreclosure; or iii) result in the Managing General Partner deeming it
appropriate for the Partnership to dispose of its interest in the Local Limited
Partnership prior to the expiration of the Compliance Period. Also, the Managing
General Partner, in the normal course of the Partnership's business, may arrange
for the future disposition of its interest in certain Local Limited
Partnerships. The following Property discussions focus only on such Properties.

As previously reported, the Managing General Partner negotiated an agreement in
the form of a Contingent Note with an unaffiliated entity in exchange for
previously exercised Put options on five Local Limited Partnerships: Lexington,
Fulton, Eaglewood, Kirkendall Heights and Briarwood II. The Put option granted
the Partnership 50% of all future net cash receipts from such Local Limited
Partnership interests. On September 15, 2005 the Partnership received $10,415 in
exchange for the sale of the Contingent Notes, as the Managing General Partner
deemed the potential value of 50% of all future net cash receipts to be
immaterial. This transaction resulted in taxable income of $10,415, or
approximately $0.08 per Unit.

As previously reported, the Managing General Partner negotiated an agreement
with an unaffiliated entity to have the ability to transfer the Partnership's
interest in Poplar Village, located in Cumberland, Kentucky, to the unaffiliated
entity or its designee. The Managing General Partner had the right to put its
interest in the Local Limited Partnership at any time in exchange for a
Contingent Note that granted the Partnership 50% of all future net cash receipts
from the Local Limited Partnership interest. However, on September 15, 2005, the
Partnership negotiated a Put option entered into with the previously mentioned
unaffiliated third party instead. The Put option is expected to be exercised in
early 2006, effectively disposing of its interests in the Local Limited
Partnership. 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, will retain the entire amount of net proceeds from
this sale in Reserves. The pending transfer of the Partnership interest will
result in taxable income currently projected to be approximately $340,000, or $3
per Unit.


<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)

As previously reported, Waterfront and Shoreline, both located in Buffalo, New
York, continue to have operating deficits as a result of a soft rental market,
low occupancy and deferred maintenance, which impacts the marketability of the
developments. The mortgage loans on both Properties are payable only out of
available cash flow, and neither Property has made mortgage payments in several
years. The Managing General Partner and the Local General Partner commenced
discussions regarding the options available to improve operations at, or dispose
of, the Properties. An agreement was reached whereby the Managing General
Partner would allow the Local General Partner to transfer its Local General
Partner interest to a developer that will resyndicate the Properties. In return,
the Partnership obtained both a put option allowing the Partnership to transfer
its interest in the 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 Properties prior to the end of the Compliance Period.
These transfers of the Local General Partner interests occurred during April
2005. The transfer of the Partnership's interest is currently expected to occur
in 2006 and 2007 for Shoreline and Waterfront, respectively.

As previously reported, increased competition for Georgetown II, located in
Georgetown, Delaware, has negatively impacted the Property's operations.
Although the Property has maintained a high level of occupancy, rental rates
have stagnated while expenses have continued to increase. In an effort to reduce
fixed expenses to improve cash flow, the Local General Partner refinanced the
Property's first mortgage during the first quarter of 2004, reducing the
interest rate from 8% to 6%, which significantly improved the Property's future
operating performance. The Property operated slightly above breakeven during
2004. The Property no longer generates Tax Credits and the Compliance Period
expired on December 31, 2004. In 2003, the non-profit affiliate of the state
housing finance agency that holds the Property's long-term ground lease offered
to transfer the land at little cost to the Partnership. The Managing General
Partner gave its consent to the transfer and, 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 put agreement gives the Partnership the right to
transfer its interest to the Local General Partner for a nominal price.

As previously reported, operations at Westwood Manor, located in Flint,
Michigan, have suffered in recent quarters. Poor site management caused deferred
maintenance and curb appeal issues. The Partnership also advanced $50,000 from
Reserves to address the deferred maintenance issues at the Property during 2001.
The advance was to be repaid through operations, if available, with the Local
General Partner obligated to pay back 50% of the remaining balance should the
entire amount of the advance not be repaid by December 31, 2001. The Property
did not generate sufficient cash from operations to repay any of the
Partnership's advances. The Partnership has not yet made a demand from the Local
General Partner to meet his obligation to repay 50% of the advance. However, the
Managing General Partner and the Local General Partner have reached agreement on
an exit strategy on this Local Limited Partnership. The Local General Partner
received approval for a refinancing of the Property from the U.S. Department of
Housing and Urban Development ("HUD") and the refinanced mortgage was closed on
July 31, 2003. The Managing General Partner, in providing its approval of the
refinancing, received agreement from the Local General Partner to a put option
whereby the Partnership can dispose of its interest in the Local Limited
Partnership any time after December 31, 2003, when the Compliance Period
expired. The Managing General Partner currently expects to dispose of its
interest in this Local Limited Partnership during 2006. Part of the agreement
included repayment of the Partnership's $50,000 loan, the repayment of which
would be waived by the Managing General Partner if the Local General Partner is
successful in obtaining HUD approval of the Transfer of Physical Asset
application.


<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)

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

As previously reported, due to operating deficits in 2002 and 2003 at Tucson
Trails I and Tucson Trails II, located in Madison, Wisconsin, the Local General
Partner proposed a refinancing of the Properties. At the same time, the same
Local General Partner proposed a refinancing of the first mortgages of two other
Properties, Elver Park II and Elver Park III, also located in Madison,
Wisconsin, which the Partnership had an interest but had enjoyed stable
operations for the last several quarters. The Managing General Partner agreed to
the refinancing of all four Properties, and all four Properties closed on their
new first mortgages in November 2003 with the Partnership receiving a total of
$954,098 in cash from refinancing proceeds. The Managing General Partner, in
accordance with and as permitted by the Partnership Agreement, retained the
entire amount of net proceeds in Reserves. The Managing General Partner and the
Local General Partner also entered into call and put options whereby the Local
General Partner received call options at the end of the Compliance Period for
the Properties for a nominal amount. If the calls were not exercised within a
six month period, the Partnership had the option to put its interests to the
Local General Partner. The expiration of the Compliance Periods was no later
than December 31, 2004 for any of the four Properties. Effective May 31, 2005,
the Partnership's interests in all four Local Limited Partnerships were
transferred to the Local General Partner. The Partnership no longer has an
interest in these four Local Limited Partnerships. These sales resulted in
taxable income projected to be approximately $1,320,000, or $13 per Unit.

As previously reported, Fox Run Housing, located in Victoria, Texas, experienced
operating deficits in 2003 and the first half of 2004 due to decreased revenues
and increased expenses. The Property also suffered from deferred maintenance and
failed two consecutive HUD physical inspections in February and July 2004. In
addition, the Property defaulted on its HUD-insured mortgage loan in December
2003. Since the Property generated its last Tax Credits in 1999 and in order to
minimize risk to the Partnership, the Managing General Partner decided in late
August 2004 to transfer the Partnership's interest to an unaffiliated third
party in exchange for a Contingent Note that grants the Partnership 50% of all
future net cash receipts from such Local Limited Partnership interest. On
September 15, 2005, the Partnership, in exchange for the sale of the previously
mentioned Contingent Note, received $2,083 from the previously mentioned
unaffiliated third party. The Managing General Partner, in accordance with and
as permitted by the Partnership Agreement, will retain the entire amount of net
proceeds from this sale in Reserves. The Partnership no longer has an interest
in this Local Limited Partnership, as HUD approved the transfer effective July
15, 2005. This sale resulted in taxable income projected to be approximately $1
million, or $10 per Unit.

As previously reported, in 2003 the Local General Partner of El Jardin, located
in Davie, Florida, expressed its desire to sell the Property to a third party
buyer. In April 2003, a realtor was hired to appraise the Property. In September
2004, the Local General Partner received an offer from a third party buyer that
was subsequently higher than the 2003 appraisal as a result of an updated market
valuation. On March 8, 2005, the Property was sold, and 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)

Partnership received approximately $2.9 million in sales proceeds during the
nine months ended September 30, 2005. This sale resulted in taxable income of
approximately $3.6 million, or $36 per Unit. The Managing General Partner, in
accordance with and as permitted by the Partnership Agreement, retained the
entire amount of net proceeds in Reserves. The Partnership no longer has an
interest in this Local Limited Partnership.

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 interests 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, will retain the entire amount of net proceeds from this transfer in
Reserves. This transfer of Partnership interest will result in a 2005 taxable
income currently projected to be approximately $928,000, or $9 per Unit. Upon
HUD's approval to a Transfer of Physical Assets application the Partnership will
then have the ability to finalize the transfer of its interest in this Local
Limited Partnership to the third party.

The Managing General Partner has 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 Properties. However, approval to a Modified
Transfer of Physical Assets application is required from HUD that may delay the
actual transfer until early 2006. This pending transfer is currently estimated
to result in a cash distribution to the Partnership of approximately $1,500,000,
or $15 per Unit, which would be retained in Reserves in accordance with and as
permitted by the Partnership Agreement. The transfer of interest would result in
taxable income currently projected to be approximately $3,500,000, or $35 per
Unit.








<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 September 30, 2005


<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: November 14, 2005                BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                        CREDITS L.P. III

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




                                              /s/Jenny Netzer
                                              Jenny Netzer
                                              Executive Vice President
                                              MMA Financial, LLC