November 12, 1999



Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312

Re:     Boston Financial Qualified Housing Tax Credits L.P.  III
        Report on Form 10-QSB for Quarter Ended September 30, 1999
        File Number 01-18462




Gentlemen:

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-Q2.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           September 30, 1999
                                  ----------------------------------


                                       OR

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

For the transition period from                to



For Quarter Ended     September 30, 1999      Commission file number 01-18462
                     ---------------------


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

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


   101 Arch Street, Boston, Massachusetts                        02110-1106
    (Address of principal executive offices)                     (Zip Code)


Registrant's telephone number, including area code     (617)439-3911
                                                     ----------------------


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


<PAGE>


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

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


<S>                                                                                         <C>
PART I - FINANCIAL INFORMATION                                                              Page No.
------------------------------                                                              --------

Item 1.  Combined Financial Statements

         Combined Balance Sheet - September 30, 1999 (Unaudited)                              1

         Combined Statements of Operations (Unaudited) - For the Three and Six
           Months Ended September 30, 1999 and 1998                                           2

         Combined Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Six Months Ended September 30, 1999                          3

         Combined Statements of Cash Flows (Unaudited) - For the
           Six Months Ended September 30, 1999 and 1998                                       4

         Notes to the Combined Financial Statements (Unaudited)                               5

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                               10

PART II - OTHER INFORMATION

Items 1-6                                                                                    14

SIGNATURE                                                                                    15
</TABLE>



<PAGE>


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

                             COMBINED BALANCE SHEET
                               September 30, 1999
                                   (Unaudited)


<TABLE>
<CAPTION>

Assets

<S>                                                                                              <C>
Cash and cash equivalents                                                                        $     596,054

Marketable securities, at fair value                                                                   422,706
Investments in Local Limited Partnerships, net
   of reserve for valuation of $2,017,192 (Note 1)                                                  13,932,614
Accounts receivable, net                                                                               108,868

Interest receivable                                                                                     13,276
Prepaid expenses                                                                                        29,466
Tenant security deposits                                                                                81,897
Replacement reserves                                                                                   264,161
Operating reserves                                                                                      41,285
Rental property at cost, net of accumulated
   depreciation and reserve for valuation                                                           12,910,834
Deferred acquisition fees escrow                                                                       112,500
Deferred expenses, net of $147,949 accumulated amortization                                            205,843
Other assets                                                                                           264,108
                                                                                                 -------------
     Total Assets                                                                                $  28,983,612
                                                                                                 =============

Liabilities and Partners' Equity

Accounts payable to affiliates                                                                   $   2,163,680
Accounts payable and accrued expenses                                                                  600,154
Interest payable                                                                                       330,754
Note payable, affiliate                                                                                514,968
Security deposits payable                                                                               78,179
Deferred acquisition fees payable                                                                      112,500
Advances from affiliate                                                                                200,000
Mortgage notes payable                                                                               7,822,709
                                                                                                 -------------
     Total Liabilities                                                                              11,822,944

Minority interest in Local Limited Partnerships                                                        882,337
                                                                                                 -------------

General, Initial and Investor Limited Partners' Equity                                              16,280,001
Net unrealized losses on marketable securities                                                          (1,670)
     Total Partners' Equity                                                                         16,278,331
                                                                                                 -------------
     Total Liabilities and Partners' Equity                                                      $  28,983,612
                                                                                                 =============

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

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

                        COMBINED STATEMENTS OF OPERATIONS
                                 (Unaudited)
        For the Three and Six Months Ended September 30, 1999 and 1998

<TABLE>
<CAPTION>

                                                        Three Months Ended                  Six Months Ended
                                                  September 30,     September 30,     September 30,    September 30,
                                                      1999              1998              1999             1998
                                                 --------------   ---------------   --------------     ------------
Revenue:
<S>                                              <C>              <C>               <C>                <C>
   Rental                                        $     607,009    $      620,267    $   1,220,362      $  1,200,173
   Investment                                           11,307             9,280           23,536            17,886
   Other                                                25,287            35,747           77,044            81,263
                                                 -------------    --------------    -------------      ------------
       Total Revenue                                   643,603           665,294        1,320,942         1,299,322
                                                 -------------    --------------    -------------      ------------

Expenses:
   Asset management fees, related party                 97,540            95,938          189,355           191,876
   General and administrative (includes
     reimbursements to affiliates of $67,024
     and $65,076 in 1999 and 1998, respectively)       (16,084)           83,940           87,358           197,012
   Bad debt                                            178,637           123,785           97,998            96,904
   Provision for valuation of investment in
     Local Limited Partnership                         382,192                 -          382,192                -
   Property management fees                             28,475            29,339           58,158            79,493
   Rental operations, exclusive of depreciation        393,475           352,194          794,656           697,349
   Interest                                            185,936           204,152          392,943           394,574
   Depreciation                                        155,359           155,339          310,698           321,531
   Amortization                                         43,088            44,257           84,264            88,560
                                                 -------------    --------------    -------------      ------------
Total Expenses                                       1,448,618         1,088,944        2,397,622         2,067,299
                                                 -------------    --------------    -------------      ------------

Loss before equity in losses of Local Limited
   Partnerships,  minority interest, and loss
   on liquidation of interest in Local Limited
   Partnership                                        (805,015)         (423,650)      (1,076,680)         (767,977)

Equity in losses of Local Limited Partnerships
   (Note 1)                                           (537,859)         (711,318)      (1,092,500)       (1,559,340)

Minority interest in (income) losses of
   Local Limited Partnerships                            2,233            (4,469)           4,390            (2,347)

Loss on liquidation of interest in Local
   Limited Partnership (Note 2)                              -                 -         (193,883)                -
                                                 -------------    --------------    -------------      ------------

Loss before gain on transfer                        (1,340,641)       (1,139,437)      (2,358,673)       (2,329,664)

Gain on transfer of assets                                   -           640,183                -           640,183
                                                 -------------    --------------    -------------      ------------

Net Loss                                         $  (1,340,641)   $     (499,254)   $  (2,358,673)     $ (1,689,481)
                                                 =============    ==============    =============      ============
Net Loss allocated:
   To General Partners                           $     (13,407)   $       (4,993)   $     (23,587)     $    (16,895)
   To Limited Partners                              (1,327,234)         (494,261)      (2,335,086)       (1,672,586)
                                                 -------------    --------------    -------------      ------------
                                                 $  (1,340,641)   $     (499,254)   $  (2,358,673)     $ (1,689,481)
                                                 =============    ==============    =============      ============
Net Loss before gain on transfer per
   Limited Partnership Unit (100,000 Units)      $      (13.27)   $       (11.28)   $      (23.35)     $     (23.06)
                                                 =============    ==============    =============      ============
Gain on transfer per Limited Partnership
   Unit (100,000 Units)                          $           -    $         6.34    $           -      $       6.34
                                                 =============    ==============    =============      ============
Net Loss per Limited Partnership Unit
   (100,00 Units)                                $      (13.27)   $        (4.94)   $      (23.35)     $     (16.72)
                                                 =============    ==============    =============      ============


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

</TABLE>
<PAGE>

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

              STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                                   (Unaudited)
                   For the Six Months Ended September 30, 1999


<TABLE>
<CAPTION>


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

<S>                                   <C>              <C>            <C>             <C>          <C>
Balance at March 31, 1999             $  (689,458)     $  5,000       $ 19,323,132    $      237   $  18,638,911
                                      -----------      --------       ------------    ----------   -------------

Comprehensive Loss:
   Net change in net unrealized
     gains on marketable securities
     available for sale                         -             -                  -        (1,907)         (1,907)
   Net Loss                               (23,587)            -         (2,335,086)            -      (2,358,673)
                                      -----------      --------       ------------    ----------   -------------
Comprehensive Loss                        (23,587)            -         (2,335,086)       (1,907)     (2,360,580)
                                      -----------      --------       ------------    ----------   -------------

Balance at September 30, 1999         $  (713,045)     $  5,000       $ 16,988,046    $   (1,670)  $  16,278,331
                                      ===========      ========       ============    ==========   =============

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

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

                        COMBINED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
              For the Six Months Ended September 30, 1999 and 1998


<TABLE>
<CAPTION>

                                                                                  1999                1998
                                                                             -------------       -------------

<S>                                                                          <C>                 <C>
Net cash used for operating activities                                       $    (160,335)      $    (106,273)

Net cash provided by investing activities                                          325,442             364,413

Net cash provided by (used for) financing activities                                (9,418)             30,121
                                                                             -------------       -------------

Net increase in cash and cash equivalents                                          155,689             288,261

Cash and cash equivalents, beginning                                               440,365             311,867
                                                                             -------------       -------------

Cash and cash equivalents, ending                                            $     596,054       $     600,128
                                                                             =============       =============

Supplemental Disclosure:
   Cash paid for interest                                                    $     395,077       $     376,784
                                                                             =============       =============
The accompanying notes are an integral part of these combined financial statements.

</TABLE>

<PAGE>

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

                     NOTES TO COMBINED 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  generally  accepted  accounting
principles.  These  statements  should be read in conjunction with the financial
statements and notes thereto included with the  Partnership's  Form 10-K for the
year ended  March 31,  1999.  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 has elected to report results of the Local Limited
Partnerships  on a 90 day lag  basis,  because  the Local  Limited  Partnerships
report  their  results on a calendar  year  basis.  Accordingly,  the  financial
information  of  the  Local  Limited   Partnerships  that  is  included  in  the
accompanying  financial  statements  is as of June 30,  1999 and  1998.  Certain
reclassifications have been made to prior period financial statements to conform
to current period classifications.

1.   Investments in Local Limited Partnerships

The  Partnership  uses the equity  method to  account  for its  limited  partner
interests in  forty-nine  Local  Limited  Partnerships  (excluding  the Combined
Entities) which own and operate  multi-family  housing complexes,  most of which
are government-assisted.  The Partnership,  as Investor Limited Partner pursuant
to the various  Local Limited  Partnership  Agreements,  which  contain  certain
operating  and  distribution  restrictions,  has  acquired a 99% interest in the
profits, losses, tax credits and cash flows from operations of each of the Local
Limited  Partnerships,  except for Granite,  Colony Apartments and Harbour View,
where  the   Partnership's   ownership   interests  are  97%,  49%  and  48.96%,
respectively.  Upon dissolution,  proceeds will be distributed according to each
respective partnership agreement.
<TABLE>
<CAPTION>

The  following is a summary of  Investments  in Local  Limited  Partnerships  at
September 30, 1999, excluding the Combined Entities:

Capital contributions to Local Limited Partnerships and purchase
<S>                                                                                            <C>
    price paid to withdrawing partners of Local Limited Partnerships                           $  59,419,634

Cumulative equity in losses of Local Limited Partnerships (net of
   cumulative unrecognized losses of $48,463,506)                                                (44,600,670)

Cumulative cash distributions received from Local Limited Partnerships                            (2,850,076)
                                                                                               -------------

Investments in Local Limited Partnerships before adjustment                                       11,968,888

Excess of investment costs over the underlying net assets acquired:

   Acquisition fees and expenses                                                                   5,335,849

   Accumulated amortization of acquisition fees and expenses                                      (1,354,931)
                                                                                               -------------

Investments in Local Limited Partnerships                                                         15,949,806

Reserve for valuation of investments in Local Limited Partnerships                                (2,017,192)
                                                                                               -------------
                                                                                               $  13,932,614
</TABLE>


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

               NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


1.   Investments in Local Limited Partnerships (continued)

The  Partnership's  share of the net losses of the Local  Limited  Partnerships,
excluding  the Combined  Entities,  for the six months ended  September 30, 1999
totaled $2,747,032. For the six months ended September 30, 1999, the Partnership
has not  recognized  $1,660,616  of equity in losses  relating to certain  Local
Limited  Partnerships  in which  cumulative  equity in losses and  distributions
exceeded its total investments in these Local Limited Partnerships.

2.   Liquidation of Interests in Local Limited Partnerships

For  financial  reporting  purposes,  loss on  liquidation  of interest in Local
Limited Partnership of $193,883 was recognized in the six months ended September
30, 1999 as a result of the redemption of Boulevard Commons II.



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

3.   Supplemental Combining Schedules
<TABLE>
<CAPTION>

                                 Balance Sheets

                                            Boston Financial
                                             Qualified Housing      Combined
                                                 Tax Credits         Entities                          Combined
                                                L.P. III (A)           (B)        Eliminations           (A)
Assets
<S>                                            <C>              <C>               <C>              <C>
Cash and cash equivalents                      $     297,169    $     147,403     $     151,482    $     596,054
Marketable securities, at fair value                 422,706                -                 -          422,706
Investments in Local Limited
   Partnerships, net                              16,012,790                -        (2,080,176)      13,932,614
Accounts receivable, net                                   -          108,868                 -          108,868
Interest receivable                                   13,276                -                 -           13,276
Notes receivable                                   1,389,038                -        (1,389,038)               -
Prepaid expenses                                           -           29,466                 -           29,466
Tenant security deposits                                   -           81,897                 -           81,897
Replacement reserves                                       -          264,161                 -          264,161
Operating reserves                                         -           41,285                 -           41,285
Rental property at cost, net of
   accumulated depreciation and
   reserve for valuation                                   -       12,143,005           767,829       12,910,834
Deferred acquisition fees escrow                     112,500                -                 -          112,500
Deferred expenses, net                                     -          205,843                 -          205,843
Other assets                                               -          264,108                 -          264,108
                                               -------------    -------------     -------------    -------------
     Total Assets                              $  18,247,479    $  13,286,036     $  (2,549,903)   $  28,983,612
                                               =============    =============     =============    =============

Liabilities and Partners' Equity
Accounts payable to affiliates                 $   2,149,886    $     930,798     $    (917,004)   $   2,163,680
Accounts payable and accrued
   expenses                                          260,280          339,874                 -          600,154
Interest payable                                           -          330,754                 -          330,754
Note payable, affiliate                              514,968                -                 -          514,968
Security deposits payable                                  -           78,179                 -           78,179
Deferred acquisition fees payable                    112,500                -                 -          112,500
Advances from affiliate                                    -          200,000                 -          200,000
Mortgage notes payable                                     -        9,211,747        (1,389,038)       7,822,709
                                               -------------    -------------     -------------    -------------
     Total Liabilities                             3,037,634       11,091,352        (2,306,042)      11,822,944
                                               -------------    -------------     -------------    -------------

Minority interest in Local
   Limited Partnerships                                    -                -           882,337          882,337
                                               -------------    -------------     -------------    -------------

General, Initial and Investor Limited
   Partners' Equity                               15,211,515        2,194,684        (1,126,198)      16,280,001
Net unrealized losses on marketable
   securities                                         (1,670)               -                 -           (1,670)
                                               -------------    -------------     -------------    -------------
     Total Partners' Equity                       15,209,845        2,194,684        (1,126,198)      16,278,331
                                               -------------    -------------     -------------    -------------
     Total Liabilities and
       Partners' Equity                        $  18,247,479    $  13,286,036     $  (2,549,903)   $  28,983,612
                                               =============    =============     =============    =============
</TABLE>


(A) As of September 30, 1999.
(B) As of June 30, 1999.


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

               NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)

3.   Supplemental Combining Schedules (continued)

<TABLE>
<CAPTION>

                                                   Statements of Operations
                                         For the Six Months Ended September 30, 1999

                                               Boston Financial
                                              Qualified Housing     Combined
                                                 Tax Credits         Entities                          Combined
                                                L.P. III(A)            (B)         Eliminations             (A)
Revenue:
<S>                                             <C>             <C>               <C>              <C>
   Rental                                       $         -     $   1,220,362     $           -    $ 1,220,362
   Investment                                         20,760            2,776                 -          23,536
   Other                                              49,993           47,220           (20,169)         77,044
                                                ------------    -------------     -------------    ------------
     Total Revenue                                    70,753        1,270,358           (20,169)      1,320,942
                                                ------------    -------------     -------------    ------------

Expenses:
   Asset management fees, related party              189,355                -                 -          189,355
   General and administrative                        170,426                -           (83,068)          87,358
   Bad debt                                        1,112,848                -        (1,014,850)          97,998
   Provision for valuation of investment in
     Local Limited Partnership                       382,192                -                 -          382,192
   Property management fees                                -           58,158                 -           58,158
   Rental operations, exclusive of depreciation            -          765,224            29,432          794,656
   Interest                                            3,000          410,112           (20,169)         392,943

   Depreciation                                            -          310,698                 -          310,698
   Amortization                                       70,691           13,573                 -           84,264
                                                ------------    -------------     -------------    -------------
     Total Expenses                                1,928,512        1,557,765        (1,088,655)       2,397,622
                                                ------------    -------------     -------------    -------------

Loss before equity in losses of Local
   Limited Partnerships, minority
   interest and loss on liquidation of interest
   in Local Limited Partnership                   (1,857,759)        (287,407)        1,068,486       (1,076,680)

Equity in losses of Local Limited
   Partnerships                                   (1,375,517)               -           283,017       (1,092,500)

Minority interest in losses of
   Local Limited Partnerships                              -                -             4,390            4,390

Loss on liquidation of interest in Local
   Limited Partnership                              (193,883)               -                 -         (193,883)
                                                ------------    -------------     -------------    -------------

Net Loss                                        $ (3,427,159)   $    (287,407)    $   1,355,893    $  (2,358,673)
                                                ============    =============     =============    =============
</TABLE>

(A) For the six months ended  September  30, 1999.
(B) For the six months ended June 30, 1999.


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

               NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)

3.   Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>


                            Statements of Cash Flows

                                              Boston Financial
                                             Qualified Housing      Combined
                                                 Tax Credits         Entities                          Combined
                                                L.P. III (A)           (B)        Eliminations            (A)

<S>                                            <C>              <C>               <C>              <C>
Net cash used for operating activities         $    (123,001)   $      (90,970)   $      53,636    $    (160,335)

Net cash provided by (used for) investing
   activities                                         81,177           (23,217)         267,482          325,442

Net cash provided by (used for) financing
   activities                                              -           160,218         (169,636)          (9,418)
                                               -------------    --------------    -------------    -------------

Net increase (decrease) in cash
   and cash equivalents                              (41,824)           46,031          151,482          155,689

Cash and cash equivalents, beginning                 338,993           101,372                -          440,365
                                               -------------    --------------    -------------    -------------

Cash and cash equivalents, ending              $     297,169    $      147,403    $     151,482    $     596,054
                                               =============    ==============    =============    =============

</TABLE>

(A) For the six months ended  September  30, 1999.
(B) For the six months ended June 30, 1999.





<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 their 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,  interest rates and unanticipated  delays or expenses on the
part of the Partnership and its suppliers in achieving year 2000 compliance.

Liquidity and Capital Resources

At September 30, 1999, the  Partnership,  including the Combined  Entities,  had
cash and cash equivalents of $596,054 as compared to $440,365 at March 31, 1999.
The increase is primarily attributable to cash distributions received from Local
Limited  Partnerships  and  proceeds  from sales and  maturities  of  marketable
securities.  The  increase  is  partially  offset by cash  used for  operations,
purchases of marketable securities and additions to rental property.

The  Managing  General  Partner  initially  designated  3% of Gross  Proceeds as
Reserves.  The  Reserves,  as  defined  in  the  Partnership   Agreement,   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  September  30,  1993,  the  Managing
General  Partner  decided  to  increase  the  Reserve  level  to  3.75%.   Funds
approximating  $196,000 have been  withdrawn  from the Reserves to pay legal and
other costs. Additionally, professional fees relating to various property issues
totaling  approximately  $1,757,000  have been paid from  Reserves.  This amount
includes approximately  $1,313,000 for the Texas Partnerships.  To date, Reserve
funds in the  amount  of  approximately  $434,000  have  also  been used to make
additional capital  contributions to three Local Limited  Partnerships,  and the
Partnership has paid approximately  $1,038,000 (net of paydowns) to purchase the
mortgage of a Local  Limited  Partnership.  To date,  the  Partnership  has used
approximately  $2,169,000 of operating funds to replenish Reserves. At September
30,  1999,  approximately  $677,000 of cash,  cash  equivalents  and  marketable
securities  has  been  designated  as  Reserves.  Reserves  may be  used to fund
Partnership  operating  deficits,  if the Managing General Partner deems funding
appropriate. If Reserves are not adequate to cover the Partnership's operations,
the Partnership will seek other financing sources including, but not limited to,
the  deferral of Asset  Management  Fees paid to an  affiliate  of the  Managing
General  Partner or working with Local  Limited  Partnerships  to increase  cash
distributions.

In the  event a Local  Limited  Partnership  encounters  operating  difficulties
requiring  additional funds, the Partnership might deem it in its best interests
to provide such funds, voluntarily, in order to protect its investment. To date,
in addition to the $1,313,000  noted above,  the  Partnership  has also advanced
approximately  $594,000 to the Texas  Partnerships  and $1,223,000 to four other
Local Limited Partnerships to fund operating deficits.

Since the  Partnership  invests as a limited  partner,  the  Partnership  has no
contractual  duty to  provide  additional  funds to Local  Limited  Partnerships
beyond its specified  investment.  Thus, at September 30, 1999, 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, 1999.

<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

For the six months ended September 30, 1999,  Partnership operations resulted in
a net loss of  $2,358,673,  as compared to a net loss of $1,689,481 for the same
period  in 1998.  The  increase  in net  loss is  primarily  attributable  to an
increase in loss on liquidation due to the transfer of Boulevard  Commons II and
the  reserve  for  Boulevard  Commons  IIA.  The  increase  in net  loss is also
attributable  to a gain on transfer of Willowick in the quarter ended  September
30, 1998.  These changes are partially  offset by a decrease in equity in losses
of Local Limited  Partnership's  due to decreases in general and  administrative
expenses, interest, depreciation, and amortization expenses.

Property Discussions

Many of the 53 Local Limited  Partnerships in which the Partnership has invested
have stable operations and are operating satisfactorily.  Several properties are
experiencing operating difficulties and are generating cash flow deficits due to
a variety  of  reasons.  In most  cases,  the Local  General  Partners  of these
properties  are  funding  the  deficits   through   project  expense  loans  and
subordinated  loans or  payments  from  escrows.  In  instances  where the Local
General  Partners'  obligations to fund deficits have expired or otherwise,  the
Managing  General  Partner is working with the Local General Partner to increase
operating income, reduce expenses or refinance the debt at lower interest rates.

Boulevard Commons II and IIA, located in Chicago,  Illinois, and both having the
same Local General Partner have been experiencing  operating deficits.  Expenses
have increased due to increasing maintenance, capital needs, security issues and
high turnover at the property.  At Boulevard  Commons IIA, the Managing  General
Partner has been in  negotiations  with the Local  General  Partner to develop a
plan  that will  ultimately  transfer  ownership  of the  property  to the Local
General Partner. The plan includes provisions to minimize the risk of recapture.
Effective  January 1, 1999, the  Partnership  redeemed its interest in Boulevard
Commons II to the Local Limited Partnership. The redemption of the Partnership's
interest avoids a possible  recapture event.  However,  the redemption may cause
investors to have minimal taxable gain or loss for the 1999 tax year,  depending
upon the tax basis of the property.

As previously  reported,  the Managing  General Partner has been in negotiations
with the Local General Partner regarding Boulevard Commons IIA to develop a plan
that will  ultimately  transfer  ownership of the property to the Local  General
Partner and  minimize  the risk of  recapture.  Effective  January 2, 1999,  the
Managing General Partner  consummated the transfer of 49.5% of the Partnership's
capital and profits in the properties to the Local General Partner. The Managing
General Partner has the right to transfer the Partnership's  remaining  interest
in the  property  to the  Local  General  Partner  any time  after  one year has
elapsed.  The  Partnership  will retain its full share of tax credits until such
time as the remaining interest is put to the Local General Partner. In addition,
the Local General Partner has the right to call the remaining interest after the
tax credit period has expired.

Breckenridge  Creste,  located in Duluth,  Georgia,  is  experiencing  operating
deficits  as a result of higher  vacancies  during the  summer of 1998.  However
occupancy for the last two quarters has been in the mid 90% range.  The Managing
General  Partner is working with  property  management  to review  completion of
needed capital improvements and to review the revised marketing strategy.

Columbia  Townhouses,   located  in  Burlington,  Iowa,  has  been  experiencing
operating deficits due to consistent  increases in vacancy. As of June 30, 1999,
occupancy  was 96%. The Local  General  Partner,  Managing  General  Partner and
management  agent have been working  together to review the marketing,  security
and long-term strategy for this property. In addition, the Local General Partner
is in  negotiations  with the lender about the  possibility of  refinancing  the
mortgage.  Effective  September  1999, the City of Burlington  acquired  through
eminent domain, one of the buildings  comprising  Columbia  Townhomes.  The City
acquired the building for the purpose of allowing

<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)

access to a contemplated Walgreens development.  For tax purposes, the taking of
one  building  by  eminent  domain  will  result in both  Section  1231 Gain and
cancellation  of  indebtedness  income.  In  addition,  there will be tax credit
recapture of  approximately  $1.40 per unit for the 1999 tax year.  The Managing
General  Partner  continues to work with the Local General Partner in monitoring
this property and the outcome of the refinancing.

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
institutional  buyer.  The Managing  General  Partner and Local General  Partner
continue  to  participate  in  workout  discussions  with  the new  lender.  The
Partnership's  ability to retain its interest in the property will depend on the
ability of the Local General Partner and  Partnership  affiliates to negotiate a
satisfactory workout agreement with the new lender. However, if the negotiations
are not  successful,  it is possible  that the  Partnership  will not be able to
retain its interest in the property through 1999. A foreclosure  would result in
recapture of credits for  investors,  the  allocation  of taxable  income to the
Partnership and loss of future benefits associated with this property. Occupancy
for this property as of June 30, 1999 was 93%.

As previously reported, a refinancing  application was submitted for Kyle Hotel,
located in Temple,  Texas,  in December  1997.  The  potential  lender  needs to
approve  several issues before the  application  will be approved.  The Managing
General  Partner is still  monitoring the progress of the  application  approval
process.

Pleasant  Plaza  located in  Malden,  Massachusetts,  as well as 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
Operating  Deficit Loans.  Properties  unable to make full debt service payments
were declared in default by MHFA. The Managing General Partner joined a group of
SHARP property  owners called the  responsible  SHARP Owners,  Inc. (RSO) and is
negotiating with MHFA and the Local General Partners of Pleasant Plaza and South
Holyoke to find a solution to the problems  that will result from the  withdrawn
subsidies.  Given  existing  operating  deficits  and the  dependence  on  these
subsidies  by Pleasant  Plaza and South  Holyoke  House,  it is likely that both
properties  will default on their mortgage  obligations  in the near future.  On
September 16, 1998, the Partnership 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 and in its
early  stages,  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.

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.  Shoreline  was approved  for the 1998 New Approach  Anti-Drug
Grant.  The Grant was issued in February  1999 and will be used to support  drug
prevention,  educational  programs and increased  security on the property.  The
Management Agent has applied for consideration for a Project Improvement Program
(PIP)  and  applied  for a Safe  Neighborhood  Grant  for  both  Waterfront  and
Shoreline.  At this  point,  deficits  continue  to be funded by the  Management
Agent.  The  viability of the  properties  depends upon funding  deficits  until
receipt of the grants. Both properties  currently carry cash flow mortgages with
New York State.  The Managing  General Partner is working closely with the Local
General Partner to develop a plan that will address these concerns.


<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)

Willow Lake,  located in Kansas, is experiencing  operating  difficulties due to
soft rental market  conditions.  As previously  reported,  the Managing  General
Partner negotiated a nine year extension to the original workout agreement.  The
nine-year  extension  will expire on May 31,  2001.  In  addition,  the Managing
General Partner is working with the Local General Partner to negotiate permanent
debt service relief, increase rents and monitor property expenses.

Impact of Year 2000

The Managing  General  Partner's  plan to resolve year 2000 issues  involves the
following four phases: assessment,  remediation, testing and implementation.  To
date,  the Managing  General  Partner has fully  completed an  assessment of all
information  systems that may not be operative  subsequent to 1999 and has begun
the remediation,  testing and implementation phase on both hardware and software
systems.  Because the hardware and software  systems of both the Partnership and
Local Limited  Partnerships are generally the  responsibility of obligated third
parties,  the plan primarily  involves  ongoing  discussions  with and obtaining
written  assurances from these third parties that pertinent systems will be 2000
compliant.   In  addition,   neither  the  Partnership  nor  the  Local  Limited
Partnerships are incurring significant  additional costs since such expenses are
principally  covered under service contracts with vendors.  As of November 1999,
the General Partner is in the final stages of its Year 2000 remediation plan and
believes all major  systems are  compliant;  any systems still being updated are
not considered significant to the Partnership's operations. However, despite the
likelihood that all significant  year 2000 issues are expected to be resolved in
a timely manner,  the Managing General Partner has no means of ensuring that all
systems of outside vendors or other entities that impact operations will be 2000
compliant.  The Managing  General Partner does not believe that the inability of
third  parties to address  their year 2000 issues in a timely manner will have a
material impact on the Partnership.  However,  the effect of  non-compliance  by
third parties is not readily determinable.

Management has also evaluated a worst case scenario  projection  with respect to
the year 2000 and  expects  any  resulting  disruption  of either  the  Managing
General Partner's activities or any Local Limited Partnership's operations to be
short-term  inconveniences.  Such  problems,  however,  are not  likely to fully
impede the ability to carry out necessary duties of the  Partnership.  Moreover,
because  expected  problems  under a worst  case  scenario  are not  extensively
detrimental,   and  because  the  likelihood  that  all  systems  affecting  the
Partnership  will be compliant  before 2000,  the Managing  General  Partner has
determined  that a formal  contingency  plan that  responds to  material  system
failures is not necessary.

Other Development

Lend Lease Real Estate Investments,  Inc., ("Lend Lease") the U.S. subsidiary of
Lend Lease Corporation and the leading U.S.  institutional  real estate advisor,
as ranked by assets under management,  announced on July 29, 1999 it had reached
a memorandum  of  understanding  to acquire The Boston  Financial  Group Limited
Partnership  ("Boston  Financial").  Lend Lease closed the acquisition of Boston
Financial on November 3, 1999.

Headquartered  in New York and  Atlanta,  Lend Lease  Corporation  has  regional
offices in 12 cities  nationwide.  The company ranks as the leading U.S. manager
of tax-exempt assets invested in real estate. Lend Lease is a subsidiary of Lend
Lease  Corporation,  an international  real estate and financial  services group
listed on the  Australian  Stock  Exchange.  Worldwide,  Lend Lease  Corporation
operates from more than 30 cities on five  continents:  North  America,  Europe,
Asia,  Australia and South America. In addition to real estate investments,  the
Lend  Lease  Group  operates  in the  areas  of  property  development,  project
management and construction,  and capital services  (infrastructure).  Financial
services  activities  include  funds  management,  life  insurance,  and  wealth
protection.


<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 September 30, 1999.


<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 12, 1999                 BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                         CREDITS L.P. III

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




                                         /s/Randolph G. Hawthorne
                                         Randolph G. Hawthorne
                                         Managing Director, Vice President and
                                         Chief Operating Officer






<PAGE>