November 14, 2001



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


Re:    Boston Financial Qualified Housing Tax Credits L.P. III
       Report on Form 10-QSB for Quarter Ended September 30, 2001
       File Number 01-18462


Dear Sir/Madam:

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


Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller




QH3-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, 2001
                               ------------------------------------------------

                                        OR

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


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


                         Commission file number 01-18462
                                                --------
         Boston Financial Qualified Housing Tax Credits L.P. III
      ----------------------------------------------------------------------
        (Exact name of registrant as specified in its charter)


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


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


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

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


<PAGE>


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

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                       <C>



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

Item 1. Financial Statements

         Balance Sheet (Unaudited) - September 30, 2001                                       1

         Statements of Operations (Unaudited) - For the Three and Six
           Months Ended September 30, 2001 and 2000                                           2

         Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Six Months Ended September 30, 2001                          3

         Statements of Cash Flows (Unaudited) - For the
           Six Months Ended September 30, 2001 and 2000                                       4

         Notes to the Financial Statements (Unaudited)                                        5

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

PART II - OTHER INFORMATION

Items 1-6                                                                                    10

SIGNATURE                                                                                    11

</TABLE>


<PAGE>


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

                                  BALANCE SHEET
                               September 30, 2001
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                                             <C>



Assets

Cash and cash equivalents                                                                        $     395,392
Marketable securities, at fair value                                                                   617,984
Investments in Local Limited Partnerships, net  (Note 1)                                             9,759,498
Note receivable, affiliate                                                                           1,388,829
Interest receivable, affiliate                                                                          60,915
Other asset                                                                                              9,045
                                                                                                 -------------
     Total Assets                                                                                $  12,231,663
                                                                                                 =============     =

Liabilities and Partners' Equity

Accounts payable to affiliates                                                                   $   3,530,705
Accrued expenses                                                                                       352,379
Note payable, affiliate                                                                                514,968
                                                                                                 -------------
     Total Liabilities                                                                               4,398,052
                                                                                                 -------------     -

General, Initial and Investor Limited Partners' Equity                                               7,820,400
Net unrealized gains on marketable securities                                                           13,211
                                                                                                 -------------
     Total Partners' Equity                                                                          7,833,611
                                                                                                 -------------
     Total Liabilities and Partners' Equity                                                      $  12,231,663
                                                                                                 =============
</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, 2001 and 2000
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                             <C>              <C>              <C>               <C>



                                                        Three Months Ended                Six Months Ended
                                                  September 30,     September 30,     September 30,    September 30,
                                                      2001              2000              2001             2000
                                                 --------------   ---------------   --------------     -------------
Revenue:
   Investment                                    $      12,064    $       12,042    $      29,692      $     22,810
   Recovery of bad debt                                  9,695                 -            9,695                 -
   Other                                                69,003            17,895           98,546            55,962
                                                 -------------    --------------    -------------      ------------
       Total Revenue                                    90,762            29,937          137,933            78,772
                                                 -------------    --------------    -------------      ------------
Expenses:
   Asset management fees, affiliate                     97,286            99,521          192,701           190,066
   General and administrative (includes
     reimbursements to affiliates of $217,132
     and $111,487 in 2001 and 2000,
     respectively)                                     129,954           102,169          312,249           219,911
   Provision for valuation of investments in
     Local Limited Partnerships                              -            10,000                -                 -
   Interest                                              1,500             1,000            3,000             2,500
   Amortization                                         17,774            21,011           36,240            44,662
                                                 -------------    --------------    -------------      ------------
       Total Expenses                                  246,514           233,701          544,190           457,139
                                                 -------------    --------------    -------------      ------------

Loss before equity in losses of Local Limited
   Partnerships                                       (155,752)         (203,764)        (406,257)         (378,367)
Equity in losses of Local Limited Partnerships
   (Note 1)                                           (619,774)         (542,832)        (823,076)         (947,970)
                                                 -------------    --------------    -------------      ------------

Net Loss                                         $    (775,526)   $     (746,596)   $  (1,229,333)     $ (1,326,337)
                                                 =============    ==============    =============      ============

Net Loss allocated:
   To General Partners                           $      (7,755)   $       (7,466)   $     (12,293)     $    (13,263)
   To Limited Partners                                (767,771)         (739,130)      (1,217,040)       (1,313,074)
                                                 -------------    --------------    -------------      ------------
                                                 $    (775,526)   $     (746,596)   $  (1,229,333)     $ (1,326,337)
                                                 =============    ==============    =============      ============
Net Loss per Limited Partnership
   Unit (100,000 Units)                          $       (7.68)   $       (7.39)    $     (12.17)      $     (13.13)
                                                 =============    =============     ============       ============

</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, 2001
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                   <C>            <C>            <C>            <C>            <C>





                                                        Initial        Investor          Net
                                        General         Limited         Limited      Unrealized
                                       Partners        Partners         Partners       Gains           Total
                                      -----------    ---------------   ---------     ---------       ---------

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

Comprehensive Income (Loss):
   Change in net unrealized gains
     on marketable securities
     available for sale                         -             -                  -         5,537           5,537
   Net Loss                               (12,293)            -         (1,217,040)            -      (1,229,333)
                                      -----------     ---------      -------------   -----------   -------------
Comprehensive Income (Loss)               (12,293)            -         (1,217,040)        5,537      (1,223,796)
                                      -----------     ---------      -------------   -----------   -------------

Balance at September 30, 2001         $  (797,640)    $   5,000      $   8,613,040   $    13,211   $   7,833,611
                                      ===========     =========      =============   ===========   =============
</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, 2001 and 2000
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                        <C>                 <C>


                                                                                  2001                2000
                                                                             -------------       -------------

Net cash used for operating activities                                       $    (227,499)      $     (64,479)

Net cash provided by investing activities                                          256,850               8,492
                                                                             -------------       -------------

Net increase (decrease) in cash and cash equivalents                                29,351             (55,987)
Cash and cash equivalents, beginning                                               366,041             172,793
                                                                             -------------       -------------
Cash and cash equivalents, ending                                            $     395,392       $     116,806
                                                                             =============       =============
Supplemental Disclosure:
    Cash paid for interest                                                   $       3,000       $       2,500
                                                                             =============       =============
</TABLE>


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


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

                        Notes to the Financial Statements
                                   (Unaudited)


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

The Managing General Partner of the Partnership has elected to report results of
the Local Limited Partnerships of which the Partnership has a limited
partnership interest on a 90 day lag basis, because the Local Limited
Partnerships report their results on a calendar year basis. Accordingly, the
financial information of the Local Limited Partnerships that is included in the
accompanying financial statements is as of June 30, 2001 and 2000.

1.   Investments in Local Limited Partnerships

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

The following is a summary of investments in Local Limited Partnerships at
September 30, 2001:
<TABLE>
<CAPTION>
<S>                                                                                           <C>

Capital contributions and advances paid to Local Limited Partnerships
   and purchase price paid to withdrawing partners of Local Limited Partnerships               $  66,751,960

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $60,933,204)                                                           (54,015,252)

Cumulative cash distributions received from Local Limited Partnerships                            (3,532,298)
                                                                                               -------------

Investments in Local Limited Partnerships before adjustment                                        9,204,410

Excess investment costs over the underlying net assets acquired:

   Acquisition fees and expenses                                                                   6,075,901

   Accumulated amortization of acquisition fees and expenses                                      (1,703,139)
                                                                                               -------------

Investments in Local Limited Partnerships prior to reserve for valuation                          13,577,172

Reserve for valuation of investments in Local Limited Partnerships                                (3,817,674)
                                                                                               -------------

Investments in Local Limited Partnerships                                                      $   9,759,498
                                                                                               =============
</TABLE>

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

The Partnership's share of the net losses of the Local Limited Partnerships for
the six months ended September 30, 2001 is $3,852,375. For the six months ended
September 30, 2001, the Partnership has not recognized $3,029,299 of equity in
losses relating to certain Local Limited Partnerships in which cumulative equity
in losses and distributions exceeded its total investments in these Local
Limited Partnerships.


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

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The
Partnership intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements and is including this statement
for purposes of complying with these safe harbor provisions. Although the
Partnership believes the forward-looking statements are based on reasonable
assumptions, the Partnership can give no assurance that its expectations will be
attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors, including, without limitation, general economic and real
estate conditions and interest rates.

Liquidity and Capital Resources

At September 30, 2001, the Fund had cash and cash equivalents of $395,392,
compared with $366,041 at March 31, 2001. This increase is primarily due to
proceeds from sales and maturities of marketable securities and cash
distributions received from Local Limited Partnerships. These increases are
partially offset by cash used for operations, and purchases of marketable
securities.

The Managing General Partner initially designated 3% of the Gross Proceeds as
Reserves. The Reserves were established to be used for working capital of the
Partnership and contingencies related to the ownership of Local Limited
Partnership interests. The Managing General Partner may increase or decrease
such Reserves from time to time, as it deems appropriate. During the year ended
March 31, 1993, the Managing General Partner increased the Reserve level to
3.75%. Professional fees relating to various property issues totaling
approximately $2,095,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $434,000 have also been used to make additional
capital contributions to three Local Limited Partnerships, and the Partnership
has paid approximately $778,000 (net of paydowns) to purchase the mortgage of a
Local Limited Partnership. To date, the Partnership has used approximately
$2,513,000 of operating funds to replenish Reserves. At September 30, 2001,
approximately $994,000 of cash, cash equivalents and marketable securities have
been designated as Reserves. Reserves may be used to fund Partnership operating
deficits, if the Managing General Partner deems funding appropriate. If Reserves
are not adequate to cover the Partnership's operations, the Partnership will
seek other financing sources including, but not limited to, the deferral of
Asset Management Fees paid to an affiliate of the Managing General Partner or
working with Local Limited Partnerships to increase cash distributions.

In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Partnership might deem it in its best interests
to provide such funds, voluntarily, in order to protect its investment. The
Partnership has advanced approximately $1,962,000 to Local Limited Partnerships
to fund operating deficits.

Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, at September 30, 2001, the Partnership
had no contractual or other obligation to any Local Limited Partnership which
had not been paid or provided for.

Cash Distributions

No cash distributions were made during the six months ended September 30, 2001.


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

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


Results of Operations

Three Month Period

For the three months ended September 30, 2001, the Partnership's operations
resulted in a net loss of $775,526 as compared to a net loss of $746,596 for the
same period in 2000. The increase in net loss is primarily due to an increase in
equity in losses of Local Limited Partnerships and an increase in general and
administrative expenses partially offset by an increase in other revenue. The
increase in equity in losses of Local Limited Partnerships is primarily due to
the Partnership recognizing losses relating to one Local Limited Partnership
whose losses were not recognized in the prior period. The increase in general
and administrative expense is primarily due to increased charges from an
affiliate of the General Partner for operational and administrative expenses
necessary for the operation of the Partnership. The increased charges pertained
to higher levels of staffing and salary levels at the affiliate in addition to
changes in the affiliate's allocation of operational and administrative expenses
to more accurately reflect the actual cost of services provided to the
Partnership. The increase in other revenue is primarily attributable to
increased interest income received on a note receivable held by the Partnership.

Six Month Period

For the six months ended September 30, 2001, the Partnership's operations
resulted in a net loss of $1,229,333 as compared to a net loss of $1,326,337 for
the same period in 2000. The decrease in net loss is due to a decrease in equity
in losses of Local Limited Partnerships and an increase in other revenue offset
by an increase in general and administrative expenses. 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 increase in general and administrative expense is primarily due
to increased charges from an affiliate of the General Partner for operational
and administrative expenses necessary for the operation of the Partnership. The
increased charges pertained to higher levels of staffing and salary levels at
the affiliate in addition to changes in the affiliate's allocation of
operational and administrative expenses to more accurately reflect the actual
cost of services provided to the Partnership. The increase in other revenue is
primarily attributable to increased interest income received on a note
receivable held by the Partnership.

Property Discussions

The Partnership's investment portfolio consists of limited partnership interests
in fifty-one Local Limited Partnerships, each of which own and operate a
multi-family apartment complex. A majority of the Properties have stabilized
operations and operate above break-even. A few Properties generate cash flow
deficits that the Local General Partners of those Properties fund through
project expenses loans, subordinated loans or operating escrows. However, some
Properties have persistent operating difficulties that could either: i) have an
adverse impact on the Partnership's liquidity; ii) result in their foreclosure
or iii) result in the Managing General Partner deeming it appropriate for the
Partnership to dispose of its interest in the Property. Also, the Managing
General Partner, in the normal course of the Partnership's business, may desire
to dispose of the Partnership's interest in certain Properties. The following
Property discussion focuses only on such Properties.

Boulevard Commons IIA, located in Chicago, Illinois continues to generate an
operating deficit. Expense levels at the Property are high due to increasing
maintenance, capital needs, security issues and high turnover. The Managing
General Partner developed a plan with the Local General Partner to transfer
ownership of the Property to the Local General Partner. The plan includes
provisions to minimize the risk of recapture. The Partnership transferred 99% of
its interest in Boulevard Commons IIA in 1999 and 2000. During August 2001, the
Partnership transferred its remaining 1% interest in the Property. Therefore,
the Partnership no longer has an interest in the Property.
<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

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


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

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

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

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

Waterfront and Shoreline, both located in Buffalo, New York, continue to have
operating deficits as a result of a soft rental market, deferred maintenance and
security issues. Lend Lease Asset Management visited the Properties in October
2000 and found them in reasonably good condition. The Managing General Partner
will continue to closely monitor Property operations.


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

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


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

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

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

Increased competition for Georgetown Apartments, located in Georgetown,
Delaware, has negatively impacted the Property's operations. Although the
Property has maintained a high level of occupancy, rental rates have stagnated
while expenses have continued to increase and the local taxing authority is
contemplating a 300% increase in the real estate tax rate. The Property no
longer generates tax credits and the compliance period expires in 2005.
Recently, the non-profit organization that holds the Property's long term ground
lease, offered to transfer the land at little cost. At this time, we are
researching the legal and tax issues associated with this potential transfer.

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

During 1995, the Kyle Hotel, located in Temple, Texas, defaulted on its mortgage
and the lender placed the Local Limited Partnership in bankruptcy. Under the
subsequent reorganization, the Local General Partner was replaced by an
affiliate of Lend Lease and the Partnership purchased the outstanding debt on
the Property. The Property makes mortgage payments in the amount of available
cash flow to the Partnership. Recently, the site management company at the
Property informed Lend Lease that it would like to terminate its management
contract. We believe this presents an opportunity to select an entity to assume
management of the Property as well as to assume the Local General Partner
interest and to develop a strategy for the Partnership to dispose of its
interest in the Property. We are currently preparing materials to distribute to
potential buyers.

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

<PAGE>


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



PART II       OTHER INFORMATION

Items 1-5     Not applicable

Item 6        Exhibits and reports on Form 8-K

                (a)Exhibits - None

                (b)Reports on Form 8-K - No reports on Form 8-K were filed
                   during the quarter ended September 30, 2001.


<PAGE>

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

                                    SIGNATURE

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


DATED: November 14, 2001                BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                        CREDITS L.P. III

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





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

<PAGE>