August 11, 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 Edgar for Quarter Ended June 30, 1999
       File Number 01-18462




Dear Sir/Madam:

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


Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller





QH3-Q1.DOC



<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934

(Mark One)

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

For the quarterly period ended       June 30, 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      June 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>


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

<S>                                                                                          <C>
Item 1.  Combined Financial Statements

         Combined Balance Sheets - June 30, 1999 (Unaudited)
           and March 31, 1999                                                                 1

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

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

         Combined Statements of Cash Flows (Unaudited) -  For the
           Three Months Ended June 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
                                  June 30, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>

Assets

<S>                                                                                              <C>
Cash and cash equivalents                                                                        $     576,356
Marketable securities, at fair value                                                                   522,838
Investments in Local Limited Partnerships, net (Note 1)                                             14,953,274
Accounts receivable, net                                                                               112,830
Interest receivable                                                                                     32,250
Prepaid expenses                                                                                        10,104
Tenant security deposits                                                                                94,211
Replacement reserves                                                                                   215,427
Rental property at cost, net of accumulated
   depreciation and reserve for valuation                                                           13,057,771
Deferred acquisition fees escrow                                                                       112,500
Deferred expenses, net of $178,178
   accumulated amortization                                                                            212,629
Other assets                                                                                           228,699
                                                                                                 -------------
     Total Assets                                                                                $  30,128,889
                                                                                                 =============

Liabilities and Partners' Equity

Accounts payable to affiliates                                                                   $   2,068,949
Accounts payable and accrued expenses                                                                  531,229
Interest payable                                                                                       323,056
Note payable, affiliate                                                                                514,968
Security deposits payable                                                                               84,471
Deferred acquisition fees payable                                                                      112,500
Advances from affiliate                                                                                200,000
Mortgage notes payable                                                                               7,789,986
                                                                                                 -------------
     Total Liabilities                                                                              11,625,159

Minority interest in Local Limited Partnerships                                                        884,570
                                                                                                 -------------

General, Initial and Investor Limited Partners' Equity                                              17,620,642
Net unrealized losses on marketable securities                                                          (1,482)
     Total Partners' Equity                                                                         17,619,160
                                                                                                 -------------
     Total Liabilities and Partners' Equity                                                      $  30,128,889
                                                                                                 =============

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 Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>


                                                                         1999                   1998
                                                                     -------------          ------------
Revenue:
<S>                                                                  <C>                    <C>
    Rental                                                           $     613,353          $    579,906
    Investment                                                              12,229                 8,606
    Recovery of  bad debt                                                   80,639                26,881
    Other                                                                   51,757                67,885
                                                                     -------------          ------------
      Total Revenue                                                        757,978               683,278
                                                                     -------------          ------------

Expenses:
    Asset management fees, related party                                    91,815                95,938
    General and administrative (includes
      reimbursements to affiliates of $36,662 and
      $32,550 in 1999 and 1998, respectively)                              103,442               113,072
      Property management fees                                              29,683                50,154
    Rental operations, exclusive of depreciation                           407,096               345,155
    Interest                                                               201,092               212,791
    Depreciation                                                           155,339               166,192
    Amortization                                                            41,176                44,303
                                                                     -------------          ------------
      Total Expenses                                                     1,029,643             1,027,605
                                                                     -------------          ------------

Lossbefore equity in losses of Local  Limited  Partnerships,
    minority  interest and loss on liquidation of interests in
    Local Limited Partnerships                                            (271,665)             (344,327)

Equity in losses of Local Limited Partnerships (Note 1)                   (554,641)             (848,022)

Minority interest in losses of
    Local Limited Partnerships                                               2,157                 2,122

Loss on liquidation of interests in Local Limited
    Partnerships (Note 2)                                                 (193,883)                    -
                                                                     -------------          ------------

Net Loss                                                             $  (1,018,032)         $ (1,190,227)
                                                                     =============          ============

Net Loss allocated:
    To General Partners                                              $     (10,180)         $    (11,902)
    To Limited Partners                                                 (1,007,852)           (1,178,325)
                                                                     -------------          ------------
                                                                     $  (1,018,032)         $ (1,190,227)
                                                                     =============          ============
Net Loss per Limited Partnership Unit
    (100,000 Units)                                                  $     (10.08)          $     (11.78)
                                                                     ============           ============


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 Three Months Ended June 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 unrealized gains
     on marketable securities
     available for sale                        -              -                  -        (1,719)         (1,719)
   Net Loss                              (10,180)             -         (1,007,852)            -      (1,018,032)
                                      -----------     ---------      --------------  -----------   --------------
Comprehensive Loss                       (10,180)             -         (1,007,852)       (1,719)     (1,019,751)
                                      ----------      ---------      -------------   -----------   -------------

Balance at June 30, 1999              $ (699,638)     $   5,000      $  18,315,280   $    (1,482)  $  17,619,160
                                      ==========      =========      =============   ===========   =============

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 Three Months Ended June 30, 1999 and 1998


<TABLE>
<CAPTION>

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

<S>                                                                   <C>                      <C>
Net cash used for operating activities                                $   (245,308)            $    (80,525)

Net cash provided by investing activities                                  253,804                  217,282

Net cash provided by financing activities                                  127,495                   41,031
                                                                      ------------             ------------

Net increase in cash and cash equivalents                                  135,991                  177,788

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

Cash and cash equivalents, ending                                     $    576,356             $    489,655
                                                                      ============             ============

Supplemental Disclosure:
     Cash paid for interest                                           $    190,755             $    195,058
                                                                      ============             ============
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 THE 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  about  the  Local  Limited  Partnerships  that is  included  in the
accompanying financial statements is as of March 31, 1999 and 1998.  Certain
reclassifications have been made to prior periods 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  partnership
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 interest is 97%, 49% and 48.96%, respectively.
Upon  dissolution,  proceeds will be  distributed  according to each  respective
partnership agreement.

The following is a summary of Investments in Local Limited  Partnerships at June
30, 1999, excluding the Combined Entities:
<TABLE>
<CAPTION>
<S>                                                                                            <C>
Capital contributions to Local Limited Partnerships and purchase
    price paid to withdrawing partners of Local Limited Partnerships                           $  59,334,634

Cumulative equity in losses of Local Limited Partnerships (net of
   cumulative unrecognized losses of $47,708,566)                                                (44,066,348)


Cumulative cash distributions received from Local Limited Partnerships                            (2,689,902)
                                                                                               -------------

Investments in Local Limited Partnerships before adjustment                                       12,578,384

Excess of investment cost over the underlying net assets acquired:

   Acquisition fees and expenses                                                                   5,335,849

   Accumulated amortization of acquisition fees and expenses                                      (1,325,959)
                                                                                               -------------

Investments in Local Limited Partnerships                                                         16,588,274

Reserve for valuation of investments in Local Limited Partnerships                                (1,635,000)
                                                                                               -------------
                                                                                               $  14,953,274

</TABLE>

<PAGE>

           BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)
             NOTES TO THE 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 three months ended June 30, 1999 is
$1,457,770.  For the three months ended June 30, 1999, the  Partnership  has not
recognized  $905,676  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

As previously  reported,  the Managing  General  Partner  transferred all of the
assets of the Texas Partnerships,  subject to their liabilities, to unaffiliated
entities. Crown Point, Godley Arms, Glenbrook Apartments,  Quail Run Apartments,
Sherwood Arms Housing,  Lone Oak  Apartments,  Hallet West  Apartments,  Lakeway
Colony,  Crestwood  Place,  Eagle Nest Apartments,  One Main Place,  Pilot Point
Apartments  and  Willowick  were  transferred  prior to March 31, 1999.  For tax
purposes,  these events  resulted in both Section 1231 gain and  cancellation of
indebtedness  income.  In  addition,  the  transfer of  ownership  resulted in a
nominal  amount of  recapture  of tax  credits  because  the Texas  Partnerships
represent only 2% of the Partnership's tax credits.

For  financial  reporting  purposes,  loss on  liquidation  of interest in Local
Limited Partnership of $193,883 was recognized in the period ended June 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 THE COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
<TABLE>
<CAPTION>

3.   Supplemental Combining Schedules

                                 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                      $     421,450    $     154,906     $           -    $     576,356
Marketable securities, at fair value                 522,838                -                 -          522,838
Investments in Local Limited
   Partnerships, net                              17,169,105                -        (2,215,831)      14,953,274
Accounts receivable, net                             928,240          101,594          (917,004)         112,830
Interest receivable                                   32,250                -                 -           32,250
Notes receivable                                   1,389,038                -        (1,389,038)               -
Prepaid expenses                                       1,120            8,984                 -           10,104
Tenant security deposits                                   -           94,211                 -           94,211
Replacement reserves                                       -          215,427                 -          215,427
Rental property at cost, net of accumulated
   depreciation and reserve for valuation                  -       12,282,612           775,159       13,057,771
Deferred acquisition fees escrow                     112,500                -                 -          112,500
Deferred expenses, net                                     -          212,629                 -          212,629
Other assets                                               -          228,699                 -          228,699
                                               -------------    -------------     -------------    -------------
Total Assets                                   $  20,576,541    $  13,299,062     $  (3,746,714)   $  30,128,889
                                               =============    =============     =============    =============

Liabilities and Partners' Equity
Accounts payable to affiliates                 $   2,058,585    $     927,368     $    (917,004)   $   2,068,949
Accounts payable and accrued
   expenses                                          271,328          259,901                 -          531,229
Interest payable                                           -          323,056                 -          323,056

Note payable, affiliate                              514,968                -                 -          514,968
Security deposits payable                                  -           84,471                 -           84,471
Due to affiliate                                           -                -                 -                -

Deferred acquisition fees payable                    112,500                -                 -          112,500

Advances from affiliate                                    -          200,000                 -          200,000
Mortgage notes payable                                     -        9,179,024        (1,389,038)       7,789,986
                                               -------------    -------------     -------------    -------------
     Total Liabilities                             2,957,381       10,973,820        (2,306,042)      11,625,159
                                               -------------    -------------     -------------    -------------

Minority interest in Local
   Limited Partnerships                                    -                -           884,570          884,570
                                               -------------    -------------     -------------    -------------

General, Initial and Investor Limited
   Partners' Equity                               17,620,642        2,325,242        (2,325,242)      17,620,642
Net unrealized losses on marketable
   securities                                         (1,482)              -                  -           (1,482)
                                               -------------    -------------     -------------    -------------
     Total Partners' Equity                       17,619,160        2,325,242        (2,325,242)      17,619,160
                                               -------------    -------------     -------------    -------------
     Total Liabilities and
     Partners' Equity                          $  20,576,541    $  13,299,062     $  (3,746,714)   $  30,128,889
                                               =============    =============     =============    =============
</TABLE>

(A) As of June 30, 1999.
(B) As of March 31, 1999.


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

             NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
<TABLE>
<CAPTION>

3.   Supplemental Combining Schedules (continued)

                            Statements of Operations


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

Revenue:
<S>                                         <C>                 <C>               <C>              <C>
   Rental                                   $              -    $     613,353     $           -    $     613,353
   Investment                                         11,005            1,224                 -           12,229
   Recovery of bad debt                               80,639                -                 -           80,639
   Other                                              24,686           27,071                 -           51,757
                                            ----------------    -------------     -------------    -------------
     Total Revenue                                   116,330          641,648                 -          757,978
                                            ----------------    -------------     -------------    -------------

Expenses:
   Asset management fees, related party               91,815                -                 -           91,815
   General and administrative                        103,442                -                 -          103,442

   Property management fees                                -           29,683                 -           29,683
   Rental operations, exclusive of depreciation            -          407,096                 -          407,096

   Interest                                            1,500          199,592                 -          201,092

   Depreciation                                            -          155,339                 -          155,339
   Amortization                                       34,389            6,787                 -           41,176
                                            ----------------    -------------     -------------    -------------
     Total Expenses                                  231,146          798,497                 -        1,029,643
                                            ----------------    -------------     -------------    -------------

Loss before equity in losses of Local Limited
   Partnerships,  minority  interest
   and loss on liquidation of interest in Local
   Limited Partnership                              (114,816)        (156,849)                -         (271,665)

Equity in losses of Local Limited
   Partnerships                                     (709,333)               -           154,692         (554,641)

Minority interest in losses of Local
   Limited Partnerships                                    -                -             2,157            2,157

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

Net Loss                                    $     (1,018,032)   $    (156,849)    $     156,849    $  (1,018,032)
                                            ================    ==============    =============    =============

</TABLE>

(A) For the three  months  ended June 30,  1999.
(B) For the three months ended March 31, 1999.


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

             NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
<TABLE>
<CAPTION>

3.   Supplemental Combining Schedules (continued)


                            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         $     (88,793)   $     (156,515)   $           -    $    (245,308)

Net cash provided by investing activities            171,250            82,554                -          253,804

Net cash provided by financing activities                  -           127,495                -          127,495
                                               -------------    --------------    -------------    -------------

Net increase in cash and cash equivalents             82,457            53,534                -          135,991

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

Cash and cash equivalents, ending              $     421,450    $      154,906    $           -    $     576,356
                                               =============    ==============    =============    =============

</TABLE>

(A) For the three  months  ended June 30,  1999.
(B) For the three months ended March 31, 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  are  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 their suppliers in achieving year 2000 compliance.

Liquidity and Capital Resources

At June 30, 1999, the Partnership, including the Combined Entities, had cash and
cash  equivalents  of $576,356 as  compared to $440,365 at March 31,  1999.  The
increase is primarily  attributable  to proceeds  from sales and  maturities  of
marketable  securities in excess of purchases of marketable  securities and cash
distributions  received  from  Local  Limited  Partnerships.   The  increase  is
partially  offset by cash used for  operations,  improvements to rental property
and repayment of mortgage notes payable.

The  Managing  General  Partner  initially  designated  3% of 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
June 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 $1,755,000 have been paid from
Reserves.   This  amount  includes   approximately   $1,314,000  for  the  Texas
Partnerships.  To date,  Reserve funds in the amount of  approximately  $349,000
have  also  been  used to make  additional  capital  contributions  to two Local
Limited Partnerships, and the Partnership has paid approximately $1,073,000 (net
of paydowns) to purchase the mortgage of a Local Limited  Partnership.  To date,
the  Partnership  has  used  approximately  $2,241,000  of  operating  funds  to
replenish  Reserves.  At June 30,  1999,  approximately  $873,000 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  $789,000 to the Texas  Partnerships  and  $957,000 to three 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 June 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 three 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 (continued)


Results of Operations

For the three months ended June 30, 1999,  Partnership  operations resulted in a
net loss of  $1,018,032  as  compared to a net loss of  $1,190,227  for the same
period in 1998. The decrease in net loss is primarily attributable to a decrease
in equity in losses. This decrease in equity in losses is primarily attributable
to a decrease in property operating expenses, interest and depreciation expenses
due to the  transfer of one of the  Combined  Entities in 1998.  In addition the
decrease in net loss is attributable to a decrease in property  management fees,
general and administrative expenses, interest and depreciation, partially offset
by an increase in loss on liquidation  due to the transfer of Boulevard  Commons
II.

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.  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 will cause investors to have
minimal taxable gain or loss for the 1999 tax year, depending upon the tax basis
of the property.

The Managing General Partner is still negotiating 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. However, given the severity of the operating deficits, 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.

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 increased  from 96% in December 31, 1998
to 97% in March 31, 1999. 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 March 31, 1999,
occupancy  was 89%. The Local  General  Partner,  Managing  General  Partner and
Management  Agent are working  together to review the  marketing,  security  and
long-term strategy for this property. In addition, the Local General Partner has
approached the lender about the  possibility of  refinancing  the mortgage.  The
Managing General Partner is closely monitoring this property.

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

<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)

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
March 31, 1999 was 96%.

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.  For
both   Waterfront   and  Shoreline,   the  Management   Agent  has  applied  for
consideration  for a Project  Improvement  Program  (PIP) and applied for a Safe
Neighborhood  Grant.  At this  point,  deficits  continue  to be  funded  by the
Management Agent. As noted previously,  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.

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.

<PAGE>

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


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

Property Discussions  (continued)

In accordance with Financial  Accounting  Standard No. 121,  "Accounting for the
Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of",
which is  effective  for fiscal years  beginning  after  December 15, 1995,  the
Partnership has implemented  policies and practices for assessing  impairment of
its real estate assets and investments in local limited partnerships. Each asset
is analyzed by real  estate  experts to  determine  if an  impairment  indicator
exists.  If so, the carrying value is compared to the future cash flows expected
to be derived from the asset. If the total undiscounted cash flows are less than
the  carrying  value,  a provision to write down the asset to fair value will be
charged against income.

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 the service contracts with vendors. As of August 1999,
the General Partner is in the final stages of its Year 2000 remediation plan and
believes that 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 in early 1999, 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.,  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 has reached a memorandum
of understanding to acquire The Boston Financial Group Limited Partnership.  The
transaction  remains  subject  to final due  diligence,  legal  agreements,  and
regulatory  approvals with no guarantee that the acquisition  will be completed.
The two  companies  are  targeting  to complete the  transactions  by the end of
September.

Headquartered in New York and Atlanta, Lend Lease Real Estate Investments,  Inc.
has regional offices in 12 cities nationwide.  Worldwide, Lend Lease Real Estate
Investments operates from more than 30 cities on five continents: North America,
Europe, Asia, Australia and South America. The company ranks as the leading U.S.
manager of tax-exempt assets invested in real estate. It is a subsidiary of Lend
Lease  Corporation,  an international  real estate and financial  services group
listed on the Australian Stock Exchange. 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)

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




PART II       OTHER INFORMATION

Items 1-5     Not applicable

Item 6        Exhibits and reports on Form 8-K

                (a)Exhibits - None

                (b)Reports  on Form 8-K - No  reports  on Form  8-K  were  filed
                   during the quarter ended June 30, 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: August 11, 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