August 15, 2005


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


Re:    Boston Financial Qualified Housing Tax Credits L.P. III
       Report on Form 10-QSB for the Quarter Ended June 30, 2005
       File Number 01-18462


Dear Sir/Madam:

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


Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller









<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB


(Mark One)

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

For the quarterly period ended         June 30, 2005
                                       --------------------------------

                                                         OR

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


For the transition period from           to



                         Commission file number 01-18462

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


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


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


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

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


<PAGE>


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



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>



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

Item 1.  Financial Statements

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

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

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

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

         Notes to the Financial Statements (Unaudited)                                        5

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

Item 3.  Controls and Procedures                                                             14

PART II - OTHER INFORMATION

Items 1-6                                                                                    15

SIGNATURE                                                                                    16

CERTIFICATIONS                                                                               17
</TABLE>



<PAGE>


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


                                  BALANCE SHEET
                                  June 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>


Assets

<S>                                                                                               <C>
Cash and cash equivalents                                                                         $     3,742,583
Investments in Local Limited Partnerships (Note 1)                                                      2,908,555
                                                                                                  ---------------
   Total Assets                                                                                   $     6,651,138
                                                                                                  ===============

Liabilities and Partners' Equity

Due to affiliate                                                                                  $     2,150,712
Accrued expenses                                                                                          386,319
                                                                                                  ---------------
   Total Liabilities                                                                                    2,537,031

General, Initial and Investor Limited Partners' Equity                                                  4,114,107
                                                                                                  ---------------
   Total Liabilities and Partners' Equity                                                         $     6,651,138
                                                                                                  ===============
</TABLE>


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


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

                            STATEMENTS OF OPERATIONS
                For the Three Months Ended June 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                 2005                     2004
                                                                           ----------------         ----------
Revenue:
<S>                                                                        <C>                      <C>
   Investment                                                              $         15,634         $           842
   Other                                                                             16,778                  43,543
                                                                           ----------------         ---------------
     Total Revenue                                                                   32,412                  44,385
                                                                           ----------------         ---------------

Expense:
   Asset management fees, affiliate                                                  47,124                  53,557
   Provision for valuation of advances to Local Limited Partnerships                      -                  31,845
   General and administrative (includes reimbursements
     to an affiliate in the amount of $53,180 and
     $121,892 in 2005 and 2004, respectively)                                       131,423                 165,533
   Amortization                                                                       2,031                  11,380
   Interest                                                                               -                   1,500
                                                                           ----------------         ---------------
     Total Expenses                                                                 180,578                 263,815
                                                                           ----------------         ---------------

Loss before equity in losses of Local Limited Partnerships                         (148,166)               (219,430)

Equity in losses of Local Limited Partnerships (Note 1)                            (125,771)               (339,831)

Loss on sale of investments in Local Limited Partnerships (Note 1)                 (441,078)                      -
                                                                           ----------------         ---------------

Net Loss                                                                   $       (715,015)        $      (559,261)
                                                                           ================         ===============

Net Loss allocated:
   General Partners                                                        $         (7,150)        $        (5,593)
   Limited Partners                                                                (707,865)               (553,668)
                                                                           ----------------         ---------------
                                                                           $       (715,015)        $      (559,261)
                                                                           ================         ===============
Net Loss per Limited Partner Unit
   (100,000 Units)                                                         $          (7.08)        $         (5.54)
                                                                           ================         ===============
</TABLE>



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


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

              STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                    For the Three Months Ended June 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                Initial           Investor
                                            General             Limited            Limited
                                           Partners            Partners           Partners              Total


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

Net Loss                                        (7,150)                  -           (707,865)           (715,015)
                                         -------------      --------------     --------------      --------------

Balance at June 30, 2005                 $    (834,704)     $        5,000     $    4,943,811      $    4,114,107
                                         =============      ==============     ==============      ==============
</TABLE>


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

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

                            STATEMENTS OF CASH FLOWS
                For the Three Months Ended June 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>


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

<S>                                                                           <C>              <C>
Net cash used for operating activities                                        $    (246,135)   $      (38,012)

Net cash provided by investing activities                                         3,097,989            11,698

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

Net increase (decrease) in cash and cash equivalents                              2,851,854          (127,878)

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

Cash and cash equivalents, ending                                             $   3,742,583    $      239,119
                                                                              =============    ==============

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                     $           -    $        1,500
                                                                              =============    ==============
</TABLE>


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


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


                        NOTES TO THE FINANCIAL STATEMENTS
                                   (Unaudited)


The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Partnership's Form 10-KSB for the year ended March 31, 2005. In the opinion of
the Managing General Partner, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Partnership's financial position and results of operations.
The results of operations for the period may not be indicative of the results to
be expected for the year.

The Managing General Partner of the Partnership has elected to report results of
the Local Limited Partnerships in which the Partnership has a limited
partnership interest on a 90-day lag basis because the Local Limited
Partnerships report their results on a calendar year basis. Accordingly, the
financial information of the Local Limited Partnerships that is included in the
accompanying financial statements is as of March 31, 2005 and 2004.

1.   Investments in Local Limited Partnerships

The Partnership has limited partnership interests in nineteen Local Limited
Partnerships which were organized for the purpose of owning and operating
multi-family housing complexes, all of which are government-assisted. The
Partnership's ownership interest in each Local Limited Partnership is 99%. The
Partnership may have negotiated or may negotiate options with the local general
partners to purchase or sell the Partnership's interests in the Local Limited
Partnerships at the end of the Compliance Period at nominal prices. In the event
that Local Limited Partnerships are sold to third parties, or upon dissolution
of the Local Limited Partnerships, proceeds will be distributed according to the
terms of each Local Limited Partnership agreement.

The following is a summary of investments in Local Limited Partnerships at June
30, 2005:
<TABLE>
<CAPTION>


Capital contributions and advances paid to Local Limited Partnerships
<S>                                                                                                 <C>
   and purchase price paid to withdrawing partners of Local Limited Partnerships                    $    34,173,063

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $55,203,103)                                                                  (26,489,747)

Cumulative cash distributions received from Local Limited Partnerships                                   (2,963,188)
                                                                                                    ---------------

Investments in Local Limited Partnerships before adjustments                                              4,720,128

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                                          2,336,493

   Cumulative amortization of acquisition fees and expenses                                                (710,060)
                                                                                                    ---------------

Investments in Local Limited Partnerships before impairment allowance                                     6,346,561

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

Investments in Local Limited Partnerships                                                           $     2,908,555
                                                                                                    ================
</TABLE>


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

                  NOTES TO THE FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


1. Investments in Local Limited Partnerships (continued)

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

The Partnership's share of the net losses of the Local Limited Partnerships for
the three months ended June 30, 2005 is $1,069,518. For the three months ended
June 30, 2005, the Partnership has not recognized $953,548 of equity in losses
relating to certain Local Limited Partnerships in which cumulative equity in
losses and distributions exceeded its total investments in these Local Limited
Partnerships. Previously unrecognized losses of $9,801 were included in losses
recognized in the three months ended June 30, 2005.

The Partnership's interests in four of its investments in Local Limited
Partnerships were sold during the three months ended June 30, 2005, resulting in
a loss of $441,078.

2.   Significant Equity Investee

Three Local Limited Partnerships invested in by the Partnership represent more
than 20% of the Partnership's consolidated assets, equity or net losses. The
following financial information represents the Local Limited Partnerships
performance for the three months ended March 31, 2005 and 2004:
<TABLE>
<CAPTION>


         Quartermill                                                       2005              2004
         -----------                                                   -------------    -------------
<S>                                                                    <C>              <C>
         Revenue                                                       $     469,100    $     458,000
         Net Loss                                                      $     (80,300)   $     (65,000)

         Riverfront
         Revenue                                                       $     427,200    $     429,000
         Net Loss                                                      $     (28,900)   $     (12,000)

         Elver Park III
         Revenue                                                       $      89,700    $     103,073
         Net Loss                                                      $      (8,900)   $        (893)
</TABLE>



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

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



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

Critical Accounting Policies

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

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

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

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

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


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

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


Critical Accounting Policies (continued)

assessed the Interpretation and concluded that it is not the Primary Beneficiary
of any of the Local Limited Partnerships that meet the definition of a VIE. The
Partnership is involved with those VIEs as a non-controlling limited partner
equity holder. The Partnership is required to disclose its maximum exposure to
economic and financial statement losses as a result of its involvement with the
VIEs. The Partnership's exposure to economic and financial statement losses from
the VIEs is limited to its investment in the VIEs ($2,908,555 at June 30, 2005).
The Partnership may be subject to additional losses to the extent of any
financial support that the Partnership voluntarily provides in the future.

Liquidity and Capital Resources

The Partnership had an increase in cash and cash equivalents of $2,851,854 for
the three months ended June 30, 2005. This increase is attributable proceeds
received from the sale of an investment in Local Limited Partnership in the
previous quarter and cash distributions received from Local Limited
Partnerships, somewhat offset by cash used for operations.

The Managing General Partner initially designated 3.00% of the Gross Proceeds as
Reserves as defined in the Partnership Agreement. The Reserves were established
to be used for working capital of the Partnership and contingencies related to
the ownership of Local Limited Partnership interests. The Managing General
Partner may increase or decrease such Reserves from time to time, as it deems
appropriate. During the year ended March 31, 1993, the Managing General Partner
increased the Reserve level to 3.75%. At June 30, 2005, $3,742,583 of cash and
cash equivalents has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,328,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $534,000 also have been used to make additional
capital contributions to four Local Limited Partnerships, and the Partnership
has paid approximately $452,000 (net of paydowns) to purchase the mortgage of
The Kyle Hotel. In the event a Local Limited Partnership encounters operating
difficulties requiring additional funds, the Managing General Partner might deem
it in its best interest to voluntarily provide such funds in order to protect
its investment. As of June 30, 2005, the Partnership has advanced approximately
$1,578,000 to Local Limited Partnerships to fund operating deficits.

The Managing General Partner believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions. To date, the Partnership has used approximately $4,884,000 of
operating funds and proceeds from sales of investments in Local Limited
Partnerships to replenish Reserves.

Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, at June 30, 2005, the Partnership had no
contractual or other obligation to any Local Limited Partnership which had not
been paid or provided for.

Cash Distributions

No cash distributions were made during the three months ended June 30, 2005.


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

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

Results of Operations

For the three months ended June 30, 2005, the Partnership's operations resulted
in a net loss of $715,015 as compared to a net loss of $559,261 for the same
period in 2004. The increase in net loss is primarily due to an increase in loss
on sale of investments in Local Limited Partnerships and a decrease in other
income, somewhat offset by a decrease in equity in losses of Local Limited
Partnerships and a decrease in general and administrative costs. The increase in
loss on sale of investments in Local Limited Partnerships is due to the sale of
four Local Limited Partnership's during the three months ended June 30, 2005.
The decrease in other income is due to a decrease in distributions from Local
Limited Partnerships with carrying values of zero. The decrease in equity in
losses of Local Limited Partnership's is primarily due to the Partnership
disposing of its interest in four Local Limited Partnerships during the three
months ended June 30, 2005. General and administrative costs decreased primarily
due to decreased charges due to an affiliate of the General Partner for
operations and administrative expenses necessary for the operation of the
Partnership. Charges due to an affiliate of the General Partner decreased due to
a reduction in the number of Local Limited Partnerships invested in by the
Partnership. The decrease in charges due to an affiliate of the General Partner
was partially of set by an increase in legal expenses associated with
ligitgation in which the Parnership is currently involved.

Portfolio Update

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

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

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

On or about July 13, 2004, Park G.P., Inc. ("Park") commenced litigation against
Boston Financial Qualified Housing Tax Credits L.P. IV and its purported general
partners (collectively, the "Defendants") in Clay County, Missouri, claiming
that the Defendants breached the relevant partnership agreement and their
fiduciary duties owed to Park by, among other things, failing to permit
inspection of certain alleged "books and records" of the Partnership. On or
about October 7, 2004, Park sought leave of the court to amend its petition to
include claims for inspection of the alleged "books and records" against the
Partnership, Boston Financial Qualified Housing Limited Partnership, Boston
Financial Qualified Housing Tax Credits L.P. II, Boston Financial Qualified
Housing Tax Credits L.P. V, Boston Financial Tax Credit Fund Plus, A Limited
Partnership, Boston Financial Tax Credit Fund VII, A Limited Partnership, and
their purported general partners (collectively, the "New Defendants"). The court
granted the amendment on November 15, 2004, and the New Defendants subsequently
moved to dismiss the amended complaint


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

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


Portfolio Update (continued)

in its entirety. That motion is currently pending (along with a concurrently
filed motion for entry of a blanket protective order), and oral arguments on the
motion took place on February 16, 2005. On or about October 8, 2004, Park moved
the court for entry of a temporary restraining order compelling the Defendants
and the New Defendants to turn over the alleged "books and records" in
conjunction with a transaction Park was proposing entering into. On October 12,
2004, the court denied Park's request.

After Park served a deposition notice duces tecum that requested the production
of confidential non-public documents, the New Defendants filed a Motion for a
Protective Order on March 23, 2005. After a short hearing on April 21, 2005, the
Court "overrruled" the Motion in a brief docket entry on May 16, 2005 without
any findings of fact, conclusions of law, or other explanation. On or about June
9, 2005, the New Defendants petitioned the Missouri Court of Appeals for a writ
ordering the Circuit Court to set aside the prior order and grant the New
Defendants' request for a protective order.

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

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

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

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


Property Discussions

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

As previously reported, the Managing General Partner negotiated an agreement
with an unaffiliated entity to have the ability to transfer the Partnership's
interest in Poplar Village, located in Cumberland, Kentucky to the unaffiliated
entity or its designee. The Managing General Partner has the right to put its
interest in the Property at any time in exchange for a Contingent Note that
grants the Partnership 50% of all future net cash receipts from the Local
Limited Partnership interest.

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

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

As previously reported, operations at Westwood Manor, located in Flint,
Michigan, have suffered in recent quarters. Poor site management caused deferred
maintenance and curb appeal issues. The Partnership also advanced $50,000 from
Reserves to address the deferred maintenance issues at the Property during 2001.
The advance was to be repaid through operations, if available, with the Local
General Partner obligated to pay back 50% of the remaining balance should the
entire amount of the advance not be repaid by December 31, 2001. The Property
did not generate


<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)

sufficient cash from operations to repay any of the Partnership's advances. The
Partnership has not yet made a demand from the Local General Partner to meet his
obligation to repay 50% of the advance. However, the Managing General Partner
and the Local General Partner have reached agreement on an exit strategy on this
Property. The Local General Partner received approval for a refinancing of the
Property from the U.S. Department of Housing and Urban Development ("HUD") and
the refinanced mortgage was closed on July 31, 2003. The Managing General
Partner, in providing its approval of the refinancing, received agreement from
the Local General Partner to a put option whereby the Partnership can dispose of
its interest in the Property any time after December 31, 2003, when the
Compliance Period expired. Part of the agreement also includes repayment of the
Partnership's $50,000 loan.

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

As previously reported, due to operating deficits in 2002 and 2003 at Tucson
Trails I and Tucson Trails II, located in Madison, Wisconsin, the Local General
Partner proposed a refinancing of the Properties. At the same time, the same
Local General Partner proposed a refinancing of the first mortgages of two other
Properties, Elver Park II and Elver Park III, in which the Partnership had an
interest but had enjoyed stable operations for the last several quarters. The
Managing General Partner agreed to the refinancing of all four Properties and
all four Properties closed on their new first mortgages in November 2003 with
the Partnership receiving a total of $954,098 in cash from refinancing proceeds.
The Managing General Partner, in accordance with and as permitted by the
Partnership Agreement, retained the entire amount of net proceeds in Reserves.
The Managing General Partner and the Local General Partner also entered into a
call and put option whereby the Local General Partner received a call option at
the end of the Compliance Period for a nominal amount. If the call was not
exercised within a 6-month period, the Partnership had the option to put its
interest to the Local General Partner. The expiration of the Compliance Period
was no later than December 31, 2004 for any of the four Properties. Effective
May 31, 2005, the Partnership's interests in all four Properties were
transferred to the Local General Partner. The Partnership no longer has an
interest in these four Properties. These sales resulted in taxable income
projected to be approximately $1,320,000, or $13 per Unit.

As previously reported, Fox Run, located in Victoria, Texas experienced
operating deficits in 2003 and the first half of 2004 due to decreased revenues
and increased expenses. The Property also suffered from deferred maintenance and
failed two consecutive HUD physical inspections in February and July 2004. In
addition, the Property defaulted on its HUD-insured mortgage loan in December
2003. Since the Property generated its last Tax Credits in 1999 and in order to
minimize risk to the Partnership, the Managing General Partner decided in late
August 2004 to transfer the Partnership's interest to a third party in exchange
for a Contingent Note that grants the Partnership 50% of all future net cash
receipts from such Local Limited Partnership interest. The Partnership no longer
has an interest in this Property, as HUD approved the transfer effective July
15, 2005. This sale resulted in taxable income projected to be approximately $1
million, or $10 per Unit.
<page>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

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


Property Discussions (continued)

As previously reported, in 2003, the Local General Partner of El Jardin, located
in Davie, Florida, expressed its desire to sell the Property to a third party
buyer. In April 2003, a realtor was hired to appraise the Property. In June
2004, the Local General Partner received an offer from a third party buyer that
was subsequently increased as a result of an updated market valuation. On March
8, 2005, the Property was sold, and the Partnership received approximately $2.9
million in sales proceeds during the quarter ended June 30, 2005. The
Partnership no longer has an interest in this Property. This sale resulted in
taxable income of approximately $3.6 million or $36 per Unit. The Managing
General Partner, in accordance with and as permitted by the Partnership
Agreement, retained the entire amount of net proceeds in Reserves.

Elmwood Delmar, located in Aurora, Colorado, has a first mortgage with a
prohibition of prepayment prior to December 2008. Given this major impediment to
sale and the Partnership's desire to transfer its interest in the Property since
the Property's Compliance Period ended on December 31, 2003, the Managing
General Partner entered into a put option agreement with an unaffiliated entity
that would allow for the transfer of the Partnership's interest in the Property
to the unaffiliated entity for a nominal amount. This put option agreement is
subject to HUD providing approval to a Transfer of Physical Assets application.



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

                             CONTROLS AND PROCEDURES



Controls And Procedures

Based on the Partnership's evaluation as of the end of the period covered by
this report, the Partnership's officer has concluded that the Partnership's
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports that the Partnership files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.

There have been no significant changes in the Partnership's internal controls or
in other factors that could significantly affect those controls subsequent to
the date of their evaluation.


<PAGE>

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


PART II       OTHER INFORMATION

Items 1-5     Not applicable

Item 6        Exhibits and reports on Form 8-K

              (a) Exhibits

                  31.1 Certification of Principal Executive Officer pursuant to
                       section 302 of the Sarbanes-Oxley Act of 2002
                  31.2 Certification of Principal Financial Officer pursuant to
                       section 302 of the Sarbanes-Oxley Act of 2002
                  32.1 Certification of Principal Executive Officer and
                       Principal Financial Officer pursuant to section 906 of
                       the Sarbanes-Oxley Act of 2002

              (b) Reports on Form 8-K - No reports on Form 8-K were filed during
                  the quarter ended June 30, 2005


<PAGE>

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

                                    SIGNATURE




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


DATED: August 15, 2005          BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                CREDITS L.P. III

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




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


<PAGE>