August 14, 2003


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, 2003
       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


(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, 2003

                                       OR

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


For the transition period from           to


                         Commission file number 01-18462

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


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


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


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

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


<PAGE>


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



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

PART I - FINANCIAL INFORMATION                                                              Page No.

Item 1.  Financial Statements

<S>                                                                                           <C>
         Balance Sheet (Unaudited) - June 30, 2003                                            1

         Statements of Operations (Unaudited) - For the Three
           Months Ended June 30, 2003 and 2002                                                2

         Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Three Months Ended June 30, 2003                             3

         Statements of Cash Flows (Unaudited) - For the
           Three Months Ended June 30, 2003 and 2002                                          4

         Notes to the Financial Statements (Unaudited)                                        5

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

Item 3.  Controls and Procedures                                                             11

PART II - OTHER INFORMATION

Items 1-6                                                                                    12

SIGNATURE                                                                                    13


</TABLE>

<PAGE>


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


                                  BALANCE SHEET
                                  June 30, 2003
                                   (Unaudited)

<TABLE>
<CAPTION>

Assets

<S>                                                                                       <C>
Cash and cash equivalents                                                                 $        701,829
Marketable securities, at fair value                                                               203,375
Investments in Local Limited Partnerships (Note 1)                                               6,834,294
Other assets                                                                                         1,492
     Total Assets                                                                         $      7,740,990

Liabilities and Partners' Equity

Due to affiliate                                                                          $      4,353,745
Accrued expenses                                                                                   399,365
Note payable, affiliate                                                                            514,968
     Total Liabilities                                                                           5,268,078

General, Initial and Investor Limited Partners' Equity                                           2,472,393
Net unrealized gains on marketable securities                                                          519
     Total Partners' Equity                                                                      2,472,912
     Total Liabilities and Partners' Equity                                               $      7,740,990


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

</TABLE>

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


                            STATEMENTS OF OPERATIONS
                For the Three Months Ended June 30, 2003 and 2002
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                                                2003                  2002
Revenue:
<S>                                                                        <C>                   <C>
   Investment                                                              $       5,161         $      10,037
   Other                                                                           1,496                64,289
     Total Revenue                                                                 6,657                74,326

Expenses:
   Asset management fees, affiliate                                               95,376                96,852
   Provision for valuation of advances to Local Limited Partnerships              15,000                10,000
   General and administrative (includes reimbursements
     to an affiliate of $96,594 and $190,507 in 2003 and
     2002, respectively)                                                         149,261               237,409
   Amortization                                                                   11,380                14,247
   Interest                                                                        1,500                 1,500
     Total Expenses                                                              272,517               360,008

Loss before equity in losses of Local Limited Partnerships                      (265,860)             (285,682)
Equity in losses of Local Limited Partnerships  (Note 1)                        (269,893)             (306,492)
Net Loss                                                                   $    (535,753)        $    (592,174)
Net Loss Allocated:
   General Partners                                                        $      (5,358)        $      (5,922)
   Limited Partners                                                             (530,395)             (586,252)
                                                                           $    (535,753)        $    (592,174)
Net Loss per Limited Partner Unit
    (100,000 Units)                                                        $       (5.30)        $       (5.86)



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

<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, 2003
                                   (Unaudited)


<TABLE>
<CAPTION>

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

<S>                                   <C>             <C>            <C>             <C>           <C>
Balance at March 31, 2003             $  (845,763)    $   5,000      $   3,848,909   $     2,551   $   3,010,697

Comprehensive Loss:
   Change in net unrealized gains
     on marketable securities
     available for sale                         -             -                  -        (2,032)         (2,032)
   Net Loss                                (5,358)            -           (530,395)            -        (535,753)
Comprehensive Loss                         (5,358)            -           (530,395)       (2,032)       (537,785)

Balance at June 30, 2003              $  (851,121)    $   5,000      $   3,318,514   $       519   $   2,472,912

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

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


                            STATEMENTS OF CASH FLOWS
                For the Three Months Ended June 30, 2003 and 2002
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                                                 2003              2002

<S>                                                                        <C>                 <C>
Net cash used for operating activities                                     $    (352,952)      $     (40,649)

Net cash provided by investing activities                                        121,106             134,863

Net increase (decrease) in cash and cash equivalents                            (231,846)             94,214

Cash and cash equivalents, beginning                                             933,675             804,936

Cash and cash equivalents, ending                                          $     701,829       $     899,150

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                  $       1,500       $       1,500

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

<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, 2003. 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, 2003 and 2002.

1.   Investments in Local Limited Partnerships

The Partnership has limited partnership interests in forty-seven Local Limited
Partnerships which were organized for the purpose of owning and operating
multi-family housing complexes, all of which are government-assisted. Upon
dissolution of the Local Limited Partnerships, proceeds will be distributed
according to the respective Local Limited Partnership agreements.

The following is a summary of investments in Local Limited Partnerships at June
30, 2003:
<TABLE>
<CAPTION>

Capital contributions and advances paid to Local Limited Partnerships
<S>                                                                                              <C>
   and purchase price paid to withdrawing partners of Local Limited Partnerships                 $  58,634,549


Cumulative equity in losses of Local Limited Partnerships
   (excluding cumulative unrecognized losses of $57,008,260)                                       (46,792,178)

Cumulative cash distributions received from Local Limited Partnerships                              (4,055,682)


Investments in Local Limited Partnerships before adjustments                                         7,786,689


Excess of investment cost over the underlying assets acquired:

   Acquisition fees and expenses                                                                     5,284,749


   Cumulative amortization of acquisition fees and expenses                                         (1,634,368)

Investments in Local Limited Partnerships before reserve for valuation                              11,437,070

Reserve for valuation of investments in Local Limited Partnerships                                  (4,602,776)


Investments in Local Limited Partnerships                                                        $   6,834,294

</TABLE>

For the three months ended June 30, 2003, the Partnership advanced $15,000 to
one Local Limited Partnership, all of which was reserved. The Partnership has
recorded a reserve for valuation for its investment 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, 2003 is $1,569,543. For the three months ended
June 30, 2003, the Partnership has not recognized $1,300,640 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. The Partnership recognized $990 of previously unrecognized losses
in the three months ended June 30, 2003.


<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.

Accounting Polices

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 because the Partnership does not have control
over the major operating and financial policies of the Local Limited
Partnerships in which it invests. 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 Partnership investments
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. Real estate experts
analyze the investments to determine if impairment indicators exist. If so, the
carrying value is compared to the undiscounted future cash flows expected to be
derived from the asset. If there is a significant impairment in carrying value,
a provision to write down the asset to fair value will be recorded in the
Partnership's financial statements.

Liquidity and Capital Resources

The Partnership had a decrease in cash and cash equivalents of $231,846 for the
three months ended June 30, 2003. This decrease is attributable to cash used for
operations and advances paid to Local Limited Partnerships offset by cash
distributions received from Local Limited Partnerships.

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, 2003, $905,204 of cash, cash
equivalents and marketable securities has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,159,000 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 three Local Limited Partnerships and the Partnership
has paid approximately $734,000 (net of paydowns) to purchase the mortgage of
The Kyle Hotel. In the event a Local Limited Partnership encounters

<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)


Liquidity and Capital Resources (continued)

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, 2003, the Partnership has advanced
approximately $1,929,000 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 $2,512,000 of
operating funds 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, 2003, 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, 2003.

Results of Operations

For the three months ended June 30, 2003, the Partnership's operations resulted
in a net loss of $535,753 as compared to a net loss of $592,174 for the same
period in 2002. The decrease in net loss is primarily due to a decrease in
general and administrative expenses and a decrease in losses of Local Limited
Partnerships. The decrease in general and administrative expenses is primarily
due to charges from an affiliate of the General Partner for operational and
administrative expenses necessary for the operation of the Partnership related
to the year ended March 31, 2002, which are being expensed in the three months
ended June 30, 2002. The decrease in equity in losses is due to an increase in
unrecognized losses by the Partnership of Local Limited Partnerships with
carrying values of zero.

Portfolio Update

The Partnership's investment portfolio consists of limited partnership interests
in forty-seven 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, with an immaterial amount of Tax
Credits expected to be generated during 2003 and 2004. 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 (the "Compliance Period"). 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 forty-seven
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.


<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)

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.

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.

The Managing General Partner negotiated an agreement with an unaffiliated entity
to have the ability to transfer its interest to the unaffiliated entity or its
designee with respect to the following Properties: Briarwood II, located in Lake
Havasua, Arizona, Eaglewood, located in Covington, Tennessee, Fulton, located in
Fulton, Kentucky, Kirkendall Heights, located in Ellsworth, Kansas and Poplar
Village, located in Cumberland, Kentucky. Although these Properties do not share
a common Local General Partner, they are all Rural Housing Section 515 ("FMHA")
properties. The Managing General Partner has the right to put its interest in
any of the Properties at any time in exchange for a Contingent Note that grants
the Partnership 50% of all future net cash receipts from such Local Limited
Partnership interest. Should the Partnership dispose of its interest in the
above-mentioned Properties in any other manner, the Partnership will be required
to pay a $2,500 termination fee per Property.

The Managing General Partner reached an agreement to transfer the Partnership's
interest in Aurora East Apartments, located in Denver, Colorado, to the Local
General Partner of the Property. On January 2, 2003, the Managing General
Partner transferred its interest in the Property to the Local General Partner
for $150,000. The Managing General Partner, in accordance with and as permitted
by the Partnership Agreement, retained the entire amount of net proceeds in
Reserves. The sale will generate taxable income of approximately $1.1 million,
or $11 per Unit.

During the third quarter of 2002, the Massachusetts Housing Finance Agency
("MHFA") issued a report that gave Granite V, located in Boston, Massachusetts,
a below average physical condition rating. Site management addressed the issues
listed in the report, and MHFA subsequently rated the Property in satisfactory
condition. Unfortunately, current replacement reserve levels are inadequate to
meet future needs. During the first quarter of 2003, the Managing General
Partner approved a transfer of the Local General Partner interest to a new Local
General Partner. Since the Property's mortgage, which accrues interest at a rate
of 12.2%, may be prepaid without a premium beginning in 2002, the new Local
General Partner is pursuing a refinancing of the Property. The Compliance Period
for the Property ends in 2003, and the Managing General Partner has begun to
identify possible disposition options for the Partnership's interest in the
Property.

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. The mortgage loans on both Properties are payable only out of
available cash flow, and neither Property has made mortgage payments in several
years.


<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)

Several years ago Willow Lake, located in Kansas City, Missouri, entered into a
loan workout agreement that allowed the Property to defer the payment of some of
the interest on the loan. The loan workout agreement expired on May 31, 2001,
and the Property was unable to make the payment required under the loan workout
agreement of approximately $227,000. After a long negotiating period, a mutually
acceptable workout plan was agreed upon, whereby the Property used its Operating
Deficit Escrow of approximately $75,000 plus approximately $78,000 from its
Replacement Reserve Account to paydown the loan. In addition, the Property is
required to make monthly payments on the loan until the outstanding balance is
fully repaid. The Managing General Partner has advanced Partnership Reserves to
the Property in order to make the required payments. Occupancy at the Property
has remained depressed during recent months due to a slowing economy and an
excess of supply over demand for rental units. Rental rates are declining as a
result.

During 1994, the Local General Partner at Admiral Court, located in
Philadelphia, Pennsylvania, transferred its interest in the Local Limited
Partnership. The IRS subsequently conducted a compliance audit at the Property
and has taken the position that the Property is subject to recapture due to
non-compliance issues. The Managing General Partner disagrees with the IRS and
is working to resolve the matter. In the opinion of the Managing General
Partner, there is a risk that the Local Limited Partnership and, consequently,
the Partnership could suffer significant Tax Credit recapture or Tax Credit
disallowance. However, it is not possible to quantify the potential amount at
this time. The Property's Tax Credit stream ended in 1999. Further, the Property
suffers from poor location and security issues. Vandalism has caused an increase
in maintenance and repair expenses and has negatively affected the Property's
occupancy levels and tenant profile. The Managing General Partner and the Local
General Partner have begun to pursue disposition of the Partnership's interest
in the Property.

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. The Property no longer generates Tax Credits and the
Compliance Period expires in 2005. Recently, 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 concurrently executed a Put
Agreement for the Partnership's interest in the Property to the Local General
Partner. The Put Agreement gives the Partnership the right to transfer its
interest to the Local General Partner. It is unlikely the Partnership will
transfer its interest until the end of the Compliance Period.

Operations at Westwood Manor, located in Flint, Michigan, have suffered
recently. Poor site management has caused occupancy, deferred maintenance and
curb appeal issues. The Partnership also advanced $50,000 from Reserves to
address the deferred maintenance issues at the Property during 2001. The advance
was to be repaid through operations, if available, with the Local General
Partner obligated to pay back 50% of the remaining balance should the entire
amount of the advance not be repaid by December 31, 2001. The Property did not
generate sufficient cash from operations to repay any of the Partnership's
advance. The Partnership has not yet made a demand from the Local General
Partner to meet his obligation to repay 50% of the advance. In addition, the
Managing General Partner has begun discussions with the Local General Partner
regarding the refinancing of the Property and a disposition of the Partnership's
interest in the Property.

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 Managing General Partner
will continue in its attempts to dispose of the Partnership's interest in the
Property.


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


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


Property Discussions (continued)

Elmwood/Delmar, located in Aurora, Colorado, continues to maintain high
occupancy, as demand for affordable housing in the area remains strong. Capital
improvements undertaken over the past year have improved the Property's
appearance but more improvements are necessary. The Property generated its last
year of Tax Credits during 1999. The Managing General Partner has begun to
identify possible disposition strategies with respect to its interest in the
Property.

As previously reported, Pleasant Plaza, located in Malden, Massachusetts, and
South Holyoke, located in Holyoke, Massachusetts, receive a subsidy under the
State Housing Assistance Rental Program ("SHARP"), which is an important part of
their annual income. As originally conceived, the SHARP subsidy was scheduled to
decline over time to match increases in net operating income. However, increases
in net operating income failed to keep pace with the decline in the SHARP
subsidy. Many of the SHARP properties (including Pleasant Plaza and South
Holyoke) structured workouts that included additional subsidies in the form of
Operating Deficit Loans ("ODL's"). Effective October 1, 1997, the Massachusetts
Housing Finance Agency ("MHFA"), which provided the SHARP subsidies, withdrew
funding of the ODL's from its portfolio of seventy-seven subsidized properties.
Properties unable to make full debt service payments were declared in default by
MHFA. The Managing General Partner has 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. On
September 16, 1998, the Partnership joined with the RSO and about twenty other
SHARP property owners and filed suit against the MHFA (Mass. Sup. Court Civil
Action #98-4720). Among other things, the suit seeks to enforce the MHFA's
previous financial commitments to the SHARP properties. The lawsuit is complex,
so no predications can be made at this time as to the ultimate outcome. In the
meantime, the Managing General Partner intends to continue to participate in the
RSO's efforts to negotiate a resolution of this matter with MHFA. Due to the
existing operating deficits and the dependence on these subsidies, Pleasant
Plaza and South Holyoke have been declared in default on their mortgage
obligations.

Pleasant Plaza was included in a "Dilution Pool" composed of approximately
twenty of the seventy-seven SHARP properties. MHFA made an offering to Wall
Street that consisted primarily of an effort to sell the tax losses generated by
the 20 partnerships, assuming restructured mortgages. As a result, a new limited
partner was admitted to the Local Limited Partnership that owns Pleasant Plaza,
and the Partnership's interest in the Local Limited Partnership was diluted to
4%. The Partnership had the right to put the Partnership's remaining interest in
the Local Limited Partnership to the Local General Partner one-year from the
effective date of admitting the new investor limited partner. Effective October
8, 2001 the Partnership transferred its remaining interest in the Property.
Therefore, the Partnership no longer has an interest in Pleasant Plaza.

The Local General Partner of South Holyoke negotiated an agreement with MHFA to
restructure the SHARP and ODL debt as well as the mortgage on the Property. As
part of the restructuring, the Partnership contributed additional capital of
$100,000 to the Property in exchange for the right to put its interest to the
Local General Partner at the end of the Property's Compliance Period, January 1,
2004.

Operations at Breckenridge, located in Duluth, Georgia, which historically has
operated at a deficit, have slightly improved as a result of ongoing capital
improvements made to the Property. However, the Property continues to experience
occupancy fluctuations. Based upon the Property's persistent operating
challenges, the Managing General Partner expressed concerns regarding the
long-term viability of the Property and believed it was in the best interest of
the Partnership to dispose of its interest. Effective December 31, 2000, the
Managing General Partner, on behalf of the Partnership, entered into an
agreement to transfer the Partnership's interest in the Local Limited
Partnership to an unaffiliated entity. The agreement includes provisions to
minimize the risk of recapture. As of December 31, 2002, the Partnership had
transferred 99% its interest in the Property, and on January 3, 2003 the
Partnership transferred its remaining 1% interest in the Property.


<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 director 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 Jenny Netzer pursuant to section 302
                           of the Sarbanes-Oxley Act of 2002

                    32.1   Certification of Jenny Netzer 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, 2003



<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 14, 2003                  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