February 11, 2000




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

Re:     Boston Financial Qualified Housing Tax Credits L.P.  III
        Report on Form 10-QSB for Quarter Ended December 31, 1999
        File No. 01-18462




Gentlemen:

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


Very truly yours,



/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller





QH3-Q3.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          December   31, 1999
                                    ---------------------------------

                                       OR

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

For the transition period from            to


      Commission file number 01-18462

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


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


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


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

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


<PAGE>


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

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


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

Item 1.  Combined Financial Statements

         Combined Balance Sheet - December 31, 1999 (Unaudited)                               1

         Combined Statements of Operations (Unaudited) - For the Three and Nine
           Months Ended December 31, 1999 and 1998                                            2

         Combined Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Nine Months Ended December 31, 1999                          3

         Combined Statements of Cash Flows (Unaudited) -  For the
           Nine Months Ended December 31, 1999 and 1998                                       4

         Notes to the Combined Financial Statements (Unaudited)                               5

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

PART II - OTHER INFORMATION

Items 1-6                                                                                    13

SIGNATURE                                                                                    14

</TABLE>


<PAGE>


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


                             COMBINED BALANCE SHEET
                                December 31, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>


Assets

<S>                                                                                           <C>
Cash and cash equivalents                                                                     $        423,541
Marketable securities, at fair value                                                                   501,891
Investments in Local Limited Partnerships, net of reserve
   for valuation of $2,017,192 (Note 1)                                                             13,253,492
Accounts receivable, net                                                                               111,773
Interest receivable                                                                                      7,765
Prepaid expenses                                                                                        25,439
Tenant security deposits                                                                                83,216
Replacement reserves                                                                                   214,366
Operating reserves                                                                                      41,285
Rental property at cost, net of accumulated
   depreciation and reserve for valuation                                                           12,789,457
Deferred expenses, net of accumulated amortization of $154,736                                         199,056
Other assets                                                                                           239,257
                                                                                              ----------------
     Total Assets                                                                             $     27,890,538
                                                                                              ================

Liabilities and Partners' Equity

Accounts payable to affiliates                                                                $      2,259,660
Accounts payable and accrued expenses                                                                  373,545
Interest payable                                                                                       336,925
Note payable, affiliate                                                                                514,968
Security deposits payable                                                                               81,784
Advances from affiliate                                                                                200,000
Mortgage notes payable                                                                               7,951,381
                                                                                              ----------------
     Total Liabilities                                                                              11,718,263

Minority interest in Local Limited Partnerships                                                        879,756
                                                                                              ----------------

General, Initial and Investor Limited Partners' Equity                                              15,294,778
Net unrealized gains on marketable securities                                                           (2,259)
     Total Partners' Equity                                                                         15,292,519
                                                                                              ----------------
     Total Liabilities and Partners' Equity                                                   $     27,890,538
                                                                                              ================

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



<PAGE>


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


                        COMBINED STATEMENTS OF OPERATIONS
         For the Three and Nine Months Ended December 31, 1999 and 1998
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                        Three Months Ended                  Nine Months Ended
                                                  December 31,      December 31,      December 31,     December 31,
                                                      1999              1998              1999             1998
                                                 --------------   ---------------   --------------     -----------

Revenue:
<S>                                               <C>              <C>               <C>               <C>
   Rental                                         $    611,414     $     594,032     $  1,831,776      $  1,794,205
   Investment                                           13,133            12,008           36,669            29,894
   Other                                               137,452           410,139          214,496           491,402
                                                  ------------     -------------     ------------      ------------
     Total Revenue                                     761,999         1,016,179        2,082,941         2,315,501
                                                  ------------     -------------     ------------      ------------

Expenses:
   Asset management fees, related party                 95,409            95,938          284,764           287,814
   General and administrative (includes
     reimbursements to affiliates of $104,186
     and $100,157 in 1999 and 1998, respectively)      116,196            96,085          203,554           293,097
   Bad debt                                              5,000             5,165          102,998           102,069
   Provision for valuation of investment in Local
     Limited Partnership                                     -                 -          382,192                 -
   Property management fees                             28,561            29,115           86,719           108,608
   Rental operations, exclusive of depreciation        400,545           378,702        1,195,201         1,076,051
   Interest                                            185,966           180,149          578,909           574,723
   Depreciation                                        156,743           155,296          467,441           476,827
   Amortization                                         27,669            44,569          111,933           133,129
                                                  ------------     -------------     ------------      ------------
     Total Expenses                                  1,016,089           985,019        3,413,711         3,052,318
                                                  ------------     -------------     ------------      ------------

Income (loss) before equity in losses of Local
   Limited  Partnerships,  minority interest and
   loss on liquidation of interest in Local
   Limited Partnership                                (254,090)           31,160       (1,330,770)         (736,817)

Equity in losses of Local Limited Partnerships
   (Note 1)                                           (733,714)         (570,195)      (1,826,214)       (2,129,535)

Minority interest in losses of Local Limited
   Partnerships                                          2,581             2,415            6,971                68

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

Loss before gain on transfer                          (985,223)         (536,620)      (3,343,896)       (2,866,284)

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


Net Loss                                          $   (985,223)    $    (536,620)    $ (3,343,896)     $ (2,226,101)
                                                  ============     =============     ============      ============

Net Loss allocated:
   To General Partners                            $     (9,852)    $      (5,366)    $    (33,439)     $    (22,261)
   To Limited Partners                                (975,371)         (531,254)      (3,310,457)       (2,203,840)
                                                  ------------     -------------     ------------      ------------
                                                  $   (985,223)    $    (536,620)    $ (3,343,896)     $ (2,226,101)
                                                  ============     =============     ============      ============

Net Loss before gain on transfer per
   Limited Partnership Unit (100,000 Units)       $      (9.75)    $       (5.31)    $     (33.10)     $    (28.38)
                                                  ============     =============     ============      ===========

Gain on transfer per Limited Partnership
   Unit (100,000 Units)                           $          -     $           -     $          -      $       6.34
                                                  ============     =============     ============      ============

Net Loss per Limited Partnership Unit
   (100,000 Units)                                $     (9.75)     $       (5.31)    $     (33.10)     $    (22.04)

                                                  ============      =============     ============      ===========

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


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

         COMBINED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                   For the Nine Months Ended December 31, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>

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

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

Comprehensive Loss:
   Net change in net unrealized
      gains on marketable securities
      available for sale                        -             -                  -        (2,496)         (2,496)
   Net Loss                               (33,439)            -         (3,310,457)            -      (3,343,896)
                                      -----------     ---------       ------------   -----------   -------------
Comprehensive Loss                        (33,439)            -         (3,310,457)       (2,496)     (3,346,392)
                                      -----------     ---------       ------------   -----------   -------------

Balance at December 31, 1999          $  (722,897)    $   5,000       $ 16,012,675   $    (2,259)  $  15,292,519
                                      ===========     =========       ============   ===========   =============


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

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


                        COMBINED STATEMENTS OF CASH FLOWS
              For the Nine Months Ended December 31, 1999 and 1998
                                   (Unaudited)

<TABLE>
<CAPTION>


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

<S>                                                                          <C>                 <C>
Net cash provided by (used for) operating activities                         $      (413,847)    $      230,130

Net cash provided by investing activities                                            321,462            178,096

Net cash provided by financing activities                                             75,561             12,937
                                                                             ---------------     --------------

Net increase (decrease) in cash and cash equivalents                                 (16,824)           421,163

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

Cash and cash equivalents, ending                                            $       423,541     $      733,030
                                                                             ===============     ==============

Supplemental Disclosure:
    Cash paid for interest                                                   $       594,467     $      594,508
                                                                             ===============     ==============


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


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

                   NOTES TO THE COMBINED FINANCIAL STATEMENTS
                                   (Unaudited)


The  unaudited  financial  statements  presented  herein  have been  prepared in
accordance  with the  instructions  to Form 10-QSB and do not include all of the
information  and note  disclosures  required by  generally  accepted  accounting
principles.  These  statements  should be read in conjunction with the financial
statements and notes thereto included with the  Partnership's  Form 10-K for the
year ended  March 31,  1999.  In the  opinion  of  management,  these  financial
statements  include  all  adjustments,   consisting  only  of  normal  recurring
adjustments,  necessary to present fairly the Partnership's  financial  position
and results of  operations.  The results of operations for the period may not be
indicative of the results to be expected for the year.

The Managing  General Partner has elected to report results of the Local Limited
Partnerships  on a 90-day  lag basis,  because  the Local  Limited  Partnerships
report  their  results on a calendar  year  basis.  Accordingly,  the  financial
information  of  the  Local  Limited   Partnerships  that  is  included  in  the
accompanying  financial statements is as of September 30, 1999 and 1998. Certain
reclassifications have been made to prior period financial statements to conform
to current period classifications.

1.   Investments in Local Limited Partnerships

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

The  following is a summary of  Investments  in Local  Limited  Partnerships  at
December 31, 1999, excluding the Combined Entities:

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

Cumulative equity in losses of Local Limited Partnerships (net of
   cumulative unrecognized losses of $50,213,158)                                                (45,236,239)

Cumulative cash distributions received from Local Limited Partnerships                            (2,880,076)
                                                                                               -------------

Investments in Local Limited Partnerships before adjustment                                       11,303,319

Excess of investment cost over the underlying net assets acquired:

   Acquisition fees and expenses                                                                   5,335,849

   Accumulated amortization of acquisition fees and expenses                                      (1,368,484)
                                                                                               -------------

Investments in Local Limited Partnerships                                                         15,270,684

Reserve for valuation of investments in Local Limited Partnerships                                (2,017,192)
                                                                                               -------------
                                                                                               $  13,253,492

</TABLE>

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

             NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


1.   Investments in Local Limited Partnerships (continued)

The  Partnership's  share of the net losses of the Local  Limited  Partnerships,
excluding  the Combined  Entities,  for the nine months ended  December 31, 1999
totaled $5,132,253. For the nine months ended December 31, 1999, the Partnership
has not  recognized  $3,410,268  of equity in losses  relating to certain  Local
Limited  Partnerships  in which  cumulative  equity in losses and  distributions
exceeded its total investments in these Local Limited Partnerships.

2.   Liquidation of Interests in Local Limited Partnerships

For  financial  reporting  purposes,  loss on  liquidation  of interest in Local
Limited Partnership of $193,883 was recognized in the nine months ended December
31, 1999 as a result of the redemption of Boulevard Commons II.




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


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

3.   Supplemental Combining Schedules

                                 Balance Sheets

                                              Boston Financial
                                             Qualified Housing      Combined
                                                 Tax Credits        Entities                          Combined
                                                L.P. III (A)           (B)        Eliminations           (A)
Assets
<S>                                            <C>              <C>               <C>              <C>
Cash and cash equivalents                      $     122,742    $     167,799     $     133,000    $     423,541
Marketable securities, at fair value                 501,891                -                 -          501,891
Investments in Local Limited
   Partnerships, net                              15,168,793                -        (1,915,301)      13,253,492
Accounts receivable, net                                   -          111,773                 -          111,773
Interest receivable                                    7,765                -                 -            7,765
Notes receivable                                   1,345,345                -        (1,345,345)               -
Prepaid expenses                                           -           25,439                 -           25,439
Tenant security deposits                                   -           83,216                 -           83,216
Replacement reserves                                       -          214,366                 -          214,366
Operating reserves                                         -           41,285                 -           41,285
Rental property at cost, net of
   accumulated depreciation and reserve
   for valuation                                           -       12,028,957           760,500       12,789,457
Deferred expenses, net                                     -          199,056                 -          199,056
Other assets                                               -          239,257                 -          239,257
                                               -------------    -------------     -------------    -------------
     Total Assets                              $  17,146,536    $  13,111,148     $  (2,367,146)   $  27,890,538
                                               =============    =============     =============    =============

Liabilities and Partners' Equity
Accounts payable to affiliates                 $   2,251,824    $   1,076,322     $  (1,068,486)   $   2,259,660
Accounts payable and accrued
   expenses                                          288,711           84,834                 -          373,545

Interest payable                                           -          336,925                 -          336,925

Note payable, affiliate                              514,968                -                 -          514,968
Security deposits payable                                  -           81,784                 -           81,784

Advance from affiliate                                     -          200,000                 -          200,000

Mortgage notes payable                                     -        9,296,726        (1,345,345)       7,951,381
                                               -------------    -------------     -------------    -------------
     Total Liabilities                             3,055,503       11,076,591        (2,413,831)      11,718,263
                                               -------------    -------------     -------------    -------------

Minority interest in Local
   Limited Partnerships                                    -                -           879,756          879,756
                                               -------------    -------------     -------------    -------------

General, Initial and Investor Limited
   Partners' Equity                               14,093,292        2,034,557          (833,071)      15,294,778
Net unrealized losses on marketable
   securities                                         (2,259)               -                 -           (2,259)
                                               -------------    -------------     -------------    -------------
     Total Partners' Equity                       14,091,033        2,034,557          (833,071)      15,292,519
                                               -------------    -------------     -------------    -------------
     Total Liabilities and
       Partners' Equity                        $  17,146,536    $  13,111,148     $  (2,367,146)   $  27,890,538
                                               =============    =============     =============    =============

(A) As of December 31, 1999.
(B) As of September 30, 1999.
</TABLE>


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


             NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)

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

                                                 Statements of Operations


                                               Boston Financial
                                              Qualified Housing     Combined
                                                 Tax Credits        Entities
                                                L.P. III(A)            (B)         Eliminations           Combined
Revenue:
<S>                                            <C>              <C>               <C>              <C>
   Rental                                      $          -     $   1,831,776     $           -    $   1,831,776

   Investment                                         29,380            7,289                 -           36,669
   Other                                             186,397           67,863           (39,764)         214,496
                                               -------------    -------------     -------------    -------------
     Total Revenue                                   215,777        1,906,928           (39,764)       2,082,941
                                               -------------    -------------     -------------    -------------

Expenses:
   Asset management fees, related party              284,764                -                 -          284,764
   General and administrative                        286,622                -           (83,068)         203,554
Bad debt                                           1,250,848                -        (1,147,850)         102,998
Provision for valuation of investment in
     Local Limited Partnership                       382,192                -                 -          382,192
   Property management fees                                -           86,719                 -           86,719
   Rental operations, exclusive of depreciation                 -                 1,165,769        29,432
1,195,201
   Interest                                            4,500          614,173           (39,764)         578,909
Depreciation                                               -          467,441                 -          467,441
Amortization                                          91,573           20,360                 -          111,933
                                               -------------    -------------     -------------    -------------
     Total Expenses                                2,300,499        2,354,462        (1,241,250)       3,413,711
                                               -------------    -------------     -------------    -------------

Loss before equity in losses of Local
   Limited Partnerships, minority
   interest and loss on liquidation of interest
   in Local Limited Partnership                   (2,084,722)        (447,534)        1,201,486       (1,330,770)

Equity in losses of Local Limited
   Partnerships                                   (2,266,777)               -           440,563       (1,826,214)

Minority interest in losses of
   Local Limited Partnerships                              -                -             6,971            6,971

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

Net loss                                       $  (4,545,382)   $    (447,534)    $   1,649,020    $  (3,343,896)
                                               =============    =============     =============    =============

(A) For the nine months ended December 31, 1999.
(B) For the nine months ended September 30, 1999.
</TABLE>


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


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

3.   Supplemental Combining Schedules (continued)


                            Statements of Cash Flows

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

<S>                                            <C>              <C>               <C>              <C>
Net cash used for operating activities         $    (153,348)   $     (314,135)   $      53,636    $    (413,847)

Net cash provided by (used for)
   investing activities                              (62,903)          (16,117)         400,482          321,462

Net cash provided by financing activities                  -           396,679         (321,118)          75,561
                                               -------------    --------------    -------------    -------------

Net increase (decrease) in cash
   and cash equivalents                             (216,251)           66,427          133,000          (16,824)

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

Cash and cash equivalents, ending              $     122,742    $      167,799    $     133,000    $     423,541
                                               =============    ==============    =============    =============


(A) For the nine months ended December 31, 1999.
(B) For the nine months ended September 30, 1999.
</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 their expectations will
be attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors,  including,  without limitation,  general economic and real
estate conditions and interest rates.

Liquidity and Capital Resources

At December 31, 1999, the Partnership, including the Combined Entities, had cash
and cash  equivalents of $423,541 as compared to $440,365 at March 31, 1999. The
increase is primarily  attributable  to cash  distributions  received from Local
Limited  Partnerships  and  proceeds  from sales and  maturities  of  marketable
securities.  The  increase  is  partially  offset by cash  used for  operations,
purchases of marketable securities and additions to rental property.

The  Managing  General  Partner  initially  designated  3% of Gross  Proceeds as
Reserves, 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  December  31, 1993,  the  Managing  General
Partner  decided to increase  the Reserve  level to 3.75%.  Funds  approximating
$196,000  have been  withdrawn  from the  Reserves to pay legal and other costs.
Additionally,  professional  fees relating to various  property  issues totaling
approximately $1,795,000 have been paid from Reserves. To date, Reserve funds in
the  amount of  approximately  $434,000  have also been used to make  additional
capital contributions to three Local Limited  Partnerships,  and the Partnership
has paid approximately  $974,000 (net of paydowns) to purchase the mortgage of a
Local Limited  Partnership.  To date,  the  Partnership  has used  approximately
$2,163,000  of  operating  funds to  replenish  Reserves.  At December 31, 1999,
approximately  $559,000 of cash, cash equivalents and marketable  securities has
been designated as Reserves.  Reserves may be used to fund Partnership operating
deficits, if the Managing General Partner deems funding appropriate. If Reserves
are not adequate to cover the  Partnership's  operations,  the Partnership  will
seek other  financing  sources  including,  but not limited to, the  deferral of
Asset  Management  Fees paid to an affiliate of the Managing  General Partner or
working with Local Limited Partnerships to increase cash distributions.

In the  event a Local  Limited  Partnership  encounters  operating  difficulties
requiring  additional funds, the Partnership might deem it in its best interests
to provide  such funds,  voluntarily,  in order to protect its  investment.  The
Partnership has advanced approximately  $1,955,000 to Local Limited Partnerships
to fund operating deficits.

Since the  Partnership  invests as a limited  partner,  the  Partnership  has no
contractual  duty to  provide  additional  funds to Local  Limited  Partnerships
beyond its specified investment. Thus, at December 31, 1999, the Partnership had
no contractual or other  obligation to any Local Limited  Partnership  which had
not been paid or provided for.

Cash Distributions

No cash distributions were made during the nine months ended December 31, 1999.

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

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


Results of Operations

For the nine months ended December 31, 1999,  Partnership operations resulted in
a net loss of  $3,343,896,  as compared to a net loss of $2,226,101 for the same
period  in 1998.  The  increase  in net  loss is  primarily  attributable  to an
increase in loss on liquidation due to the transfer of Boulevard  Commons II and
the  reserve  for  Boulevard  Commons  IIA.  The  increase  in net  loss is also
attributable  to a gain on transfer of Willowick in the quarter ended  September
30, 1998.  These changes are partially  offset by a decrease in equity in losses
of Local Limited  Partnership's  due to decreases in general and  administrative
expenses, depreciation, management fees and amortization expenses.

Property Discussions

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

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

Breckenridge  Creste,  located in Duluth,  Georgia,  is  experiencing  operating
deficits  as a result of higher  vacancies  during the  summer of 1998.  However
occupancy  for the last two  quarters has  increased  to the mid 90% range.  The
Managing  General  Partner  is  working  with  property   management  to  review
completion of needed capital  improvements  and to review the revised  marketing
strategy. In addition,  the Managing General Partner is working closely with the
Local General Partner to develop a plan that will ultimately  transfer ownership
of the property. The plan includes provisions to minimize the risk of recapture.

Columbia  Townhouses,   located  in  Burlington,  Iowa,  has  been  experiencing
operating  deficits  due to  increases  in  vacancy.  As of December  31,  1999,
occupancy was 100%. The Local General Partner,  the Managing General Partner and
the  Management  Agent  have been  working  together  to review  the  marketing,
security and  long-term  strategy  for this  property.  In  addition,  the Local
General  Partner is in  negotiations  with the lender about the  possibility  of
refinancing  the  mortgage.  Effective  September  1999,  the City of Burlington
acquired  through  eminent  domain,  one of the  buildings  comprising  Columbia
Townhomes.  The city acquired the building for the purpose of allowing access to
a  contemplated  Walgreens  development.  For tax  purposes,  the  taking of one
building  by  eminent   domain  will  result  in  both  Section  1231  Gain  and
cancellation  of  indebtedness  income.  In  addition,  there will be tax credit
recapture of  approximately  $1.40 per unit for the 1999 tax year.  The Managing
General  Partner  continues to work with the Local General Partner in monitoring
this property and the outcome of the refinancing.


<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


Property Discussions (continued)

As previously  reported,  Harbour View,  located in Staten Island, New York, had
defaulted on its HUD-insured loan. Subsequently, the lender assigned the loan to
HUD. In  December  1996,  the  mortgage  was sold at auction to an  unaffiliated
institutional  buyer.  The Managing  General  Partner and Local General  Partner
continue  to  participate  in  workout  discussions  with  the new  lender.  The
Partnership's  ability to retain its interest in the property will depend on the
ability of the Local General Partner and  Partnership  affiliates to negotiate a
satisfactory workout agreement with the new lender. However, if the negotiations
are not  successful,  it is possible  that the  Partnership  will not be able to
retain its interest in the property through 2000. A foreclosure  would result in
recapture of credits for  investors,  the  allocation  of taxable  income to the
Partnership and loss of future benefits associated with this property. Occupancy
for this property as of June 30, 1999 was 93%.

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

Pleasant  Plaza,  located in Malden,  Massachusetts,  as well as South  Holyoke,
located in Holyoke,  Massachusetts,  receive a subsidy  under the State  Housing
Assistance  Rental Program  (SHARP),  which is an important part of their annual
income. As originally conceived, the SHARP subsidy was scheduled to decline over
time to match  increases  in net  operating  income.  However,  increases in net
operating income failed to keep pace with the decline in the SHARP subsidy. Many
of the SHARP properties  (including Pleasant Plaza and South Holyoke) structured
workouts that  included  additional  subsidies in the form of Operating  Deficit
Loans (ODL's).  Effective  October 1, 1997, the  Massachusetts  Housing  Finance
Agency  (MHFA),  which  provided the SHARP  subsidies,  withdrew  funding of the
ODL's.  Properties  unable to make full debt service  payments  were declared in
default by MHFA. The Managing  General  Partner joined a group of SHARP property
owners called the responsible  SHARP Owners,  Inc. (RSO) and is negotiating with
MHFA and the Local General  Partners of Pleasant Plaza and South Holyoke to find
a solution to the problems that will result from the withdrawn subsidies.  Given
existing  operating  deficits and the dependence on these  subsidies by Pleasant
Plaza and South Holyoke House, it is likely that both properties will default on
their  mortgage  obligations  in the near  future.  On September  16, 1998,  the
Partnership  joined  with the RSO and about 20 other SHARP  property  owners and
filed suit  against the MHFA (Mass.  Sup.  Court Civil Action  #98-4720).  Among
other  things,   the  suit  seeks  to  enforce  the  MHFA's  previous  financial
commitments  to the SHARP  properties.  The  lawsuit is complex and in its early
stages,  so no predications can be made at this time as to the ultimate outcome.
In the meantime, the Managing General Partner intends to continue to participate
in the RSO's efforts to negotiate a resolution of this matter with MHFA.

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

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



<PAGE>

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




PART II       OTHER INFORMATION

Items 1-5     Not applicable

Item 6        Exhibits and reports on Form 8-K

                (a)Exhibits - None

                (b)Reports  on Form 8-K - No  reports  on Form  8-K  were  filed
                   during the quarter ended December 31, 1999.


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

                                    SIGNATURE

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


DATED:    February 11, 2000          BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                     CREDITS L.P. III

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




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



<PAGE>