UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q


(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, 2009
                               -----------------------------

                                       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 .

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ___               Accelerated Filer  ___
Non-accelerated filer   ___               Smaller reporting company   X
(Do not check if a smaller reporting company)                       -------



Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                              Yes       No  X .
                                  ______  ______


<PAGE>


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









                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
<S>                                                                                          <C>

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

Item 1.  Financial Statements

         Balance Sheets  - June 30, 2009 (Unaudited) and
         March 31, 2009 (Audited)                                                               1

         Statements of Operations (Unaudited) - For the Three
           Months Ended June 30, 2009 and 2008                                                  2

         Statement of Changes in Partners' Equity
           (Unaudited) - For the Three Months Ended June 30, 2009                               3

         Statements of Cash Flows (Unaudited) - For the
           Three Months Ended June 30, 2009 and 2008                                            4

         Notes to the Financial Statements (Unaudited)                                          5

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                            17

Item 4.  Controls and Procedures                                                               17

PART II - OTHER INFORMATION
----------------------------

Items 1-6                                                                                      18

SIGNATURE                                                                                      19

CERTIFICATIONS                                                                                 20
</TABLE>


<PAGE>


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

                                  BALANCE SHEET
                  June 30, 2009 (Unaudited) and March 31, 2009 (Audited)





<TABLE>
<CAPTION>
<S>                                                                          <C>                        <C>

                                                                               June 30                  March 31
                                                                          ---------------             -------------
Assets
--------
Cash and cash equivalents                                                  $     567,813              $   3,014,508
Investments in Local Limited Partnerships (Note 1)                                     -                          -
                                                                           --------------              -------------

   Total Assets                                                            $     567,813              $   3,014,508
                                                                           =============              =============

Liabilities and Partners' Equity
--------------------------------
Due to affiliate                                                           $      18,433             $      34,248
Accrued expenses                                                                  77,832                    49,019
                                                                           --------------             -------------
   Total Liabilities                                                              96,265                    83,267

General, Initial and Investor Limited Partners' Equity                           471,548                  2,931,241
                                                                           -------------              -------------
   Total Liabilities and Partners' Equity                                  $     567,813              $   3,014,508
                                                                           =============              =============
</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, 2009 and 2008
                                   (Unaudited)



<TABLE>
<CAPTION>
<S>                                                                               <C>                    <C>

                                                                                 2009                    2008
                                                                           ----------------        ----------------
Revenue:
   Investment                                                              $          6,496        $          5,691
                                                                           -----------------       ----------------

Expenses:
   Asset management fees, affiliate                                                   9,051                  15,824
   General and administrative (includes reimbursements
     to an affiliate in the amount of $9,451 and
     $12,339 in 2009 and 2008, respectively)                                         54,739                  40,916
   Amortization                                                                           -                     540
                                                                           ----------------        ----------------
       Total Expenses                                                                63,790                  57,280
                                                                           ----------------        ----------------

Loss before equity in losses of Local Limited Partnerships                          (57,294)                (51,589)

Equity in losses of Local Limited Partnerships (Note 1)                                   -                 (67,419)
                                                                           ----------------        ----------------

Net Loss                                                                   $        (57,294)       $       (119,008)
                                                                           =================        ================

Net Loss allocated:
   General Partners                                                        $           (573)       $         (1,190)
   Limited Partners                                                                 (56,721)               (117,818)
                                                                           -----------------        -----------------
                                                                           $        (57,294)       $       (119,008)
                                                                           =================        =================
Net Loss per Limited Partner Unit
   (100,000 Units)                                                         $          (0.57)       $          (1.18)
                                                                           =================        =================
</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
                    For the Three Months Ended June 30, 2009
                                   (Unaudited)





<TABLE>
<CAPTION>
<S>                                                <C>                <C>               <C>                  <C>

                                                                     Initial           Investor
                                                  General            Limited            Limited
                                                 Partners           Partners           Partners             Total
                                               -----------         -----------       --------------      -------------
Balance at March 31, 2009                      $    29,246        $   5,000        $   2,896,995       $  2,931,241

Cash distributions                                       -                -           (2,402,399)        (2,402,399)


Net Loss                                              (573)               -              (56,721)           (57,294)
                                               -------------     --------------     --------------     --------------

Balance at June 30, 2009                       $    28,673        $   5,000        $     437,875       $    471,548
                                               =============     ==============     ==============     ==============
</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, 2009 and 2008
                                   (Unaudited)



<TABLE>
<CAPTION>
<S>                                                                                <C>                   <C>

                                                                                   2009                  2008
                                                                              -------------        -------------

Net cash used for operating activities                                        $     (44,296)      $     (72,561)

Net cash provided by investing activities                                                 -               5,000

Net cash used for financing activities                                           (2,402,399)                  -
                                                                              --------------       --------------

Net decrease in cash and cash equivalents                                        (2,446,695)            (67,561)

Cash and cash equivalents, beginning                                              3,014,508           1,424,937
                                                                              --------------        -------------

Cash and cash equivalents, ending                                             $     567,813       $   1,357,376
                                                                              ==============       ==============
</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-Q 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-K for the year ended March 31, 2009. 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, 2009 and 2008.

Generally, profits, losses, tax credits and cash flow from operations are
allocated 99% to the Limited Partners and 1% to the General Partners. Net
proceeds from a sale or refinancing will be allocated 95% to the Limited
Partners and 5% to the General Partners, after certain priority payments. The
General Partners may have an obligation to fund deficits in their capital
accounts, subject to limits set forth in the Partnership Agreement. However, to
the extent that the General Partners' capital accounts are in a deficit
position, certain items of net income may be allocated to the General Partners
in accordance with the Partnership Agreement.

1.   Investments in Local Limited Partnerships
______________________________________________
The Partnership currently owns limited partnership interests in three 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 Properties 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.


<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 following is a summary of investments in Local Limited Partnerships at June
30 and March 31, 2009:
<TABLE>
<CAPTION>
<S>                                                                                   <C>              <C>

                                                                                   June 30           March 31
                                                                             ----------------    ----------------
Capital contributions paid to Local Limited Partnerships and purchase
   price paid to withdrawing partners of Local Limited Partnerships          $       7,776,529   $       8,855,847

Cumulative equity in losses of Local Limited Partnerships
    (excluding  cumulative unrecognized losses of $45,937,670
    and $58,573,097 at June 30 and March 31, 2009, respectively)                   (5,556,571)         (6,655,895)

Cumulative cash distributions received from Local Limited Partnerships               (954,292)           (954,292)
                                                                             ----------------    ----------------

Investments in Local Limited Partnerships before adjustments                        1,265,666           1,245,660

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                      167,439             189,984

   Cumulative amortization of acquisition fees and expenses                           (51,629)            (54,168)
                                                                             ----------------    ----------------

Investments in Local Limited Partnerships before valuation allowance                1,381,476           1,381,476

Valuation allowance on investments in Local Limited Partnerships                   (1,381,476)         (1,381,476)
                                                                             ----------------    ----------------

Investments in Local Limited Partnerships                                    $              -    $              -
                                                                             ================    ================
</TABLE>

The Partnership has recorded a valuation 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, 2009 and 2008 is $798,435 and $850,410,
respectively. For the three months ended June 30, 2009 and 2008, the Partnership
has not recognized $798,435 and $782,991, respectively, 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.

During the three months ended June 30, 2009, the Partnership sold its interest
in one Local Limited Partnership, resulting in no net gain or loss.



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

                  NOTES TO THE FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


2.   Fair Value Measurements
____________________________
SFAS No. 157
_____________
In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, "Fair Value Measurements" ("SFAS No. 157"), which provides enhanced
guidance for using fair value to measure assets and liabilities. SFAS No. 157
establishes a common definition of fair value, provides a framework for
measuring fair value under U.S. generally accepted accounting principles and
expands disclosure requirements about fair value measurements. SFAS No. 157 is
effective for financial statements issued in fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. In February
2008, the FASB issued FASB Staff Position 157-2, "Effective Date of FASB
Statement No. 157", which delays the effective date of SFAS No. 157 for all
nonfinancial assets and liabilities except those that are recognized or
disclosed at fair value in the financial statements on at least an annual basis
until November 15, 2008. The Partnership adopted the provisions of SFAS No. 157
for financial assets and liabilities recognized at fair value on a recurring
basis effective April 1, 2008. The partial adoption of SFAS No. 157 did not have
a material impact on the Partnership's Financial Statements. The Partnership
does not expect the adoption of the remaining provisions of SFAS No. 157 to have
a material effect on the Partnership's financial position, operations or cash
flow. This standard requires that a Partnership measure its financial assets and
liabilities using inputs from the three levels of the fair value hierarchy. A
financial asset or liability classification within the hierarchy is determined
based on the lowest level input that is significant to the fair value
measurement. The three levels are as follows:

     Level      1 - Inputs are unadjusted quoted prices in active markets for
                identical assets or liabilities that the Partnership has the
                ability to access at the measurement date.

     Level      2 - Inputs include quoted prices for similar assets and
                liabilities in active markets, quoted prices for identical or
                similar assets or liabilities in markets that are not active,
                inputs other than quoted prices that are observable for the
                asset or liability and inputs that are derived principally from
                or corroborated by observable market data by correlation or
                other means (market corroborated inputs).

     Level      3 - Unobservable inputs reflect the Partnership's judgments
                about the assumptions market participants would use in pricing
                the asset or liability since limited market data exists. The
                Partnership develops these inputs based on the best information
                available, including the Partnership's own data.

Financial assets accounted for at fair value on a recurring basis at June 30 and
March 31, 2009 include cash equivalents of $567,813 and $3,014,508,
respectively.

SFAS No. 159
_____________
In February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("SFAS No. 159"), which permits entities to choose to measure many financial
assets and financial liabilities at fair value. Unrealized gains and losses on
items for which the fair value option has been elected are reported in earnings.
SFAS No. 159 is effective for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Partnership has not elected
to measure any financial assets and financial liabilities at fair value under
the provisions of SFAS No. 159.



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

                  NOTES TO THE FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


3.   New Accounting Principles
    ____________________________
FIN48-3
_______
In December 2008, the FASB issued Interpretation No. 48-3 "Effective Date of
FASB Interpretation No. 48 for Certain Nonpublic Enterprises" ("FIN48-3").
FIN48-3 deferred the effective date of FIN48 for certain nonpublic
organizations. The deferred effective date is intended to give the FASB
additional time to develop guidance on the application of FIN48 by pass through
and not-for-profit entities. The General Partner may modify the Partnership's
disclosures if the FASB's guidance regarding the application of FIN48 to
pass-through entities changes.

SFAS No. 168
____________
In June 2009, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 168, "The FASB Accounting Standards Codification and Hierarchy of
Generally Accepted Accounting Principles, a replacement of FASB Statement No.
162" ("SFAS 168"). SFAS 168 establishes the FASB Standards Accounting
Codification ("Codification") as the source of authoritative GAAP recognized by
the FASB to be applied to nongovernmental entities. The only other source of
authoritative GAAP is the rules and interpretive releases of the SEC which only
apply to SEC registrants. The Codification will supersede all the existing
non-SEC accounting and reporting standards upon its effective date. Since the
issuance of the Codification is not intended to change or alter existing GAAP,
adoption of this statement will not have an impact on the Partnership's
financial position or results of operations, but will change the way in which
GAAP is referenced in the Partnership's financial statements. SFAS 168 is
effective for interim and annual reporting periods ending after September 15,
2009.

SFAS No. 165
____________
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165"),
which establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before the financial statements are
issued or are available to be issued. The Partnership adopted SFAS 165 effective
April 1, 2009 and has evaluated subsequent events after the balance sheet date
of June 30, 2009 through August 14, 2009, the date the financial statements were
issued. During this period, the Partnership did not have any recognizable
subsequent events.

FAS 107-1 and APB 28-1
______________________
In April 2009, the FASB issued FASB Staff Position ("FSP") FAS 107-1 and APB
28-1, "Interim disclosures about Fair Value Measurement", which amends FASB
Statement No. 107, "Disclosures about Fair Value of Financial Instruments", and
Accounting Principles Board ("APB") Opinion No. 28, "Interim Financial
Reporting", to require disclosures about the fair value of financial instruments
for interim reporting periods. This FSP also requires companies to disclose the
methods and significant assumptions used to estimate the fair value of financial
instruments in financial statements on an interim basis and to describe any
changes during the period. FSP FAS 107-1 and APB 28-1 are effective for interim
and annual reporting periods ending after June 15, 2009. The Partnership adopted
FSP FAS 107-1 and APB 28-1 effective April 1, 2009 and the adoption did not have
a material impact on the Partnership's financial position or results of
operations.

<PAGE>

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


                  NOTES TO THE FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


4.   Significant Subsidiaries
_____________________________
The following Local Limited Partnership invested in by the Partnership represent
more than 20% of the Partnership's total assets or equity as of June 30, 2009 or
2008 or net losses for the three months ended either June 30, 2009 or 2008. The
following financial information represents the performance of these Local
Limited Partnerships for the three months ended March 31, 2009 and 2008:
<TABLE>
<CAPTION>
<S>                                                                            <C>                     <C>

Riverfront Apartments, L.P.                                                    2009                  2008
---------------------------                                            ---------------           ---------

Revenue                                                                     $  452,200            $  440,000
Net Loss                                                                    $  (66,700)           $  (68,100)

</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 use of
words like "anticipate, "intend," "project," "plan," "expect," "believe,"
"could," and similar expressions are intended to identify such forward-looking
statements. 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 Local Limited Partnerships in which the Partnership invests are Variable
Interest Entities ("VIE"s). The Partnership is involved with the VIEs as a
non-controlling limited partner equity holder. The investments in the Local
Limited Partnerships are made primarily to obtain tax credits on behalf of the
Partnership's investors. The general partners of the Local Limited Partnerships,
who are considered to be the primary beneficiaries, control the day-to-day
operations of the Local Limited Partnerships. The general partners are also
responsible for maintaining compliance with the tax credit program and for
providing subordinated financial support in the event operations cannot support
debt and property tax payments. The Partnership, through its ownership
percentages, may participate in property disposition proceeds. The timing and
amounts of these proceeds are unknown but can impact the Partnership's financial
position, results of operations or cash flows. Because the Partnership is not
the primary beneficiary of these VIEs, it accounts for its investments in the
Local Limited Partnerships using the equity method of accounting. As a result of
its involvement with the VIEs, the Partnership's exposure to economic and
financial statement losses is limited to its investments in the VIEs (zero at
June 30 and March 31, 2009). The Partnership may be subject to additional losses
to the extent of any financial support that the Partnership voluntarily provides
in the future. 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. A liability is recorded for delayed equity capital contributions to
Local Limited Partnerships. 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.

The Partnership has implemented policies and practices for assessing
other-than-temporary declines in the values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are tested
for other-than-temporary impairment. If an other-than-temporary decline in
carrying value exists, a provision to reduce the investment to the sum of the
estimated remaining benefits will be recorded in the Partnership's financial
statements. The estimated remaining benefits for each Local Limited Partnership
consist of estimated future tax losses and tax credits over the estimated life
of the investment and estimated residual proceeds at disposition. Included in
the estimated residual proceeds calculation is current net operating income
capitalized at a regional rate specific to each Local Limited Partnership less
the debt of the Local Limited Partnership. Generally, the carrying values of
most Local Limited Partnerships will decline through losses and distributions in
amounts sufficient to prevent other-than-temporary impairments. However, the
Partnership may record similar impairment losses in the future if the expiration
of tax credits outpaces losses and distributions from any of the Local Limited
Partnerships.


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

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


Liquidity and Capital Resources
_______________________________
At June 30, 2009, the Partnership has cash and cash equivalents of $567,813 as
compared with $3,014,508 at March 31, 2009. The decrease is mainly attributable
to a cash distribution paid to Investor Limited Partners.

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 and March 31, 2009,
approximately $481,000 and $2,490,000, respectively, has been designated as
Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,386,000 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 Partnership's management might deem
it in its best interest to voluntarily provide such funds in order to protect
its investment. As of June 30, 2009, 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 $1,681,000 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, as of June 30, 2009, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.

Cash Distributions
__________________
During the three months ended June 30, 2009, the Partnership made cash
distributions of $2,402,399. The Partnership is currently working on disposing
of its interest in certain Local Limited Partnerships during the next eighteen
months. These dispositions may result in cash available for distribution, but
due to the uncertainty of the sales, no guarantees can be made as to the extent
of their outcome on distributions. Based on the results of 2008 Property
operations, the Local Limited Partnerships are not expected to distribute
significant amounts of cash to the Partnership because such amounts will be
needed to fund Property operating costs. In addition, many of the Properties
benefit from some type of federal or state subsidy and, as a consequence, are
subject to restrictions on cash distributions.




<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
_____________________
The Partnership's results of operations for the three months ended June 30, 2009
resulted in net loss of $57,294 as compared to net loss of $119,008 for the same
period in 2008. The decrease in net loss is primarily attributable to a decrease
in equity in losses of Local Limited Partnerships offset by an increase in
general and administrative expenses. The decrease in equity in losses of Local
Limited Partnerships is primarily due to the Partnership's investments in Local
Limited Partnerships being zero and therefore no longer recognizing losses. The
increase in general and administrative expenses is due to an increase in
investor reporting and legal expenses.

Portfolio Update
_________________
The Partnership was formed on August 9, 1988 under the laws of the State of
Delaware for the primary purpose of investing, as a limited partner, in Local
Limited Partnerships, which own and operate apartment complexes, most of which
benefit from some form of federal, state or local assistance program and each of
which qualify for low-income housing tax credits. The Partnership's objectives
are to: (i) provide current tax benefits in the form of tax credits which
qualified investors may use to offset their federal income tax liability; (ii)
preserve and protect the Partnership's capital; (iii) provide limited cash
distributions which are not expected to constitute taxable income during
Partnership operations; and (iv) provide cash distributions from sale or
refinancing transactions. The fiscal year of the Partnership ends on March 31.

Municipal Mortgage & Equity, LLC ("MuniMae") is in the process of selling
substantially all of the assets of its Low Income Housing Tax Credit business to
a venture consisting of JEN Partners, LLC or its affiliates ("JEN") and/or Real
Estate Capital Partners, LP or its affiliates ("RECP"). The first stage of this
sale closed on July 30, 2009 and a second closing is scheduled for on or about
August 31, 2009. The entire sale will be completed no later than December 31,
2009. Upon completion of the acquisition, the business will be owned by Boston
Financial Investment Management, LP, a Delaware limited partnership, which is
directly and indirectly owned by JEN and/or RECP ("Boston Financial"). The
general partner of Boston Financial will be BFIM Management, LLC, a JEN
affiliate. Effective as of July 30, 2009, MuniMae has engaged BFIM Asset
Management, LLC ("BFIM"), an affiliate of Boston Financial, to provide asset
management to the Partnership. Most of the employees of MuniMae's LIHTC business
have joined Boston Financial and BFIM; the operations of the business are to
remain intact in the Boston office and the Partnership will continue to be
managed and administered in the ordinary course.

Arch Street III, Inc. is the Managing General Partner of the Partnership ("Arch
Street") and Arch Street III Limited Partnership is the co-General Partner of
the Partnership ("Arch Street LP"). The general partner of Arch Street LP is
Arch Street. In connection with the above-described transaction, control of Arch
Street is being transferred from entities controlled by MuniMae to one or more
entities controlled by or associated with Boston Financial. The transfer is
expected to occur on or about August 31, 2009, and will not change the
organizational structure of the Partnership. The principal office and place of
business of the Partnership subsequent to the transfer will continue to be 101
Arch Street, 13th Floor, Boston, Massachusetts 02110.

As of June 30, 2009, the Partnership's investment portfolio consisted of limited
partnership interests in three Local Limited Partnerships, each of which owns
and operates a multi-family apartment complex and each of which has generated
Tax Credits. As of July 31, 2009, the Partnership's investment portfolio
consisted of limited partnership interest in one Local Limited Partnership.
Since inception, the Partnership generated Tax Credits, net of recapture, of
approximately $1,340 per Limited Partner Unit. The aggregate amount of Tax
Credits generated by the Partnership is consistent with the objective specified
in the Partnership's prospectus.

In May 2009, the Partnership distributed $2,402,399, or $24.02 per Unit to
Limited Partners, representing a distribution from the proceeds of previously
reported property sales. In October 2007, the Partnership distributed
$9,674,581, or $96.75 per Unit to Limited Partners, representing a distribution
from the proceeds of previously


<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)
___________________________
reported dispositions of sixty-three Properties and/or the Partnership's
investment in the Local Limited Partnerships owning these Properties. The
Managing General Partner anticipates making additional distributions in the
future.

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set aside requirements for at least 15 calendar years
from the date the Property is placed in service. Failure to do so would result
in recapture of a portion of the Property's Tax Credits. The Compliance Period
of the remaining property in which the Partnership has an interest expired by
December 31, 2006. The Managing General Partner has negotiated agreements that
will ultimately allow the Partnership to dispose of its interest in the
remaining Local Limited Partnerships.

The Partnership disposed of one Local Limited Partnership interests during the
three-months ending June 30, 2009 and two Local Limited Partnerships in July
2009. The Managing General Partner will continue to pursue the disposition of
the Partnership's remaining Local Limited Partnership interest. 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.

As described in previous periodic reports, in February, 2007, various Boston
Financial public funds (the "Fund" or "Funds"), including Boston Financial
Qualified Housing Tax Credits L.P. III (the "Partnership"), reached an agreement
to resolve several lawsuits and pending disputes between the Partnership and the
Funds and their general partners on the one hand, and a group of limited partner
unit investors on the other hand. The group of investors included Park G.P.,
Inc., Bond Purchase, L.L.C. and various other entities related to David L.
Johnson (the "Johnson Group") and Everest Housing Investors 2, LLC and various
other Everest-related entities (the "Everest Group"; the Johnson Group and the
Everest Group are hereinafter collectively referred to as the "Johnson and
Everest Groups"). Per the terms of the parties' agreement, these lawsuits were
then dismissed. The Johnson and Everest Groups further agreed at that time to
refrain from interfering in various ways with the conduct of the business of the
Partnership and the business of another Fund, Boston Financial Qualified Housing
Tax Credits L.P. IV ("QH4").

Also as previously reported, beginning in November, 2007, the Johnson and
Everest Groups filed new lawsuits against QH4 and its general partners in
various jurisdictions, as part of an effort to replace the existing general
partners with parties related to the Everest Group, to prevent QH4 from selling
any of its assets without limited partner consent, and to interfere with
specific arms length sales by QH4 of certain of its assets. QH4 responded with
its own lawsuits against the Johnson and Everest Groups to block these efforts
as well as to claim damages arising from the Johnson and Everest Groups'
conduct. The following lawsuits concerning QH4 (collectively, the
"Johnson/Everest Lawsuits"), were filed in the November 2007 through April 2008
time period:

           o On November 29, 2007, QH4 and its general partners were sued
             in Superior Court for the County of Los Angeles, California by
             a Limited Partner named Danford Baker and companies named
             Everest Housing Investors 2, LP and Everest Management, LLC
             with which Mr. Baker is affiliated (collectively, "Everest").
             Everest dismissed this lawsuit without prejudice on April 17,
             2008.

           o On or about, May 6, 2008, the same Everest parties referenced
             above in the 1st California lawsuit filed a nearly identical
             Complaint against QH4 and its general partners in the same
             Superior Court for the County of Los Angeles, California.
             Everest dismissed this 2nd California lawsuit without
             prejudice on November 11, 2008.

           o On January 22, 2008, QH4 and its general partners were sued in
             the District Court of Johnson County, Kansas by a Limited
             Partner named McDowell Investments, L.P. ("McDowell").

<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)
___________________________
            o On January 29, 2008, QH4 and its general partners filed suit
              against McDowell in the Superior Court for Suffolk County,
              Massachusetts.

            o On April 22, 2008, QH4 and its general  partners filed suit in the
              Superior Court for Suffolk  County,  Massachusetts  against the
              following  defendants:  Everest Housing  Investors 2, L.P.;
              Everest  Management LLC; Everest  Properties,  Inc.; Everest
              Properties,  LLC; McDowell  Investments,  L.P.; MGM Holdings,
              LLC; Park G.P., Inc., Bond Purchase,  L.L.C.; Anise L.L.C.; Paco
              Development,  L.L.C.;  Maxus Realty Trust, Inc.; David L. Johnson;
              W. Robert Kohorst;  Danford M. Baker; Monte G. McDowell; and
              Kevan D. Acord.

Effective April 24, 2009, the Partnership, along with QH4 and several of the
other Funds, reached an agreement with the Johnson and Everest Groups to resolve
their disputes and the Johnson/Everest Lawsuits (the "Settlement Agreement").
Pursuant to the Settlement Agreement, on May 19, 2009, McDowell filed a
dismissal of the Johnson/Everest Lawsuit pending in Johnson County, Kansas. On
May 21, 2009, the parties filed with the Massachusetts court joint stipulations
of dismissal with respect to the two Johnson/Everest Lawsuits initiated in
Massachusetts.

The Settlement Agreement provides, among other things, that (a) the parties
exchange mutual releases and covenant not to bring lawsuits against each other
in the future, (b) the parties dismiss claims and counterclaims asserted in the
various lawsuits without prejudice, and (c) the Johnson and Everest Groups agree
not to take a variety of actions which could interfere with the conduct of the
business of the Partnership and other Funds. The Settlement Agreement also sets
out a schedule for future cash distributions to the limited partners and for the
eventual dissolution of the Partnership and QH4. The Settlement Agreement was
attached as Exhibit 99-1 to the Partnership's Form 8-K filed on May 21, 2009.

In addition, effective April 24, 2009, the Partnership and QH4 entered into
purchase agreements (the "Purchase Agreements") with certain members of the
Johnson and Everest Groups permitting them to purchase, subject to various
conditions and at specified prices which the Partnership believes represent fair
market value, certain interests held by the Partnership and by QH4 in Local
Limited Partnerships. The Settlement Agreement remains effective regardless of
whether any of the Local Limited Partnership interests are purchased.

With respect to the Partnership, the Purchase Agreements provide for the
purchase by affiliates of the Everest Group, for the total price of $200,000, of
the Partnership's interests in:

         River Front Apartments, L.P., which owns a property in Sunbury, PA; and
         Susquehanna View, L.P., which owns a property in Camp Hill, PA.

The sale of these Partnership interests closed on July 24, 2009.

Property Discussions
____________________
Two Properties in which the Partnership currently has an interest had stabilized
operations and operated above breakeven as of March 31, 2009. Two Properties are
operating below breakeven that the Local General Partner funds 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; or (ii) result in the Managing
General Partner deeming it appropriate for the Partnership to dispose of its
interest in the Local Limited Partnership. 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.

<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, the Managing General Partner anticipated the Fund's
interest in the Local Limited Partnership that owns Walker Woods, located in
Dover, Delaware, would be terminated upon the sale of the Property in late 2008.
On September 12, 2008 the underlying Property was sold, effectively terminating
the Partnership's interest in the Local Limited Partnership that owned Walker
Woods. The Partnership received $424,239, or $4.24 per Unit, for its interest in
this Local Limited Partnership. The Managing General Partner, in accordance with
and as permitted by the Partnership Agreement, has retained the sales proceeds
in Reserves for the time being until it deems a subsequent distribution to be
prudent. The sale resulted in 2008 taxable loss of $97,952, or about $0.98, per
Unit. The Partnership no longer has an interest in this Local Limited
Partnership.

As previously reported, the Managing General Partner and Local General Partner
of Wood Creek, located in Calcium, New York, were exploring an exit strategy
that would result in a mid-2008 disposal of the Partnership's interest in the
Local Limited Partnership. On September 12, 2008 the underlying Property was
sold, effectively terminating the Partnership's interest in the Local Limited
Partnership that owned Wood Creek. The Partnership received $1,413,851, or about
$14.14 per Unit, for its interest. The Managing General Partner, in accordance
with and as permitted by the Partnership Agreement, has retained the sales
proceeds in Reserves for the time being until it deems a subsequent distribution
to be prudent. The sale resulted in 2008 taxable loss of $224,885, or about
$2.25, per Unit. The Partnership no longer has an interest in this Local Limited
Partnership.

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 re-syndicate the Properties. In
return, the Partnership obtained both a put option allowing the Partnership to
transfer its interests in the Local Limited Partnerships 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 Local Limited Partnerships 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 in
Shoreline occurred June 8, 2009. The transaction did not result in any net sales
proceeds to the Partnership. This transaction is expected to result in 2009
taxable income projected to be approximately $10,300,000, or about $103 per
Unit. The transfer of the Partnership's interests in Waterfront is currently
expected to occur in the fiscal year ending March 31, 2011. The Managing General
Partner does not expect this transaction to result in any net sales proceeds to
the Partnership. This transaction is expected to result in taxable income
projected to be approximately $36,400,000, or $364 per Unit.

As previously reported, in accordance with the terms of their respective
Partnership Agreements, the Managing General Partner, effective November 28,
2007, transferred the Partnership's interest in the Local Limited Partnerships
that owned River Front Apartments, L.P., located in Sunbury, PA, and Susquehanna
View, L.P., located in Camp Hill, PA. The interests in the aforementioned Local
Limited Partnerships were transferred to MMA River Front, L.P., and MMA
Susquehanna View, L.P. (together, the "Transferee Partnerships"). The
Partnership is the sole Limited Partner of each of the Transferee Partnerships.
An affiliate of the Partnership is the general partner of each of the Transferee
Partnerships and has obtained a 1% interest in each of the Transferee
Partnerships in exchange for a promissory note in favor of the Partnership.

In processing these transactions, the Managing General Partner acted out of
necessity, due to the impending expiration of the Partnership's ability to
transfer its interest in the above-mentioned Local Limited Partnerships without
the Local General Partner's consent. As previously disclosed, these Local
Limited Partnership Interests were originally expected to be sold as part of a
settlement between the Partnership, Qualified Housing Tax Credits


<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)
________________________________
L.P. IV, several of the Funds, and certain of their affiliates on the one hand,
and the Johnson and Everest Groups on the other hand. When the Johnson and
Everest Groups failed to exercise their option to purchase these Local Limited
Partnership Interests, the above-described transfers were carried out. The
Managing General Partner may now have flexibility in being able to dispose of
the Partnership's interest in the Local Limited Partnerships without the Local
General Partners' consent, expediting the Managing General Partner's ability to
liquidate the assets of, and dissolve, the Partnership. It is possible that such
Local General Partner may contest this right to free transferability.

Effective April 24, 2009, contemporaneously with signing the Settlement
Agreement of the same date, the Managing General Partner and certain members of
the Johnson and Everest Groups entered into Purchase Agreements which created
rights for the Johnson and Everest Groups to acquire the Partnership's interests
in River Front Apartments, L.P., located in Sunbury, PA, and Susquehanna View,
L.P., located in Camp Hill, PA, for cash at fair market prices, for an aggregate
price of $200,000, or $2.00 per Unit. The Johnson and Everest Groups' purchase
of the Investor Limited Partner's interest was effective July 24, 2009. The
Managing General Partner expects the sale of the Fund's interest in River Front
Apartments to result in a 2009 estimated taxable gain of approximately $600,000,
or about $6.00 per Unit. The Managing General Partner expects the sale of the
Fund's interest in Susquenhanna View to result in a 2009 estimated taxable gain
of approximately $3,330,000, or about $33.30 per Unit. The Partnership no longer
has an interest in this Local Limited Partnership.


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

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Non Applicable

                             CONTROLS AND PROCEDURES



Disclosure Controls and Procedures
__________________________________
We conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
Exchange Commission's rules and forms, including to ensure that information
required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is accumulated and communicated to management to allow timely
decisions regarding required disclosure. Based on that evaluation, management
has concluded that as of June 30, 2009, our disclosure controls and procedures
were effective.

Internal Control over Financial Reporting
_________________________________________
The Partnership's internal control over financial reporting involves a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Internal control over
financial reporting includes the controls themselves, as well as monitoring of
the controls and internal auditing practices and actions to correct deficiencies
identified. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.

Management assessed the Partnership's internal control over financial reporting
as of June 30, 2009. Based on this assessment, management concluded that, as of
June 30, 2009, the Partnership's internal control over financial reporting was
designed effectively.


<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 and
                         Principal Financial Officer pursuant to Section 302 of
                         the Sarbanes-Oxley Act of 2002.
                31.2     Certification of Principal Executive Officer and
                         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.
                32.2     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, 2009


<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.


Date: August 14, 2009            BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                 CREDITS L.P. III

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



                                 /s/Greg Judge
                                __________________
                                    Greg Judge
                                    President
                                    Arch Street III, Inc.


<PAGE>


<PAGE>