February 12, 2004


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


Re:    Boston Financial Qualified Housing Tax Credits L.P. III
       Report on Form 10-QSB for the Quarter Ended December 31, 2003
       File Number 01-18462


Dear Sir/Madam:

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


Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller





QH3-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, 2003
                                ---------------------------
                                       OR

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


For the transition period from                          to
                                ---------------------        ---------------

                         Commission file number 01-18462

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


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


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


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

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


<PAGE>


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

                                TABLE OF CONTENTS



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

Item 1.  Financial Statements

         Balance Sheet (Unaudited) - December 31, 2003                                          1

         Statements of Operations (Unaudited) - For the Three and Nine
           Months Ended December 31, 2003 and 2002                                              2

         Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Nine Months Ended December 31, 2003                            3

         Statements of Cash Flows (Unaudited) - For the
           Nine Months Ended December 31, 2003 and 2002                                         4

         Notes to the Financial Statements (Unaudited)                                          5

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

Item 3.  Controls and Procedures                                                               13

PART II - OTHER INFORMATION

Items 1-6                                                                                      14

SIGNATURE                                                                                      15

</TABLE>


<PAGE>


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

                                  BALANCE SHEET
                                December 31, 2003
                                   (Unaudited)


Assets

<TABLE>
<CAPTION>
<S>                                                                                       <C>
Cash and cash equivalents                                                                 $      1,006,997
Investments in Local Limited Partnerships (Note 1)                                               5,633,279
Other assets                                                                                           187
     Total Assets                                                                         $      6,640,463

Liabilities and Partners' Equity

Due to affiliate                                                                          $      4,441,781
Accrued expenses                                                                                   430,342
Note payable, affiliate                                                                            101,564
     Total Liabilities                                                                           4,973,687

General, Initial and Investor Limited Partners' Equity                                           1,666,776
     Total Liabilities and Partners' Equity                                               $      6,640,463

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

</TABLE>

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


                            STATEMENTS OF OPERATIONS
         For the Three and Nine Months Ended December 31, 2003 and 2002
                                   (Unaudited)



<TABLE>
<CAPTION>
<S>                                              <C>                <C>               <C>              <C>    <C>
                                                        Three Months Ended                Nine Months Ended
                                                  December 31,      December 31,      December 31,     December 31,
                                                      2003              2002              2003             2002
Revenue:
   Investment                                    $           27   $         9,402   $        9,380     $      27,309
   Other                                                      -            94,552           33,971           282,164
       Total Revenue                                         27           103,954           43,351           309,473

Expenses:
   Asset management fees, affiliate                      95,376            93,140          286,128           277,519
   Provision for valuation of advances to
     Local Limited Partnerships                          75,414            15,000          111,749            35,000
   Provision for valuation of interest in
     impaired note receivable                                 -            28,017                -            84,324
   General and administrative (includes
     reimbursements to an affiliate of $293,878
     and $382,608 in 2003 and 2002, respectively)       160,546           105,713          454,154           547,551
   Amortization                                          11,389            14,247           34,149            42,742
   Interest                                               1,500             1,500            4,500             4,000
       Total Expenses                                   344,225           257,617          890,680           991,136

Loss before equity in income (losses) of Local
   Limited Partnerships                                (344,198)         (153,663)        (847,329)         (681,663)

Equity in income (losses) of Local Limited
   Partnerships (Note 1)                                101,917          (217,392)        (494,041)         (840,797)

Net Loss                                         $     (242,281)  $      (371,055)  $   (1,341,370)    $  (1,522,460)

Net Loss allocated:
   General Partners                              $       (2,423)  $        (3,711)  $      (13,414)    $     (15,225)
   Limited Partners                                    (239,858)         (367,344)      (1,327,956)       (1,507,235)
                                                 $     (242,281)  $      (371,055)  $   (1,341,370)    $  (1,522,460)
Net Loss per Limited Partner
   Unit (100,000 Units)                          $        (2.40)  $         (3.67)  $       (13.28)    $      (15.07)


</TABLE>

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


<PAGE>

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

              STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                   For the Nine Months Ended December 31, 2003
                                   (Unaudited)


<TABLE>
<CAPTION>
<S>                                   <C>             <C>            <C>             <C>           <C>
                                                                                         Net
                                                        Initial        Investor      Unrealized
                                        General         Limited         Limited         Gains
                                       Partners        Partners            Partners       (Losses)         Total
Balance at March 31, 2003             $  (845,763)    $   5,000      $   3,848,909   $     2,551   $   3,010,697

Comprehensive Loss:
   Change in net unrealized gains
     on marketable securities
     available for sale                         -             -                  -        (2,551)         (2,551)
   Net Loss                               (13,414)            -         (1,327,956)            -      (1,341,370)
Comprehensive Loss                        (13,414)            -         (1,327,956)       (2,551)     (1,343,921)

Balance at December 31, 2003          $  (859,177)    $   5,000      $   2,520,953   $         -   $   1,666,776


</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 Nine Months Ended December 31, 2003 and 2002
                                   (Unaudited)




<TABLE>
<CAPTION>
<S>                                                                              <C>               <C>
                                                                                 2003              2002


Net cash used for operating activities                                     $    (724,204)      $    (302,408)

Net cash provided by investing activities                                      1,210,930             336,994

Net cash used for financing activities                                          (413,404)                  -

Net increase in cash and cash equivalents                                         73,322              34,586

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

Cash and cash equivalents, ending                                          $   1,006,997       $     839,522

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                  $       4,500       $       4,000


</TABLE>

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

<PAGE>

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

                        Notes to the Financial Statements
                                   (Unaudited)


The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Partnership's Form 10-KSB for the year ended March 31, 2003. In the opinion of
the Managing General Partner, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Partnership's financial position and results of operations.
The results of operations for the period may not be indicative of the results to
be expected for the year.

The Managing General Partner of the Partnership has elected to report results of
the Local Limited Partnerships in which the Partnership has a limited
partnership interest on a 90-day lag basis because the Local Limited
Partnerships report their results on a calendar year basis. Accordingly, the
financial information of the Local Limited Partnerships that is included in the
accompanying financial statements is as of September 30, 2003 and 2002.

1.   Investments in Local Limited Partnerships

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

The following is a summary of investments in Local Limited Partnerships at
December 31, 2003:

Capital contributions and advances paid to Local Limited Partnerships
<TABLE>
<CAPTION>
<S>                                                                                              <C>
   and purchase price paid to withdrawing partners of Local Limited Partnerships                 $  58,731,298

Cumulative equity in losses of Local Limited Partnerships
   (excluding cumulative unrecognized losses of $59,921,004)                                       (46,983,851)

Cumulative cash distributions received from Local Limited Partnerships                              (5,042,255)

Investments in Local Limited Partnerships before adjustments                                         6,705,192

Excess of investment cost over the underlying assets acquired:

   Acquisition fees and expenses                                                                     5,284,749

   Cumulative amortization of acquisition fees and expenses                                         (1,657,137)

Investments in Local Limited Partnerships before reserve for valuation                              10,332,804

Reserve for valuation of investments in Local Limited Partnerships                                  (4,699,525)

Investments in Local Limited Partnerships                                                        $   5,633,279

</TABLE>

For the nine months ended December 31, 2003, the Partnership advanced $111,749
to one Local Limited Partnership, all of which was reserved. The Partnership has
recorded a reserve for valuation for its investment in certain Local Limited
Partnerships in order to appropriately reflect the estimated net realizable
value of these investments.

The Partnership's share of the net losses of the Local Limited Partnerships for
the nine months ended December 31, 2003 is $4,673,960. For the nine months ended
December 31, 2003, the Partnership has not recognized $4,189,131 of equity in
losses relating to certain Local Limited Partnerships in which cumulative equity
in losses and distributions exceeded its total investments in these Local
Limited Partnerships. The Partnership recognized $9,212 of previously
unrecognized losses in the nine months ended December 31, 2003.


<PAGE>

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

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



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

Accounting Policies

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

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

The Partnership has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. Real estate experts
analyze the investments to determine if impairment indicators exist. If so, the
carrying value is compared to the undiscounted future cash flows expected to be
derived from the asset. If there is a significant impairment in carrying value,
a provision to write down the asset to fair value will be recorded in the
Partnership's financial statements.

Liquidity and Capital Resources

The Partnership had an increase in cash and cash equivalents of $73,322 for the
nine months ended December 31, 2003. This increase is attributable to cash
distributions received from Local Limited Partnerships offset by cash used for
operations, advances paid to Local Limited Partnerships and the partial
repayment of a note payable to an affiliate.

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 December 31, 2003, $1,006,997 of cash
and cash equivalents has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,182,000 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 $734,000 (net of paydowns) to purchase the mortgage of The
Kyle Hotel. In the event a Local Limited Partnership encounters

<PAGE>

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

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


Liquidity and Capital Resources (continued)

operating difficulties requiring additional funds, the Managing General Partner
might deem it in its best interest to voluntarily provide such funds in order to
protect its investment. As of December 31, 2003, the Partnership has advanced
approximately $2,026,000 to Local Limited Partnerships to fund operating
deficits.

The Managing General Partner believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions. To date, the Partnership has used approximately $2,733,000 of
operating funds to replenish Reserves.

Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, at December 31, 2003, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.

Cash distributions

No cash distributions were made during the nine months ended December 31, 2003.

Results of Operations

Three Month Period

For the three months ended December 31, 2003, the Partnership's operations
resulted in a net loss of $242,281 as compared to a net loss of $371,055 for the
same period in 2002. The decrease in net loss is due to a decrease in equity in
losses of Local Limited Partnerships, which is primarily due to the Partnership
not recognizing losses relating to Local Limited Partnerships where cumulative
equity in losses and cumulative distributions have exceeded its total
investment.

Nine Month Period

For the nine months ended December 31, 2003, the Partnership's operations
resulted in a net loss of $1,341,370 as compared to a net loss of $1,522,460 for
the same period in 2002. The decrease in net loss is primarily due to a decrease
in general and administrative expenses and a decrease in equity in losses of
Local Limited Partnerships. The decrease in general and administrative expenses
is primarily due to charges from an affiliate of the General Partner for
operational and administrative expenses necessary for the operation of the
Partnership related to the year ended March 31, 2002, which are being expensed
in the nine months ended December 31, 2002. The decrease in equity in losses is
due to an increase in unrecognized losses by the Partnership of Local Limited
Partnerships with carrying values of zero.


<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

The Partnership's investment portfolio consists of limited partnership interests
in forty-seven Local Limited Partnerships, each of which owns and operates a
multi-family apartment complex and each of which has generated Tax Credits.
Since inception, the Partnership has generated Tax Credits, net of recapture, of
approximately $1,340 per Limited Partner Unit, with an immaterial amount of Tax
Credits expected to be generated during 2003 and 2004. The aggregate amount of
net Tax Credits generated by the Partnership is consistent with the objective
specified in the Partnership's prospectus.

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set- aside requirements for at least 15 years from the
date the property is completed (the "Compliance Period"). Failure to do so would
result in recapture of a portion of the property's Tax Credits. Beginning in
2003 and continuing through 2006, the Compliance Period of the forty-seven
Properties in which the Partnership has an interest will expire. The Managing
General Partner has negotiated agreements that will ultimately allow the
Partnership to dispose of its interest in twenty-five Local Limited
Partnerships. It is unlikely that the disposition of any of these Local Limited
Partnership interests will generate any material cash distributions to the
Partnership.

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

Property Discussions

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

As previously reported, the Managing General Partner negotiated an agreement
with an unaffiliated entity to have the ability to transfer the Partnership's
interest to the unaffiliated entity or its designee with respect to the
following Properties: Briarwood II, located in Lake Havasua, Arizona, Eaglewood,
located in Covington, Tennessee, Fulton, located in Fulton, Kentucky, Lexington
Civic, located in Lexington, Tennessee, Kirkendall Heights, located in
Ellsworth, Kansas and Poplar Village, located in Cumberland, Kentucky. Although
these Properties do not share a common Local General Partner, they are all Rural
Housing Section 515 ("FMHA") properties. The Managing General Partner has the
right to put its interest in any of the Properties at any time in exchange for a
Contingent Note that grants the Partnership 50% of all future net cash receipts
from such Local Limited Partnership interest.


<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 negotiated an agreement
with the Local General Partner to have the ability to transfer the Partnership's
interest to the Local General Partner with respect to the following Properties:
Ashton Heights, located in Bolivar, Missouri, Bentley Hill, located in Syracuse,
Kansas, Brownsville, located in Brownsville, Tennessee, Cedar Tree, located in
Billings, Missouri, Garden Plain, located in Garden Plain, Kansas, Horseshoe
Bend, located in Horseshoe Bend, Arizona, Longview, located in Humboldt, Kansas,
Pearl Place, located in Rossville, Kansas, Ponca Manor, located in Satanta,
Kansas, Smithville, located in Smithville, Missouri and Sunnyhill Villa, located
in Wayne, Nebraska. These Properties share a common Local General Partner and
they are all Rural Housing Section 515 ("FMHA") properties. The Managing General
Partner has the right to put its interest in any of the Properties for $5,000
subsequent to the expiration of each Property's Compliance Period. The
Compliance Period expires on or before December 31, 2004 for all eleven of these
Properties.

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

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

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.

As previously reported, several years ago Willow Lake, located in Kansas City,
Missouri, entered into a loan workout agreement that allowed the Property to
defer the payment of some of the interest on the loan. The loan workout
agreement expired on May 31, 2001, and the Property was unable to make the
payment required under the loan workout agreement of approximately $227,000.
After a long negotiating period, a mutually acceptable workout plan was agreed
upon, whereby the Property used its Operating Deficit Escrow of approximately
$75,000 plus approximately $78,000 from its Replacement Reserve Account to pay
down the loan. In addition, the Property was required to make monthly payments
on the loan until the outstanding balance was fully repaid in September 2003.
The Managing General Partner advanced Partnership Reserves to the Property in
order to make the required payments. Occupancy at the Property has remained
depressed during recent months due to a slow economy, the property's inferior
appearance compared to new affordable housing developments in the area and an
excess of supply over demand for rental units. Rental rates are declining as a
result. A new management agent took over in March 2003.


<PAGE>

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

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


Property Discussions (continued)

As previously reported, during 1994, the Local General Partner at Admiral Court,
located in Philadelphia, Pennsylvania, transferred its interest in the Local
Limited Partnership. The IRS subsequently conducted a compliance audit at the
Property and has taken the position that the Property is subject to recapture
due to non-compliance issues. The Managing General Partner disagrees with the
IRS and is working to resolve the matter. In the opinion of the Managing General
Partner, there is a risk that the Local Limited Partnership and, consequently,
the Partnership could suffer significant Tax Credit recapture or Tax Credit
disallowance. However, it is not possible to quantify the potential amount at
this time. The Property's Tax Credit stream ended in 1999. Further, the Property
suffers from poor location and security issues. Vandalism has caused an increase
in maintenance and repair expenses and has negatively affected the Property's
occupancy levels and tenant profile. In 2003, the Managing General Partner and
the Local General Partner began to pursue disposition options of the
Partnership's interest in the Property. In the fall of 2003, a put option
agreement was entered into that allowed the Partnership to transfer its interest
in the Local Partnership to the Local General Partner after the expiration of
the Compliance Period on December 31, 2003.

As previously reported, increased competition for Georgetown II, located in
Georgetown, Delaware, has negatively impacted the Property's operations.
Although the Property has maintained a high level of occupancy, rental rates
have stagnated while expenses have continued to increase. The Property no longer
generates Tax Credits and the Compliance Period expires on December 31, 2004. In
2003, the non-profit affiliate of the state housing finance agency that holds
the Property's long-term ground lease offered to transfer the land at little
cost to the Partnership. The Managing General Partner gave its consent to the
transfer and concurrently executed a Put Agreement for the Partnership's
interest in the Property to the Local General Partner. The Put Agreement gives
the Partnership the right to transfer its interest to the Local General Partner.
It is unlikely the Partnership will transfer its interest until the end of the
Compliance Period.

As previously reported, operations at Westwood Manor, located in Flint,
Michigan, have suffered in recent quarters. Poor site management has caused
occupancy, deferred maintenance and curb appeal issues. The Partnership also
advanced $50,000 from Reserves to address the deferred maintenance issues at the
Property during 2001. The advance was to be repaid through operations, if
available, with the Local General Partner obligated to pay back 50% of the
remaining balance should the entire amount of the advance not be repaid by
December 31, 2001. The Property did not generate sufficient cash from operations
to repay any of the Partnership's advances. The Partnership has not yet made a
demand from the Local General Partner to meet his obligation to repay 50% of the
advance. However, the Managing General Partner and the Local General Partner
have reached agreement on an exit strategy on this Property. The Local General
Partner received approval for a refinancing of the Property from HUD and the
refinanced mortgage was closed on July 31, 2003. The Managing General Partner,
in providing its approval of the refinancing received agreement from the Local
General Partner to a put option whereby the Partnership can dispose of its
interest in the Property anytime after December 31, 2003 when the Compliance
Period expires. Part of the agreement also includes repayment of the
Partnership's $50,000 loan.

As previously reported, during 1995, the Kyle Hotel, located in Temple, Texas,
defaulted on its mortgage and the lender placed the Local Limited Partnership in
bankruptcy. Under the subsequent reorganization, the Local General Partner was
replaced by an affiliate of the Managing General Partner, and the Partnership
purchased the outstanding debt on the Property. The Property makes mortgage
payments in the amount of available cash flow to the Partnership. The property
has consistently enjoyed high occupancy over the past several months. However,
commercial rental revenue has been eliminated by the inability to lease the
commercial space due to its odd configuration. The Managing General Partner will
continue in its attempts to dispose of the Partnership's interest in the
Property.


<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, South Holyoke, located in Holyoke, Massachusetts,
received a subsidy under the State Housing Assistance Rental Program ("SHARP"),
which was an important part of its 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
South Holyoke) structured workouts that included additional subsidies in the
form of Operating Deficit Loans ("ODL's"). Effective October 1, 1997, the
Massachusetts Housing Finance Agency ("MHFA"), which provided the SHARP
subsidies, withdrew funding of the ODL's from its portfolio of seventy-seven
subsidized properties. In addition, as of March 1, 2003, MHFA cancelled SHARP
payments for the rest of the State's fiscal year (June 30, 2003). The State did
not reinstate payments for FY 2004 (July 1, 2003 to June 30, 2004). Properties
unable to make full debt service payments were declared in default by MHFA. The
Managing General Partner has joined a group of SHARP property owners called the
Responsible SHARP Owners, Inc. ("RSO") and is negotiating with MHFA and the
Local General Partners of Pleasant Plaza and South Holyoke to find a solution to
the problems that will result from the withdrawn subsidies. On December 16,
1998, the Partnership joined with the RSO and about twenty other SHARP property
owners and filed suit against the MHFA (Mass. Sup. Court Civil Action #98-4720).
Among other things, the suit seeks to enforce the MHFA's previous financial
commitments to the SHARP properties. The lawsuit is complex, so no predications
can be made at this time as to the ultimate outcome. In the meantime, the
Managing General Partner intends to continue to participate in the RSO's efforts
to negotiate a resolution of this matter with MHFA. Due to the existing
operating deficits and the dependence on these subsidies, South Holyoke has been
declared in default on its mortgage obligations.


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

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

Due to operating deficits in 2002 and 2003 at Tucson Trails I and Tucson Trails
II, located in Madison, Wisconsin, the Local General Partner proposed a
refinancing of the Properties. At the same time, the same Local General Partner
proposed a refinancing of the first mortgages of two other Properties in which
the Partnership had an interest but had enjoyed stable operations for the last
several quarters. The Managing General Partner agreed to the refinancing of all
four properties and all four properties closed on their new first mortgages in
November 2003 with the Partnership receiving a total of $954,098 in cash from
refinancing proceeds. The Managing General Partner and the Local General Partner
also entered into a call and put option whereby the Local General Partner
received a call option at the end of the Compliance Period for a nominal amount.
If the call is not exercised within a 6-month period, the Partnership has the
option to put its interest to the Local General Partner. The expiration of the
Compliance Period will be no later than December 31, 2004 for any of the four
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)

The Compliance Period for The Colony, located in Columbia, South Carolina ended
on December 31, 2003. In anticipation of that, the Managing General Partner and
the Local General Partner executed a put option agreement that would allow the
Partnership to transfer its interest in the Local Partnership to the Local
General Partner for $1. On January 2, 2004, the put option was exercised and the
Partnership transferred its entire interest in the Local Partnership to the
Local General Partner for $1. The Managing General Partner determined that there
was no likelihood of any realizable cash distributable to the Partnership from a
sale of the property.

Other Development

During the period ended December 31, 2003, Lend Lease Real Estate Investments,
Inc. sold its interest in, and association with, the General Partner and its
affiliated business unit, Housing and Community Investing ("HCI"), to Municipal
Mortgage and Equity, LLC ("Muni Mae"). Muni Mae is in the business of
originating, servicing and investing in multi-family housing. HCI will be
combined with Muni Mae's Midland subsidiary to operate under the name MMA
Financial.


<PAGE>

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

                             CONTROLS AND PROCEDURES



Controls and Procedures

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

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


<PAGE>

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



PART II       OTHER INFORMATION

Items 1-5     Not applicable

Item 6        Exhibits and reports on Form 8-K

              (a) Exhibits

                    31.1   Certification of Jenny Netzer pursuant to section
                           302 of the Sarbanes-Oxley Act of 2002

                    32.1   Certification of Jenny Netzer pursuant to section
                           906 of the Sarbanes-Oxley Act of 2002

              (b) Reports on Form 8-K - No reports on Form 8-K were filed during
                  the quarter ended December 31, 2003



<PAGE>

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

                                    SIGNATURE




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


DATED: February 12, 2004      BOSTON FINANCIAL QUALIFIED HOUSING TAX
                              CREDITS L.P. III

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




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