November 14, 2003


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


Re:    Boston Financial Qualified Housing Tax Credits L.P. III
       Report on Form 10-QSB for the Quarter Ended September 30, 2003
       File Number 01-18462


Dear Sir/Madam:

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


Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller





QH3-Q2.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           September 30, 2003

                                       OR

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


For the transition period from                    to


    Commission file number 01-18462

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


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


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


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

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


<PAGE>


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










                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


PART I - FINANCIAL INFORMATION                                                              Page No.

Item 1.  Financial Statements

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

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

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

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

         Notes to the Financial Statements (Unaudited)                                          5

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

Item 3.  Controls and Procedures                                                               12

PART II - OTHER INFORMATION

Items 1-6                                                                                      13

SIGNATURE                                                                                      14

</TABLE>


<PAGE>


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


                                  BALANCE SHEET
                               September 30, 2003
                                   (Unaudited)
<TABLE>
<CAPTION>


Assets

<S>                                                                                       <C>
Cash and cash equivalents                                                                 $        479,629
Marketable securities, at fair value                                                               201,094
Investments in Local Limited Partnerships (Note 1)                                               6,496,849
Other assets                                                                                         4,260
     Total Assets                                                                         $      7,181,832

Liabilities and Partners' Equity

Due to affiliate                                                                          $      4,345,381
Accrued expenses                                                                                   414,188
Note payable, affiliate                                                                            514,968
     Total Liabilities                                                                           5,274,537

General, Initial and Investor Limited Partners' Equity                                           1,909,057
Net unrealized losses on marketable securities                                                      (1,762)
     Total Partners' Equity                                                                      1,907,295
     Total Liabilities and Partners' Equity                                               $      7,181,832


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 Six Months Ended September 30, 2003 and 2002
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                        Three Months Ended                Six Months Ended
                                                  September 30,     September 30,     September 30,    September 30,
                                                      2003              2002              2003             2002
Revenue:
<S>                                              <C>              <C>               <C>                <C>
   Investment                                    $        4,192   $         7,870   $        9,353     $      17,907
   Other                                                 32,475           123,323           33,971           187,612
       Total Revenue                                     36,667           131,193           43,324           205,519

Expenses:
   Asset management fees, affiliate                      95,376            87,527          190,752           184,379
   Provision for valuation of advances to
     Local Limited Partnerships                          21,335            66,307           36,335            76,307
   General and administrative (includes
     reimbursements to an affiliate of $192,853
     and $345,183 in 2003 and 2002, respectively)       144,347           204,429          293,608           441,838
   Amortization                                          11,380            14,248           22,760            28,495
   Interest                                               1,500             1,000            3,000             2,500
       Total Expenses                                   273,938           373,511          546,455           733,519

Loss before equity in losses of Local
   Limited Partnerships                                (237,271)         (242,318)        (503,131)         (528,000)

Equity in losses of Local Limited
   Partnerships (Note 1)                               (326,065)         (316,913)        (595,958)         (623,405)

Net Loss                                         $     (563,336)  $      (559,231)  $   (1,099,089)    $  (1,151,405)

Net Loss allocated:
   General Partners                              $       (5,633)  $        (5,592)  $      (10,991)    $     (11,514)

   Limited Partners                                    (557,703)         (553,639)      (1,088,098)       (1,139,891)
                                                 $     (563,336)  $      (559,231)  $   (1,099,089)    $  (1,151,405)
Net Loss per Limited Partner
   Unit (100,000 Units)                          $        (5.58)  $         (5.54)  $       (10.88)    $      (11.40)


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

<PAGE>

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

              STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                   For the Six Months Ended September 30, 2003
                                   (Unaudited)

<TABLE>
<CAPTION>

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

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

Comprehensive Loss:
   Change in net unrealized gains
     on marketable securities
     available for sale                         -             -                  -        (4,313)         (4,313)
   Net Loss                               (10,991)            -         (1,088,098)            -      (1,099,089)
Comprehensive Loss                        (10,991)            -         (1,088,098)       (4,313)     (1,103,402)

Balance at September 30, 2003         $  (856,754)    $   5,000      $   2,760,811   $    (1,762)  $   1,907,295

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

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


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



<TABLE>
<CAPTION>

                                                                                 2003              2002

<S>                                                                        <C>                 <C>
Net cash used for operating activities                                     $    (586,292)      $     (62,442)

Net cash provided by (used for) investing activities                             132,246            (298,006)

Net decrease in cash and cash equivalents                                       (454,046)           (360,448)

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

Cash and cash equivalents, ending                                          $     479,629       $     444,488

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                  $       3,000       $       2,500

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

<PAGE>


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

                        Notes to the Financial Statements
                                   (Unaudited)


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

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

Capital contributions and advances paid to Local Limited Partnerships
<S>                                                                                              <C>
   and purchase price paid to withdrawing partners of Local Limited Partnerships                 $  58,655,884


Cumulative equity in losses of Local Limited Partnerships
   (excluding cumulative unrecognized losses of $58,024,799)                                       (47,085,768)

Cumulative cash distributions received from Local Limited Partnerships                              (4,088,157)


Investments in Local Limited Partnerships before adjustments                                         7,481,959


Excess of investment cost over the underlying assets acquired:

   Acquisition fees and expenses                                                                     5,284,749


   Cumulative amortization of acquisition fees and expenses                                         (1,645,748)

Investments in Local Limited Partnerships before reserve for valuation                              11,120,960

Reserve for valuation of investments in Local Limited Partnerships                                  (4,624,111)


Investments in Local Limited Partnerships                                                        $   6,496,849
</TABLE>

For the six months ended September 30, 2003, the Partnership advanced $36,335 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 six months ended September 30, 2003 is $2,879,672. For the six months ended
September 30, 2003, the Partnership has not recognized $2,287,464 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 $3,750 of previously
unrecognized losses in the six months ended September 30, 2003.


<PAGE>


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

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



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

Accounting 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 a decrease in cash and cash equivalents of $454,046 for the
six months ended September 30, 2003. This decrease is attributable to cash used
for operations and advances paid to Local Limited Partnerships offset by cash
distributions received from Local Limited Partnerships.

The Managing General Partner initially designated 3.00% of the Gross Proceeds as
Reserves as defined in the Partnership Agreement. The Reserves were established
to be used for working capital of the Partnership and contingencies related to
the ownership of Local Limited Partnership interests. The Managing General
Partner may increase or decrease such Reserves from time to time, as it deems
appropriate. During the year ended March 31, 1993, the Managing General Partner
increased the Reserve level to 3.75%. At September 30, 2003, $680,723 of cash,
cash equivalents and marketable securities has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,166,000 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 September 30, 2003, the Partnership has advanced
approximately $1,950,000 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 $2,315,000 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 September 30, 2003, the Partnership
had no contractual or other obligation to any Local Limited Partnership which
had not been paid or provided for.

Cash distributions

No cash distributions were made during the six months ended September 30, 2003.

Results of Operations

Three Month Period

For the three months ended September 30, 2003, the Partnership's operations
resulted in a net loss of $563,336 as compared to a net loss of $559,231 for the
same period in 2002. The slight increase in net loss is due to a decrease in
other income, which is attributable to fewer distributions from Local Limited
Partnerships with carrying values of zero.

Six Month Period

For the six months ended September 30, 2003, the Partnership's operations
resulted in a net loss of $1,099,089 as compared to a net loss of $1,151,405 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 six months ended September 30, 2002. The decrease in equity in losses is
due to an increase in unrecognized losses by the Partnership of Local Limited
Partnerships with carrying values of zero.


<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 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

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

The Managing General Partner negotiated an agreement with an unaffiliated entity
to have the ability to transfer 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. Should the Partnership dispose of its interest in the
above-mentioned Properties in any other manner, the Partnership will be required
to pay a $2,500 termination fee per Property.


<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 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 generated 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 ends in 2003, and the
Managing General Partner has begun to identify possible disposition options for
the Partnership's interest in the Property.

Waterfront and Shoreline, both located in Buffalo, New York, continue to have
operating deficits as a result of a soft rental market, deferred maintenance and
security issues. The mortgage loans on both Properties are payable only out of
available cash flow, and neither Property has made mortgage payments in several
years.

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 is required to make monthly payments on
the loan until the outstanding balance is fully repaid. The Managing General
Partner has advanced Partnership Reserves to the Property in order to make the
required payments. Occupancy at the Property has remained depressed during
recent months due to a slowing economy and an excess of supply over demand for
rental units. Rental rates are declining as a result. A new management agent
took over in March, 2003 and occupancy has increased somewhat during the last
few months.

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-

<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)

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

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 in 2005. Recently, the
non-profit affiliate of the state housing finance agency that holds the
Property's long-term ground lease offered to transfer the land at little cost to
the Partnership. The Managing General Partner gave its consent to the transfer
and concurrently executed a Put Agreement for the Partnership's interest in the
Property to the Local General Partner. The Put Agreement gives the Partnership
the right to transfer its interest to the Local General Partner. It is unlikely
the Partnership will transfer its interest until the end of the Compliance
Period.

Operations at Westwood Manor, located in Flint, Michigan, have suffered 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 Managing General Partner, in
providing its approval, 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 Managing
General Partner will continue in its attempts to dispose of the Partnership's
interest in the Property.

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


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

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

The Local General Partner of South Holyoke negotiated an agreement with MHFA to
restructure the SHARP and ODL debt as well as the mortgage on the Property. As
part of the restructuring, the Partnership contributed additional capital of
$100,000 to the Property in exchange for the right to put its interest to the
Local General Partner at the end of the Property's Compliance Period, January 1,
2004. As of March 1, 2003, MHFA cancelled SHARP payments for the rest of the
State's fiscal year (June 30, 2003). It is doubtful whether the State will
reinstate payments for FY 2003 (July 1, 2003 to June 30, 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 the Property and
believed it was in the best interest of the Partnership to dispose of its
interest. Effective December 31, 2000, the Managing General Partner, on behalf
of the Partnership, entered into an agreement to transfer the Partnership's
interest in the Local Limited Partnership to an unaffiliated entity. The
agreement includes provisions to minimize the risk of recapture. As of December
31, 2002, the Partnership had transferred 99% its interest in the Property, and
on January 3, 2003 the Partnership transferred its remaining 1% interest in the
Property.

Other Development

During the quarter ended September 30, 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>




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 September 30, 2003



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


                                    SIGNATURE




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


DATED: November 14, 2003         BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                 CREDITS L.P. III

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




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