November 14, 2002



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


         Boston Financial Qualified Housing Tax Credits L.P. III
         Report on Form 10-QSB for Quarter Ended September 30, 2002
         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, 2002
                              -------------------------------------------------

                                                         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 APARTMENTS ASSOCIATES, L.P.
                             (A Limited Partnership)

                                TABLE OF CONTENTS


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

Item 1. Financial Statements

         Balance Sheet (Unaudited) - September 30, 2002                                       1

         Statements of Operations (Unaudited) - For the Three and Six
           Months Ended September 30, 2002 and 2001                                           2

         Statement of Changes in Partners' Equity (Deficiency)
           (Unaudited) - For the Six Months Ended September 30, 2002                          3

         Statements of Cash Flows (Unaudited) - For the
           Six Months Ended September 30, 2002 and 2001                                       4

         Notes to the Financial Statements (Unaudited)                                        5

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

Item 3.  Controls and Procedures                                                             11

PART II - OTHER INFORMATION

Items 1-6                                                                                    12

SIGNATURE                                                                                    13

CERTIFICATIONS                                                                               14

</TABLE>


<PAGE>


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

                                  BALANCE SHEET
                               September 30, 2002
                                   (Unaudited)


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

Cash and cash equivalents                                                                        $     444,488
Marketable securities, at fair value                                                                 1,161,724
Investments in Local Limited Partnerships, net  (Note 1)                                             8,826,506
Other asset                                                                                              6,542
                                                                                                 -------------
     Total Assets                                                                                $  10,439,260
                                                                                                 =============

Liabilities and Partners' Equity

Accounts payable to affiliates                                                                   $   4,410,352
Accrued expenses                                                                                       397,280
Note payable, affiliate                                                                                514,968
                                                                                                 -------------
     Total Liabilities                                                                               5,322,600
                                                                                                 -------------

General, Initial and Investor Limited Partners' Equity                                               5,107,954
Net unrealized gains on marketable securities                                                            8,706
                                                                                                 -------------
     Total Partners' Equity                                                                          5,116,660
                                                                                                 -------------
     Total Liabilities and Partners' Equity                                                      $  10,439,260
                                                                                                 =============

</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 and Six Months Ended September 30, 2002 and 2001
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                             <C>              <C>               <C>                <C>
                                                        Three Months Ended                Six Months Ended
                                                  September 30,     September 30,     September 30,    September 30,
                                                      2002              2001              2002             2001
                                                 --------------   ---------------   --------------     -------------
Revenue:
   Investment                                    $        7,870   $        12,064   $       17,907     $      29,692
   Recovery of provision for valuation of
     advances to Local Limited Partnerships                   -             9,695                -             9,695
   Other                                                123,323            69,003          187,612            98,546
                                                 --------------   ---------------   --------------     -------------
       Total Revenue                                    131,193            90,762          205,519           137,933
                                                 --------------   ---------------   --------------     -------------

Expenses:
   Asset management fees, affiliate                      87,527            97,286          184,379           192,701
   General and administrative (includes
     reimbursements to an affiliate of $345,183
     and $217,132 in 2002 and 2001, respectively)       204,429           129,954          441,838           312,249
   Provision for impaired interest receivable                 -                 -           56,307                 -
   Provision for valuation of advances to
     Local Limited Partnerships                          66,307                 -           20,000                 -
   Interest                                               1,000             1,500            2,500             3,000
   Amortization                                          14,248            17,774           28,495            36,240
                                                 --------------   ---------------   --------------     -------------
       Total Expenses                                   373,511           246,514          733,519           544,190
                                                 --------------   ---------------   --------------     -------------
Loss before equity in losses of Local
   Limited Partnerships                                (242,318)         (155,752)        (528,000)         (406,257)

Equity in losses of Local Limited
   Partnerships (Note 1)                               (316,913)         (619,774)        (623,405)         (823,076)
                                                 --------------   ---------------   --------------     -------------

Net Loss                                         $     (559,231)  $      (775,526)  $   (1,151,405)    $  (1,229,333)
                                                 ==============   ===============   ==============     =============
Net Loss allocated:
   General Partners                              $       (5,592)  $        (7,755)  $      (11,514)    $     (12,293)
   Limited Partners                                    (553,639)         (767,771)      (1,139,891)       (1,217,040)
                                                 --------------   ---------------   --------------     -------------
                                                 $     (559,231)  $      (775,526)  $   (1,151,405)    $  (1,229,333)
                                                 ==============   ===============   ==============     =============
Net Loss per Limited Partner
   Unit (100,000 Units)                          $       (5.54)   $         (7.68)  $       (11.40)    $      (12.17)
                                                 =============    ===============   ==============     =============

</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 Six Months Ended September 30, 2002
                                   (Unaudited)




<TABLE>
<CAPTION>
<S>                                  <C>             <C>            <C>             <C>           <C>
                                                        Initial        Investor          Net
                                        General         Limited         Limited      Unrealized
                                       Partners        Partners         Partners       Gains           Total
                                      -----------     ---------------  ---------     ---------       ---------

Balance at March 31, 2002             $  (813,251)    $   5,000      $   7,067,610   $     5,707   $   6,265,066
                                      -----------     ---------      -------------   -----------   -------------

Comprehensive Income (Loss):
   Change in net unrealized gains
     on marketable securities
     available for sale                         -             -                  -         2,999           2,999
   Net Loss                               (11,514)            -         (1,139,891)            -      (1,151,405)
                                      -----------     ---------      -------------   -----------   -------------
Comprehensive Income (Loss)               (11,514)            -         (1,139,891)        2,999      (1,148,406)
                                      -----------     ---------      -------------   -----------   -------------

Balance at September 30, 2002         $  (824,765)    $   5,000      $   5,927,719   $     8,706   $   5,116,660
                                      ===========     =========      =============   ===========   =============
</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 Six Months Ended September 30, 2002 and 2001
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                                         <C>                 <C>
                                                                                  2002                2001
                                                                             -------------       -------------

Net cash used for operating activities                                       $     (62,442)      $    (227,499)

Net cash provided by (used for) investing activities                              (298,006)            256,850
                                                                             -------------       -------------

Net increase (decrease) in cash and cash equivalents                              (360,448)             29,351

Cash and cash equivalents, beginning                                               804,936             366,041
                                                                             -------------       -------------

Cash and cash equivalents, ending                                            $     444,488       $     395,392
                                                                             =============       =============

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

</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, 2002. In the opinion of
management, these financial statements include all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the Partnership's
financial position and results of operations. The results of operations for the
period may not be indicative of the results to be expected for the year.

The Managing General Partner 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, 2002 and 2001.

1.   Investments in Local Limited Partnerships

The Partnership has limited partnership interests in forty-nine 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, 2002:

<TABLE>
<CAPTION>
<S>                                                                                           <C>
Capital contributions and advances paid to Local Limited Partnerships
   and purchase price paid to withdrawing partners of Local Limited Partnerships               $  63,464,775

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $53,774,346)                                                           (49,454,206)

Cumulative cash distributions received from Local Limited Partnerships                            (4,041,767)
                                                                                               -------------

Investments in Local Limited Partnerships before adjustment                                        9,968,802

Excess investment costs over the underlying net assets acquired:

   Acquisition fees and expenses                                                                   5,805,631

   Cumulative amortization of acquisition fees and expenses                                       (1,727,300)
                                                                                               -------------

Investments in Local Limited Partnerships before reserve for valuation                            14,047,133

Reserve for valuation of investments in Local Limited Partnerships                                (5,220,627)
                                                                                               -------------

Investments in Local Limited Partnerships                                                      $   8,826,506
                                                                                               =============
</TABLE>

For the six months ended September 30, 2002, the Partnership advanced $20,000 to
one of the Local Limited Partnerships, all of which was reserved. The
Partnership has recorded a reserve for valuation for its investment in Local
Limited Partnerships because there is evidence of a non-temporary decline in the
recoverable amounts of four of the Local Limited Partnerships.

The Partnership's share of the net losses of the Local Limited Partnerships for
the six months ended September 30, 2002 is $2,535,413. For the six months ended
September 30, 2002, the Partnership has not recognized $1,944,115 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 $32,107 of previously
unrecognized losses in the six months ended September 30, 2002.


<PAGE>


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

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


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

Accounting Polices

The Partnership's accounting polices 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.

Liquidity and Capital Resources

The Partnership had a decrease in cash and cash equivalents of $360,448 for the
six months ended September 30, 2002. This decrease is attributable to purchases
of marketable securities partially 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, 2002, on a cash basis,
approximately $1,606,000 of cash, cash equivalents and marketable securities has
been designated as Reserves. As of September 30, 2002, net claims against these
Reserves total approximately $3,797,000 making Reserves available after claims
$0.

To date, professional fees relating to various Property issues totaling
approximately $2,114,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $434,000 also have been used to make additional
capital contributions to three Local Limited Partnerships and the Partnership
has paid approximately $734,000 (net of paydowns) to purchase the mortgage of
The Kyle Hotel. In the event a Local Limited Partnership encounters 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, 2002, the Partnership has advanced
approximately $1,845,000 to Local Limited Partnerships to fund operating
deficits.
<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)
------------------------------------------

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 $2,983,000 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, 2002, 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, 2002.

Results of Operations

Three Month Period

For the three months ended September 30, 2002, Partnership's operations resulted
in a net loss of $559,231, as compared to a net loss of $775,526 for the same
period in 2001. The decrease in net loss is primarily due to a decrease in
equity in losses of Local Limited Partnerships partially 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 not recognizing
losses relating to Local Limited Partnerships where cumulative equity in losses
and cumulative distributions have exceeded its total investments. The increase
in general and administrative expense 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.

Six Month Period

For the six months ended September 30, 2002, Partnership's operations resulted
in a net loss of $1,151,405, as compared to a net loss of $1,229,333 for the
same period in 2001. The decrease in net loss is primarily due to a decrease in
equity in losses of Local Limited Partnerships partially 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 not recognizing
losses relating to Local Limited Partnerships where cumulative equity in losses
and cumulative distributions have exceeded its total investments. The increase
in general and administrative expense 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.

Property Discussions

The Partnership's investment portfolio consists of limited partnership interests
in forty-nine Local Limited Partnerships, each of which owns and operates a
multi-family apartment complex. A majority of the Properties 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 expenses loans, subordinated loans or operating escrows.

<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)
-------------------------------

However, some Properties have 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 Property.
Also, the Managing General Partner, in the normal course of the Partnership's
business, may desire to dispose of the Partnership's interest in certain
Properties. The following Property discussion focuses only on such Properties.

Boulevard Commons IIA, located in Chicago, Illinois continues to generate an
operating deficit. Expense levels at the Property are high due to increasing
maintenance, capital needs, security issues and high turnover. The Managing
General Partner developed a plan with the Local General Partner to transfer
ownership of the Property to the Local General Partner. The plan includes
provisions to minimize the risk of recapture. The Partnership transferred 99% of
its interest in Boulevard Commons IIA in 1999 and 2000. During August 2001, the
Partnership transferred its remaining 1% interest in the Property. The
Partnership no longer has an interest in the Property.

Operations at Breckenridge Creste, located in Duluth, Georgia, which
historically has operated at a deficit, have slightly improved as a result of
ongoing capital improvements made to the Property. However, the Property
continues to experience occupancy fluctuations. Based upon the Property's
persistent operating challenges, the Managing General Partner expressed concerns
regarding the long-term viability of the Property and believed it was in the
best interest of the Partnership to dispose of its interest. Effective December
31, 2000, the Managing General Partner, on behalf of the Partnership, entered
into an agreement to transfer the Partnership's interest in the Local Limited
Partnership to an unaffiliated entity. The agreement includes provisions to
minimize the risk of recapture. The Partnership has transferred 99% its interest
in the Property and has the right to fully dispose of its remaining interest in
beginning January 1, 2003. The Property no longer generates tax credits and its
compliance period ends in 2005.

As previously reported, Harbour View, located in Staten Island, New York, had
defaulted on its HUD-insured loan. Subsequently, the lender assigned the loan to
HUD. In December 1996, the mortgage was sold at auction to an unaffiliated
buyer. The Managing General Partner and Local General Partner diligently
attempted to reach a workout with the new lender but were unsuccessful.
Effective April 24, 2001, the lender took possession of the Property.

As previously reported, Pleasant Plaza, located in Malden, Massachusetts, and
South Holyoke, located in Holyoke, Massachusetts, receive a subsidy under the
State Housing Assistance Rental Program (SHARP), which is an important part of
their annual income. As originally conceived, the SHARP subsidy was scheduled to
decline over time to match increases in net operating income. However, increases
in net operating income failed to keep pace with the decline in the SHARP
subsidy. Many of the SHARP properties (including Pleasant Plaza and South
Holyoke) structured workouts that included additional subsidies in the form of
Operating Deficit Loans (ODL's). Effective October 1, 1997, the Massachusetts
Housing Finance Agency (MHFA), which provided the SHARP subsidies, withdrew
funding of the ODL's. Properties unable to make full debt service payments were
declared in default by MHFA. The Managing General Partner, separate from its
responsibilities to Pleasant Plaza or South Holyoke, joined a group of SHARP
property owners called the Responsible SHARP Owners, Inc. (RSO) and is
negotiating with MHFA to find a solution to the problems that will result from
the withdrawal of these subsidies. Given existing operating deficits and the
dependence on these subsidies by Pleasant Plaza and South Holyoke House, both
Properties are in default on their mortgage obligations. On September 16, 1998,
the Partnership also joined with the RSO and about 20 other SHARP property
owners and filed suit against the MHFA (Mass. Sup. Court Civil Action #98-4720).
Among other things, the suit seeks to enforce the MHFA's previous financial
commitments to the SHARP properties. The lawsuit is complex, 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.


<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)
-------------------------------

Pleasant Plaza was included in a "Dilution Pool" composed of approximately 20 of
the 77 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 to 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, which is
January 1, 2004.

The MHFA issued a report that gave Granite V-Blue Mountain, located in Boston
Massachusetts, a below average rating in physical condition. Unfortunately,
current replacement reserve levels are inadequate to meet current and future
needs. Due to the fact that the Property's mortgage, which accrues interest at a
rate of 12.2%, may be prepaid without a premium in 2002, the opportunity may
exist for the Property to be re-capitalized. The Tax Credit compliance period
for the Property ends in 2003 and the Managing General Partner has begun to
identify possible disposition options with respect to 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.

With respect to Shoreline, the IRS has issued Form 8823 for one of the
Property's units, indicating that it was not leased to a qualified occupant at
initial occupancy. This will result in recapture for all Tax Credits taken for
that unit. The amount of the recapture is approximately $11,000, or
approximately $0.11 per Unit.

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. Although the Property's
operations improved during 2001, occupancy has declined in recent months due to
a slowing economy and an excess of supply over demand for rental units. Rental
rates are declining as a result.

During 1994, the Local General Partner at Admiral Court, located in
Philadelphia, Pennsylvania, transferred its interest in the Local Limited
Partnership. The IRS subsequently conducted a compliance audit at the Property
and has taken the position that the Property is subject to recapture due to
non-compliance issues. The Managing General Partner disagrees with the IRS and
is working to resolve the matter. However, in the opinion of the Managing
General Partner, there is a substantial risk that the Admiral Court Partnership
and, consequently, the Partnership could suffer significant tax credit recapture
or tax credit disallowance. However, it is not possible to quantify the

<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)
-------------------------------

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.

Increased competition for Georgetown Apartments, 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
organization that holds the Property's long term ground lease, offered to
transfer the land at little cost. 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 at a time of its choosing to
the Local General Partner. It is unlikely the Partnership will transfer its
interest until the end of the compliance period.

Operations at Westwood Manor, located in Flint, Michigan, have suffered
recently. Poor site management has caused occupancy issues, 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.

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 Lend Lease 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 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. However,
a site visit conducted in June 2001 found the Property poorly maintained.
Improving the condition of the Property will be essential to long term viability
of the Property. The Property generated its last year of tax credits during 1999
and a Housing Assistance Payment ("HAP") contract is scheduled to expire in
2002, pending extensions. It is unlikely that the Property would be able to
support operations if the HAP contract is not extended. The Managing General
Partner has begun to identify possible disposition strategies with respect to
its interest in the Property.

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.





<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 within 90 days prior to filing this Form
10-QSB, 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

                     99.1  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, 2002.



<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, 2002          BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                  CREDITS L.P. III

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




                                  /s/Jenny Netzer
                                  ------------------------------------
                                  Jenny Netzer
                                  Principal, Head of Housing and
                                  Community Investment

<PAGE>



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


I, Jenny Netzer, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Boston Financial
     Qualified Housing Tax Credits L.P. III:

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a.       designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

b.       evaluated the  effectiveness of the registrant's  disclosure  controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

c.       presented in this quarterly report our conclusions  about the
         effectiveness  of the disclosure  controls and procedures based
         on our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalents functions):

a.       all  significant  deficiencies  in the design or operation of internal
         controls  which could  adversely  affect  registrant's ability to
         record,  process,  summarize  and report  financial  data and have
         identified  for the  registrant's  auditors any material weaknesses in
         internal controls; and

b.       any  fraud,  whether  or not  material,  that  involves  management  or
         other  employees  who have a  significant  role in the registrant's
         internal controls; and

6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:   November 14, 2002                 /s/Jenny Netzer
                                          ------------------------------------
                                          Jenny Netzer
                                          Principal, Head of Housing and
                                          Community Investment

<PAGE>

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

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Boston Financial Qualified Housing
Tax Credits L.P. III ("the Partnership") on Form 10-QSB for the period ending
September 30, 2002 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), the undersigned, the Principal, hereby certifies
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

1.   the Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

2.   the information  contained in the Report fairly presents,  in all material
     respects,  the financial  condition and results of  operations of the
     Partnership.


                                      /s/Jenny Netzer
                                      ------------------------------------
                                      Jenny Netzer
                                      Principal, Head of Housing and
                                      Community Investment

                               Date:  November 14, 2002

<PAGE>