UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q


(Mark One)

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

For the quarterly period ended               September 30, 2008
                               ---------------------------------------------

                                       OR

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


For the transition period from         to
                           _______          _________


                         Commission file number 01-18462

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



             Delaware                           04-3032106
          -------------                       ---------------


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


 101 Arch Street, Boston, Massachusetts                      02110-1106
-------------------------------------------               ----------------

(Address of principal executive offices)                   (Zip Code)


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


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

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

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



Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
                               Yes No X .
                                     ----


<PAGE>


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









                                TABLE OF CONTENTS

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


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

Item 1.  Financial Statements

         Balance Sheet (Unaudited) - September 30, 2008                                         1

         Statements of Operations (Unaudited) - For the Three and Six
           Months Ended September 30, 2008 and 2007                                             2

         Statement of Changes in Partners' Equity
           (Unaudited) - For the Six Months Ended September 30, 2008                            3

         Statements of Cash Flows (Unaudited) - For the Six Months
           Ended September 30, 2008 and 2007                                                    4

         Notes to the Financial Statements (Unaudited)                                          5

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                                  7

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                            12

Item 4.  Controls and Procedures                                                               12

PART II - OTHER INFORMATION

Items 1-6                                                                                      13

SIGNATURE                                                                                      14

CERTIFICATIONS                                                                                 15

</TABLE>


<PAGE>


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


                              BALANCE SHEET
                              September 30, 2008
                              (Unaudited)




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

Assets

Cash and cash equivalents                                                                         $     3,111,936
Investments in Local Limited Partnerships (Note 1)                                                         15,522
                                                                                                  ---------------
   Total Assets                                                                                   $     3,127,458
                                                                                                  ===============

Liabilities and Partners' Equity

Due to affiliate                                                                                  $        82,230
Accrued expenses                                                                                           35,507
                                                                                                  ---------------
   Total Liabilities                                                                                      117,737

General, Initial and Investor Limited Partners' Equity                                                  3,009,721
                                                                                                  ---------------
   Total Liabilities and Partners' Equity                                                         $     3,127,458
                                                                                                  ===============
</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, 2008 and 2007
                              (Unaudited)


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


                                                           Three Months Ended                   Six Months Ended
                                                  September 30,       September 30,       September 30,       September 30,
                                                      2008                2007                2008                2007
                                                ---------------     ---------------     ---------------     ---------------
Revenue
   Investment                                   $         6,736     $       396,771     $        12,427     $        407,423
   Other                                                      -                 895                   -                  895
                                                ---------------     ---------------     ---------------     ----------------
       Total Revenue                                      6,736             397,666              12,427              408,318
                                                ---------------     ---------------     ---------------     ----------------

Expenses:
   Asset management fees, affiliate                      11,303              15,201              27,127               30,402
   General and administrative
     (includes reimbursement to an
     affiliate in the amountof
     $26,298 and $35,658 for the six
     months ended September 30, 2008
     and 2007, respectively)                             48,807              68,230              89,819              121,472
   Amortization                                               -                 540                 444                1,079
                                                ---------------     ---------------     ---------------     ----------------
       Total Expenses                                    60,110              83,971             117,390              152,953
                                                ---------------     ---------------     ---------------     ----------------

Income (Loss) before equity in losses of
   Local Limited Partnerships and gain
   on disposal of investments in
   Local Limited Partnerships                           (53,374)            313,695            (104,963)             255,365

Equity in losses of Local Limited
   Partnerships (Note 1)                                (33,043)            (95,186)           (100,462)            (151,139)

Gain on disposal of investments in
   Local Limited Partnerships                         1,823,044                   -           1,823,044                    -
                                                ---------------     ---------------     ---------------     ----------------

Net Income                                      $     1,736,627     $       218,509     $     1,617,619     $        104,226
                                                ===============     ===============     ===============     ================

Net Income  allocated:
   General Partners                             $        17,366     $         2,185     $        16,176     $          1,042
   Limited Partners                                   1,719,261             216,324           1,601,443              103,184
                                                ---------------     ---------------     ---------------     ----------------
                                                $     1,736,627     $       218,509     $     1,617,619     $        104,226
                                                ===============     ===============     ===============     ================

Net Income Per Limited Partner
   Unit (100,000 Units)                         $         17.19     $          2.16     $         16.01     $           1.03
                                                ===============     ===============     ===============     ================

</TABLE>



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


<PAGE>

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

                        STATEMENT OF CHANGES IN PARTNERS' EQUITY
                For the Six Months Ended September 30, 2008
                             (Unaudited)





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

                                                                     Initial           Investor
                                                  General            Limited            Limited
                                                 Partners           Partners           Partners             Total

Balance at March 31, 2008                     $       13,855      $       5,000      $   1,373,247     $   1,392,102

Net Income                                            16,176                  -          1,601,443         1,617,619
                                              --------------      -------------      -------------     -------------

Balance at September 30, 2008                 $       30,031      $       5,000      $   2,974,690     $   3,009,721
                                              ==============      =============      =============     =============

</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, 2008 and 2007
                           (Unaudited)



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

                                                                                   2008                2007
                                                                              -------------       --------------

Net cash provided by (used for) operating activities                          $    (136,045)      $     322,430

Net cash provided by investing activities                                         1,823,044                   -
                                                                              -------------       -------------

Net increase in cash and cash equivalents                                         1,686,999             322,430

Cash and cash equivalents, beginning                                              1,424,937          10,969,239
                                                                              -------------       -------------

Cash and cash equivalents, ending                                             $   3,111,936       $  11,291,669
                                                                              =============       =============
</TABLE>



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

<PAGE>

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

                        NOTES TO THE FINANCIAL STATEMENTS
                                   (Unaudited)


The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Partnership's Form 10-KSB for the year ended March 31, 2008. 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, 2008 and 2007.

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

1.   Investments in Local Limited Partnerships

The Partnership currently owns limited partnership interests in four Local
Limited Partnerships which were organized for the purpose of owning and
operating multi-family housing complexes, all of which are government-assisted.
The Partnership's ownership interest in each Local Limited Partnership is 99%.
The Partnership may have negotiated or may negotiate options with the local
general partners to purchase or sell the Partnership's interests in the Local
Limited Partnerships at the end of the Compliance Period at nominal prices. In
the event that Properties are sold to third parties, or upon dissolution of the
Local Limited Partnerships, proceeds will be distributed according to the terms
of each Local Limited Partnership agreement.
<TABLE>
<CAPTION>
<S>                                                                                                   <C>

The following is a summary of investments in Local Limited Partnerships at
September 30, 2008:

Capital contributions paid to Local Limited Partnerships and purchase
   price paid to withdrawing partners of Local Limited Partnerships                                 $     8,855,847

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $57,110,071)                                                                   (6,655,895)

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

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

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                                            221,032

   Cumulative amortization of acquisition fees and expenses                                                 (69,694)
                                                                                                    -----------------

Investments in Local Limited Partnerships before valuation allowance                                      1,396,998

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

Investments in Local Limited Partnerships                                                           $        15,522
                                                                                                    ===============
</TABLE>
<PAGE>
                BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                         (A Limited Partnership)

              NOTES TO THE FINANCIAL STATEMENTS (continued)
                             (Unaudited)


1. Investments in Local Limited Partnerships (continued)

The Partnership has recorded a valuation allowance for its investments in
certain Local Limited Partnerships in order to appropriately reflect the
estimated net realizable value of these investments.

The Partnership's share of the net losses of the Local Limited Partnerships for
the six months ended September 30, 2008 is $1,786,212. For the six months ended
September 30, 2008, the Partnership has not recognized $1,685,750 of equity in
losses relating to certain Local Limited Partnerships in which cumulative equity
in losses and distributions exceeded its total investments in these Local
Limited Partnerships.

2.   New Accounting Principle

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

     Level      1 - Inputs are unadjusted quoted prices in active markets for
                identical assets or liabilities that the Partnership has the
                ability to access at the measurement date.
     Level      2 - Inputs include quoted prices for similar assets and
                liabilities in active markets, quoted prices for identical or
                similar assets or liabilities in markets that are not active,
                inputs other than quoted prices that are observable for the
                asset or liability and inputs that are derived principally from
                or corroborated by observable market data by correlation or
                other means (market corroborated inputs).
     Level      3 - Unobservable inputs reflect the Partnership's judgments
                about the assumptions market participants would use in pricing
                the asset or liability since limited market data exists. The
                Partnership develops these inputs based on the best information
                available, including the Partnership's own data.

Financial assets accounted for at fair value on a recurring basis at September
30, 2008 include cash equivalents of $3,111,936.

3.   Significant Subsidiaries

The following Local Limited Partnership invested in by the Partnership represent
more than 20% of the Partnership's total assets or equity as of September 30,
2008 or 2007 or net losses for the three months ended either September 30, 2008
or 2007. The following financial information represents the performance of these
Local Limited Partnerships for the three months ended June 30, 2008 and 2007:
<TABLE>
<CAPTION>
<S>                                                                       <C>                          <C>

Riverfront Apartments, L.P.                                                 2008                        2007
---------------------------                                            ---------------              -------------

Revenue                                                                $       440,100            $       419,451
Net Loss                                                               $       (68,000)           $       (96,148)

</TABLE>

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

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


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

Critical Accounting Policies

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

The Local Limited Partnerships in which the Partnership invests are Variable
Interest Entities ("VIE"s). The Partnership is involved with the VIEs as a
non-controlling limited partner equity holder. Because the Partnership is not
the primary beneficiary of these VIEs, it accounts for its investments in the
Local Limited Partnerships using the equity method of accounting. As a result of
its involvement with the VIEs, the Partnership's exposure to economic and
financial statement losses is limited to its investments in the VIEs ($15,522 at
September 30, 2008). The Partnership may be subject to additional losses to the
extent of any financial support that the Partnership voluntarily provides in the
future. Under the equity method, the investment is carried at cost, adjusted for
the Partnership's share of net income or loss and for cash distributions from
the Local Limited Partnerships; equity in income or loss of the Local Limited
Partnerships is included currently in the Partnership's operations. A liability
is recorded for delayed equity capital contributions to Local Limited
Partnerships. Under the equity method, a Local Limited Partnership investment
will not be carried below zero. To the extent that equity in losses are incurred
when the Partnership's carrying value of the respective Local Limited
Partnership has been reduced to a zero balance, the losses will be suspended and
offset against future income. Income from Local Limited Partnerships, where
cumulative equity in losses plus cumulative distributions have exceeded the
total investment in Local Limited Partnerships, will not be recorded until all
of the related unrecorded losses have been offset. To the extent that a Local
Limited Partnership with a carrying value of zero distributes cash to the
Partnership, that distribution is recorded as income on the books of the
Partnership and is included in "other revenue" in the accompanying financial
statements.

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

Liquidity and Capital Resources

At September 30, 2008, the Partnership has cash and cash equivalents of
$3,111,936 as compared with $1,424,937 at March 31, 2008. The increase is mainly
attributable to the proceeds received from the disposal of investments in Local
Limited Partnerships.


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

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


Liquidity and Capital Resources (continued)

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, 2008, $3,111,936 has been
designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $2,379,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $534,000 also have been used to make additional
capital contributions to four Local Limited Partnerships and the Partnership has
paid approximately $452,000 (net of paydowns) to purchase the mortgage of The
Kyle Hotel. In the event a Local Limited Partnership encounters operating
difficulties requiring additional funds, the Partnership's management might deem
it in its best interest to voluntarily provide such funds in order to protect
its investment. As of September 30, 2008, the Partnership has advanced
approximately $1,578,000 to Local Limited Partnerships to fund operating
deficits.

The Managing General Partner believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions. To date, the Partnership has used approximately $4,305,000 of
operating funds and proceeds from sales of investments in Local Limited
Partnerships to replenish Reserves.

Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, as of September 30, 2008, 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, 2008.
The Partnership is currently working on disposing of its interest in certain
Local Limited Partnerships during the next twelve months. These dispositions may
result in cash available for distribution, but due to the uncertainty of the
sales, no guarantees can be made as to the extent of their outcome on
distributions. Based on the results of 2007 Property operations, the Local
Limited Partnerships are not expected to distribute significant amounts of cash
to the Partnership because such amounts will be needed to fund Property
operating costs. In addition, many of the Properties benefit from some type of
federal or state subsidy and, as a consequence, are subject to restrictions on
cash distributions.

Results of Operations

Three Month Period

For the three months ended September 30, 2008, the Partnership's operations
resulted in net income of $1,736,627 as compared to net income of $218,509 for
the same period in 2007. The increase in net income is primarily due to a gain
on disposal of investments in Local Limited Partnerships recognized in the 2008
period and a decrease in equity in losses of Local Limited Partnerships,
partially offset by a decrease in investment revenue. The increase in gain on
disposal of investments in Local Limited Partnerships is due to the disposal of
two Local Limited Partnerships with large proceeds during the three months ended
September 30, 2008, where as no Local Limited Partnerships were disposed of
during the three months ended September 30, 2007. The decrease in equity in
losses of Local Limited Partnerships in the 2008 period is due to fewer Local
Limited Partnerships in the 2008 period. The Partnership had a decrease in
investment revenue during the period ended September 30, 2008 related to the
reimbursement of interest during the prior year.


<PAGE>

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

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


Results of Operations (continued)

Six Month Period

For the six months ended September 30, 2008, the Partnership's operations
resulted in net income of $1,617,619 as compared to net income of $104,226 for
the same period in 2007. The increase in net income is primarily due to a gain
on disposal of investments in Local Limited Partnerships recognized in the 2008
period, and a decrease in equity in losses of Local Limited Partnerships,
partially offset by a decrease in investment revenue. The increase in gain on
disposal of investments in Local Limited Partnerships is due to the disposal of
two Local Limited Partnerships with large proceeds during the six months ended
September 30, 2008, where as no Local Limited Partnerships were disposed of
during the six months ended September 30, 2007. The decrease in equity in losses
of Local Limited Partnerships in the 2008 period is due to fewer Local Limited
Partnerships in the 2008 period. The Partnership had a decrease in investment
revenue during the period ended September 30, 2008 related to the reimbursement
of interest during the prior year.

Portfolio Update

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

As of September 30, 2008, the Partnership's investment portfolio consisted of
limited partnership interests in four 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 generated Tax Credits,
net of recapture, of approximately $1,342 per Limited Partner Unit. The
aggregate amount of Tax Credits generated by the Partnership was consistent with
the objective specified in the Partnership's prospectus.

In October 2007, the Partnership distributed $9,674,581, or $96.77 per Unit to
Limited Partners, representing a distribution from the proceeds of previously
reported dispositions of sixty-three Properties and/or the Partnership's
investment in the Local Limited Partnerships owning these Properties. The
Managing General Partner anticipates making additional distributions in the
future.

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 calendar years
from the date the Property is placed in service. Failure to do so would result
in recapture of a portion of the Property's Tax Credits. The Compliance Period
of the four Properties in which the Partnership has an interest expired by
December 31, 2004. The Managing General Partner has negotiated agreements that
will ultimately allow the Partnership to dispose of its interest in two Local
Limited Partnerships.

The Partnership has disposed of two Local Limited Partnership interests during
the six month period ending September 30, 2008. The Managing General Partner
will continue to pursue the disposition of the Partnership's remaining Local
Limited Partnership interests. 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.

The Partnership is not a party to any pending legal or administrative
proceeding, and to the best of its knowledge, no legal or administrative
proceeding is threatened or contemplated against it.


<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

Two Properties in which the Partnership had an interest as of June 30, 2008 and
presently does through September 30, 2008, had stabilized operations and
operated above break-even as of June 30, 2008. Two Properties in which the
Partnership had an interest as of June 30, 2008 and presently does through
September 30, 2008, generate cash flow deficits that the Local General Partner
funds through project expense loans, subordinated loans or operating escrows.
However, some Properties have had persistent operating difficulties that could
either: (i) have an adverse impact on the Partnership's liquidity; (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. Also, the Managing General Partner, in the normal course of the
Partnership's business, may arrange for the future disposition of its interest
in certain Local Limited Partnerships. The following Property discussions focus
only on such Properties.

As previously reported, the Managing General Partner anticipated the Fund's
interest in the Local Limited Partnership that owns Walker Woods, located in
Dover, Delaware, would be terminated upon the sale of the Property in late 2008.
On September 12, 2008, the underlying Property was sold, effectively terminating
the Partnership's interest in the Local Limited Partnership that owned Walker
Woods. The Partnership received $424,239, or $4.24 per Unit, for its interest in
this Local Limited Partnership. The Managing General Partner, in accordance with
and as permitted by the Partnership Agreement, has retained the sales proceeds
in Reserves for the time being until it deems a subsequent distribution to be
prudent. The Managing General Partner estimates this sale will result in 2008
taxable income projected to be approximately $900,000, or $9.00, per Unit. The
Partnership no longer has an interest in this Local Limited Partnership.

As previously reported, the Managing General Partner and Local General Partner
of Wood Creek, located in Calcium, New York, were exploring an exit strategy
that may have resulted in a mid 2008 disposal of the Partnership's interest in
the Local Limited Partnership. On September 12, 2008, the underlying Property
was sold, effectively terminating the Partnership's interest in the Local
Limited Partnership that owned Wood Creek. The Partnership received $1,398,805,
or $13.99 per Unit, for its interest in this Local Limited Partnership. The
Managing General Partner, in accordance with and as permitted by the Partnership
Agreement, has retained the sales proceeds in Reserves for the time being until
it deems a subsequent distribution to be prudent. The Managing General Partner
estimates this sale will result in 2008 taxable income projected to be
approximately $1,490,000, or $14.90, per Unit. The Partnership no longer has an
interest in this Local Limited Partnership.

As previously reported, the Managing General Partner planned to exercise the
Partnership's put option and transfer its interest in the Local Limited
Partnership that owns and operates Fourche Valley, located in Perryville,
Arkansas, in January 2008. Effective January 1, 2008, the Managing General
Partner exercised the Partnership's right to transfer the Partnership's interest
in Fourche Valley, for $5,000, or $.05 per Unit. The proceeds from this transfer
have been retained in Reserves in accordance with and as permitted by the
Partnership Agreement. The Managing General Partner estimates this transaction
will result in 2008 taxable income projected to be approximately $223,000, or
$2.23 per Unit. The Partnership no longer has an interest in this Local Limited
Partnership.

As previously reported, Waterfront and Shoreline, both located in Buffalo, New
York, continue to have operating deficits as a result of a soft rental market,
low occupancy and deferred maintenance, which impacts the marketability of the
developments. The mortgage loans on both Properties are payable only out of
available cash flow and neither Property has made mortgage payments in several
years. The Managing General Partner and the Local General Partner commenced
discussions regarding the options available to improve operations at, or dispose
of, the Properties. An agreement was reached whereby the Managing General
Partner would allow the Local General Partner to transfer its Local General
Partner interest to a developer that will re-syndicate the Properties. In
return, the Partnership obtained both a put option allowing the Partnership to
transfer its interests in the Local Limited Partnerships for a nominal sum and a
pledge by the incoming Local General Partner to pay any Tax Credit recapture
incurred due to the transfer of the Local Limited Partnerships prior to the end
of the Compliance Period. These


<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)

transfers of the Local General Partner interests occurred during April 2005. The
transfer of the Partnerships interests are currently expected to occur in the
fiscal year ending March 31, 2010 and March 31, 2011, for Shoreline and
Waterfront, respectively. The Managing General Partner does not expect these
transactions to result in net sales proceeds to the Partnership. These
transactions are expected to result in taxable income projected to be
approximately $44,000,000, or $440 per Unit.

As previously reported, with respect to the Partnership, a Settlement Agreement
providing options, subject to various conditions, to purchase the Partnership's
interests in River Front Apartments, L.P., located in Sunbury, PA, and
Susquehanna View, L.P., located in Camp Hill, PA, for an aggregate price of
$1,500,000, were not exercised. The Managing General Partner continues to
explore alternative exit strategies for these Local Limited Partnership
interests.

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

In processing these transactions, the Managing General Partner acted out of
necessity, due to the impending expiration of the Partnership's ability to
transfer its interest in the above-mentioned Local Limited Partnerships without
the Local General Partner's consent. As previously disclosed, these Local
Limited Partnership Interests were originally expected to be sold as part of a
settlement agreement between the Partnership, QH IV, QH V, QH VII, and certain
of their affiliates on the one hand, and on the other hand, Everest Housing
Investors 2, LP, certain of its affiliates, Park GP, Inc., Bond Purchase, L.L.C,
Anise, L.L.C., and Paco Development, L.L.C. (together, the "Everest and Park
Parties"). When the Everest and Park Parties failed to exercise their option to
purchase these Local Limited Partnership Interests, the above-described
transfers were carried out. The Managing General Partner may now have
flexibility in being able to dispose of the Partnership's interest in the Local
Limited Partnerships without the Local General Partners' consent, expediting the
Managing General Partner's ability to liquidate the assets of, and dissolve, the
Partnership. It is possible that such Local General Partner may contest this
right to free transferability.




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

         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Non Applicable

                             CONTROLS AND PROCEDURES



Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
Exchange Commission's rules and forms, including to ensure that information
required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is accumulated and communicated to management to allow timely
decisions regarding required disclosure. Based on that evaluation, management
has concluded that as of September 30, 2008, our disclosure controls and
procedures were effective.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f) and 15d-15(f). Our management conducted an assessment of the
effectiveness of our internal control over financial reporting. This assessment
was based upon the criteria for effective internal control over financial
reporting established in Internal Control -- Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

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

Management assessed the effectiveness of the Partnership's internal control over
financial reporting as of September 30, 2008. Based on this assessment,
management concluded that, as of September 30, 2008, the Partnership's internal
control over financial reporting was effective.


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





PART II       OTHER INFORMATION

Items 1-5     Not applicable

Item 6        Exhibits and reports on Form 8-K

           (a)Exhibits

31.1 Certification of Principal Executive Officer and Principal Financial
     Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Executive Officer and Principal Financial
     Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive Officer and Principal Financial
     Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Principal Executive Officer and Principal Financial
     Officer pursuant to Section 906 of  the Sarbanes-Oxley Act of 2002.

          (b) Reports on Form 8-K - No reports on Form 8-K were filed during
              the quarter ended September 30, 2008


<PAGE>

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

                                    SIGNATURE




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


Date: November 14, 2008      BOSTON FINANCIAL QUALIFIED HOUSING TAX
                             CREDITS L.P. III

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



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