November 14, 2007


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


Re:    Boston Financial Qualified Housing Tax Credits L.P. III
       Report on Form 10-QSB for the Quarter Ended September 30, 2007
       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/Patricia Olsen-Goldberg
Patricia Olsen-Goldberg
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, 2007
                                       --------------------------------------

                                                         OR

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


For the transition period from____________ to______________


                         Commission file number 01-18462

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


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


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


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

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


<PAGE>


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









                                TABLE OF CONTENTS



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

Item 1.  Financial Statements

         Balance Sheet (Unaudited) - September 30, 2007                    1

         Statements of Operations (Unaudited) - For the Three and Six
           Months Ended September 30, 2007 and 2006                        2

         Statement of Changes in Partners' Equity (Unaudited) -
           For the Six Months Ended September 30, 2007                     3

         Statements of Cash Flows (Unaudited) - For the Six
           Months Ended September 30, 2007 and 2006                        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.  Controls and Procedures                                          13


PART II - OTHER INFORMATION


Items 1-6                                                                 14

SIGNATURE                                                                 15

CERTIFICATIONS                                                            16



<PAGE>


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



                                  BALANCE SHEET
                               September 30, 2007
                                   (Unaudited)



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


         Assets

Cash and cash equivalents                                                                         $    11,291,669
Investment in Local Limited Partnerships (Note 1)                                                       1,006,391
                                                                                                  ---------------
   Total Assets                                                                                   $    12,298,060
                                                                                                  ===============

Liabilities and Partners' Equity


Due to affiliate                                                                                  $       100,420
Accrued expenses                                                                                           44,412
                                                                                                  ---------------
   Total Liabilities                                                                                      144,832

General, Initial and Investor Limited Partners' Equity                                                 12,153,228
                                                                                                  ---------------
   Total Liabilities and Partners' Equity                                                         $    12,298,060
                                                                                                  ===============

</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, 2007 and 2006
                                   (Unaudited)

<TABLE>
<CAPTION>


<S>                                               <C>            <C>                              <C>
                                                                  Three Months Ended             Six Months Ended
                                                  September 30,       September 30,       September 30,       September 30,
                                                      2007                2006                2007                2006
                                                ----------------   ----------------     ---------------     ----------
Revenue
   Investment                                   $        396,771    $        135,907    $       407,423     $       278,974
   Other                                                     895                   -                895                   -
                                                ----------------    ----------------    ---------------     ---------------
       Total Revenue                                     397,666             135,907            408,318             278,974
                                                ----------------    ----------------    ---------------     ---------------

Expenses:
   Asset management fees, affiliate                       15,201              27,541             30,402              55,082
   General and administrative
     (includes reimbursement to an
     affiliate     in    the    amount    of
$35,658
     and $73,645 for the six months
     ended September 30, 2007 and 2006,

     respectively)                                        68,230              93,353            121,472            (11,728)
   Amortization                                              540                 540              1,079               1,079
                                                ----------------    ----------------    ---------------     ---------------
       Total Expenses                                     83,971             121,434            152,953              44,433
                                                ----------------    ----------------    ---------------     ---------------


Income  before equity in losses of
   Local Limited Partnerships and gain
   on disposal of investments in

   Local Limited Partnerships                            313,695              14,473            255,365             234,541


Equity in losses of Local Limited
   Partnerships (Note 1)                                 (95,186)            (69,513)          (151,139)          (104,511)

Gain on disposal of investments in
   Local Limited Partnerships                                  -             541,594                  -           2,046,454
                                                ----------------    ----------------    ---------------     ---------------


Net Income                                      $        218,509    $        486,554    $       104,226     $     2,176,484
                                                ================    ================    ===============     ===============


Net Income  allocated:

   General Partners                             $          2,185    $          4,862    $         1,042     $        21,765
   Limited Partners                                      216,324             481,692            103,184           2,154,719
                                                ----------------    ----------------    ---------------     ---------------
                                                $        218,509    $        486,554    $       104,226     $     2,176,484
                                                ================    ================    ===============     ===============


Net Income Per Limited Partner

   Unit (100,000 Units)                         $           2.16    $           4.82    $          1.03     $         21.55
                                                ================    ================    ===============     ===============

</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, 2007
                                   (Unaudited)




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


                                                                     Initial           Investor
                                                  General            Limited            Limited
                                                 Partners           Partners           Partners             Total

Balance at March 31, 2007                      $     120,449     $        5,000     $   11,923,553     $   12,049,002


Net Income                                             1,042                  -            103,184            104,226
                                               -------------     --------------     --------------     --------------

Balance at September 30, 2007                  $     121,491     $        5,000     $   12,026,737     $   12,153,228
                                               =============     ==============     ==============     ==============

</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, 2007 and 2006
                                   (Unaudited)



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

                                                                                  2007                   2006
                                                                              -------------           ---------

Net cash provided by operating activities                                     $     322,430       $     632,157

Net cash provided by investing activities                                                 -           1,196,183
                                                                              -------------       -------------

Net increase in cash and cash equivalents                                           322,430           1,828,340

Cash and cash equivalents, beginning                                             10,969,239           8,394,272
                                                                              -------------       -------------

Cash and cash equivalents, ending                                             $  11,291,669       $  10,222,612
                                                                              =============       =============
</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, 2007. 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, 2007 and 2006.

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 seven 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, 2007:

Capital contributions paid to Local Limited Partnerships and purchase
   price paid to withdrawing partners of Local Limited Partnerships                                 $    12,290,092

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $55,198,839)                                                                   (8,952,934)

Cumulative cash distributions received from Local Limited Partnerships                                   (1,174,471)
                                                                                                     ---------------

Investments in Local Limited Partnerships before adjustments                                              2,162,687

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                                            638,496

   Cumulative amortization of acquisition fees and expenses                                               (211,081)
                                                                                                    ---------------

Investments in Local Limited Partnerships before valuation allowance                                      2,590,102

Valuation allowance on investments in Local Limited Partnerships                                        (1,583,711)
                                                                                                    ---------------

Investments in Local Limited Partnerships                                                           $     1,006,391
                                                                                                    ===============
</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, 2007 is $1,758,057. For the six months ended
September 30, 2007, the Partnership has not recognized $1,606,918 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.   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,
2007 or 2006 or net losses for the three months ended either September 30, 2007
or 2006. The following financial information represents the performance of these
Local Limited Partnerships for the three months ended June 30, 2007 and 2006:

Riverfront Apartments, L.P.                      2007                   2006
---------------------------               --------------             ---------
Revenue                               $       419,451           $     487,809
Net Loss                              $       (96,148)          $     (70,215)




<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.

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 ($1,006,391
at September 30, 2007). 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.
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. 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, 2007, the Partnership has cash and cash equivalents of
$11,291,669, as compared with $10,969,239 at March 31, 2007. This increase is
attributable to the Partnership having an increase in investment revenue during
the period ended September 30, 2007 related to the reimbursement of 2006
interest that the Partnership had lost while its cash was invested in
below-market bearing accounts.


<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, 2007, $11,291,669 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 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, 2007, 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 $12,485,000 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, 2007, 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 to Limited Partners during the six months ended
September 30, 2007. 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 to Limited Partners. Based on the results of 2006
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.

In October 2007, the Partnership distributed $9,774,747, or $96.77 per Unit,
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.



<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

Three Month Period


For the three months ended September 30, 2007, the Partnership's operations
resulted in net income of $218,509 as compared to net income of $486,554 for the
same period in 2006. The decrease in net income is primarily due to a gain on
sale of investments in Local Limited Partnerships recognized in the 2006 period,
partially offset by an increase in investment revenue. The decrease in gain on
sale of investments in Local Limited Partnerships is due to no sale of
investments in Local Limited Partnership during the three months ended September
30, 2007 as compared to the same period in 2006. The Partnership had an increase
in investment revenue during the period ended September 30, 2007 related to the
reimbursement of 2006 interest that the Partnership had lost while its cash was
invested in below-market interest bearing accounts.


Six Month Period


For the six months ended September 30, 2007, the Partnership's operations
resulted in net income of $104,226 as compared to net income of $2,176,484 for
the same period in 2006. The decrease in net income is primarily due to a gain
on sale of investments in Local Limited Partnerships recognized in the 2006
period, an increase in general and administrative expenses, partially offset by
an increase in investment revenue. The decrease in gain on sale of investment in
Local Limited Partnerships is due to the disposal of four Local Limited
Partnerships with large proceeds during the six months ended September 30, 2006,
where as no Local Limited Partnerships were disposed of during the six months
ended September 30, 2007. The increase in general and administrative expenses is
primarily due to a reversal of an accrual for monitoring fees in the prior year.
The Partnership had an increase in investment revenue during the period ended
September 30, 2007 related to the reimbursement of 2006 interest that the
Partnership had lost while its cash was invested in below-market interest
bearing accounts.


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, 2007, the Partnership's investment portfolio consisted of
limited partnership interests in seven Local Limited Partnerships, each of which
owns and operates a multi-family apartment complex and each of which has
generated Tax Credits. Since inception, the Partnership 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 $9,774,747, or $96.77 per Unit,
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.


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

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


Portfolio Update (continued)


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 seven 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 three Local
Limited Partnerships. The Partnership did not dispose of any Local Limited
Partnership interests during the six months ended September 30, 2007.


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.

Property Discussions

Three Properties in which the Partnership has an interest have stabilized
operations and operated above break-even as of June 30, 2007. Four Properties
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, Elmwood Delmar, located in Aurora, Colorado, has a first
mortgage with a prohibition of prepayment prior to December 2008. Given this
major impediment to sale and the Partnership's desire to transfer its interest
in the Local Limited Partnership since the Property's Compliance Period ended on
December 31, 2003, the Managing General Partner entered into a put option
agreement with an unaffiliated entity that would allow for the transfer of the
Partnership's interest in the Local Limited Partnership to the unaffiliated
entity for a nominal amount. On September 15, 2005, the Partnership effectively
disposed of its interest in Elmwood Delmar when the fund received $2,083 in
exchange for the sale of a Contingent Note that was created in conjunction with
the put option entered into with the unaffiliated third party. Based on the
operating performance of the Property, the Managing General Partner determined
that there was very little value above debt in the Property. The Managing
General Partner, in accordance with and as permitted by the Partnership
Agreement, retained the entire amount of net proceeds from this transfer in
Reserves. HUD's June 6, 2006 approval to a Transfer of Physical Assets
application completed the transfer of the Partnership's interest in this Local
Limited Partnership to the third party. This transfer of Partnership interest
resulted in 2006 taxable income of $829,245, or $8.29 per Unit. The Partnership
no longer has an interest in this Local Limited Partnership.


<PAGE>

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

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


Property Discussions (continued)

As previously reported, the Managing General Partner had reached an agreement
with the Local General Partner of West Dade and West Dade II, located in Miami,
Florida, to sell the Partnership's interests in both Local Limited Partnerships,
pending HUD's approval to a Modified Transfer of Physical Assets application.
Upon further review, HUD's approval was not required. In June 2006, the
Partnership received $1,502,777, or $15 per Unit, in exchange for the
Partnership's interest in these Local Limited Partnerships. The proceeds from
this transfer have been retained in Reserves in accordance with and as permitted
by the Partnership Agreement. These transfer of interests resulted in 2006
taxable income of $3,040,190, or $30.40 per Unit. The Partnership no longer has
an interest in these Local Limited Partnerships.

As previously reported, increased competition for Georgetown II, located in
Georgetown, Delaware, negatively impacted the Property's operations. Although
the Property maintained a high level of occupancy, the Property's chronic below
breakeven status was attributable to stagnant rental rates and high maintenance
expenses. In 2003, the non-profit affiliate of the state housing finance agency
that holds the Property's long-term ground lease offered to transfer the land at
little cost to the Partnership. The Managing General Partner gave its consent to
the transfer and, in order to reduce potential risk to the Partnership and
provide an exit strategy, concurrently executed a put agreement for the
Partnership's interest in the Local Limited Partnership with the Local General
Partner. The Partnership executed its put option on August 18, 2006, effectively
transferring its interest to the Local General Partner for $5,000. This transfer
resulted in a 2006 taxable loss of $1,340,871, or $13.41 per Unit. The
Compliance Period expired on December 31, 2004. 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 interest in the Local Limited Partnerships for a nominal sum and a
pledge by the incoming Local General Partner to pay any Tax Credit recapture
incurred due to the transfer of the Local Limited Partnerships prior to the end
of the Compliance Period. These transfers of the Local General Partner interests
occurred during April 2005. The transfer of the Partnership's interest is
currently expected to occur in the fiscal years ending March 31, 2008 and 2009
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, the Managing General Partner and Local General Partner
of Wood Creek, located in Calcium, New York, were exploring an exit strategy
that might have resulted in the 2007 disposal of the Partnership's interest in
the Local Limited Partnership. The Managing General Partner is now estimating an
early 2008 disposal, as the Local General Partner began marketing the Property
for sale in October of 2007. In accordance with the terms of the listing
agreement, the Managing General Partner estimates this transaction will result
in net proceeds to the Partnership of approximately $700,000, or $7.00, per
Unit. The Managing General Partner estimates that a sale, under the proposed
terms, will result in taxable income projected to be approximately $750,000, or
$7.50 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 will explore
alternative exit strategies for these Local Limited Partnership interests.


<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)

In January 2008, the Managing General Partner will exercise the Partnership's
put option and transfer its interest in the Local Limited Partnership that that
owns and operates Fourche Valley, located in Perryville, Arkansas. The
Partnership will receive $5,000, or $.05 per Unit, for its interest in this
Local Limited Partnership. The Managing General Partner estimates this
transaction will result in 2008 taxable income projected to be approximately
$225,000, or $2.25 per Unit.



<PAGE>

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



(a) Evaluation of Disclosure Controls and Procedures.


As of the end of the period covered by this report, with the participation of
the Partnership's management, the Partnership's principal executive officer and
principal financial officer conducted an evaluation of the Partnership's
disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule
15d-15(e) under the Exchange Act). Based on this evaluation, our PEO and PFO
concluded that our disclosure controls and procedures were effective as of
September 30, 2007, to provide reasonable assurance that information required to
be disclosed in our reports filed or submitted under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.


(b) Changes in Internal Control over Financial Reporting.


During the quarter ended September 30, 2007, the Partnership completed
implementation of the following control improvements to remediate the material
weaknesses existing as of March 31, 2007:

Controls over Monitoring of Contractual Agreements

o As part of the remediation plan, management initiated changes in processes and
controls including:

o the refund of lost interest;

o restricting authority to the corporate treasury department over the opening,
  closing, investment and movement of cash accounts;

o the  engagement of the corporate  legal  department to perform due  diligence
  on new  agreements  to assure  compliance  with existing agreements; and

o the  development  and  implementation  of a fiduciary  and conflicts policy
  that  provides  guidance to personnel on conflict management.

Controls over Recording Equity in Income/Losses

o             Management now performs a more detailed review and analysis of
              quarterly financial data and audited financial statements received
              from its investees to assure proper accounting in the appropriate
              period. Specifically, investee audited financial statements are
              reviewed for unusual events (such as a fire) to assure proper
              accounting in the appropriate period. Quarterly, where warranted,
              commencing in the quarter ended September 30, 2007, management
              will expand the scope of line items tested for reasonableness in
              comparison to prior year financial statements.

There were no other changes in the Partnership's internal control over financial
reporting identified in connection with the evaluation required by paragraph (d)
of the Securities and Exchange Act Rules 13a-15 or 15d-15 that occurred during
the quarter ended September 30, 2007 that affected, or were reasonably likely to
affect, the Partnership's internal control over financial reporting.



<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

              Exhibits

 31.1     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


<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, 2007       BOSTON FINANCIAL QUALIFIED HOUSING TAX
                                CREDITS L.P. III

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



                               /s/Gary Mentesana
                                  Gary Mentesana
                                  President
                                  Arch Street III, Inc.