June  28, 2006



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

       Boston Financial Tax Credit Fund VII, A Limited Partnership
       Annual Report on Form 10-KSB for the Year End March 31, 2006
       File Number 0-24584

Dear Sir/Madam:

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

Very truly yours,




/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller


TC710KSB-K


<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

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

For the fiscal year end                   March 31, 2006
                        ----------------------------------


                                       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 0-24584

          Boston Financial Tax Credit Fund VII, A Limited Partnership
          (Exact name of registrant as specified in its charter)

            Massachusetts                          04-3166203
      (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
                                                     ------------------


Securities registered pursuant to Section 12(b) of the Act:
                                           Name of each exchange on
          Title of each class                  which registered
          -------------------             ---------------------------
                 None                              None

Securities registered pursuant to Section 12(g) of the Act:

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of Class)
                                     100,000

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ X ]

State the aggregate sales price of partnership units held by non-affiliates of
the registrant.
                                         $45,581,000 as of March 31, 2006
                                         --------------------------------


<PAGE>




                                       K-5
DOCUMENTS  INCORPORATED  BY REFERENCE:  LIST THE FOLLOWING  DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-KSB INTO WHICH THE
 DOCUMENT IS INCORPORATED:  (1) ANY ANNUAL REPORT TO SECURITY HOLDERS:
(2) ANY PROXY OR  INFORMATION  STATEMENT:  AND (3) ANY  PROSPECTUS  FILED
PURSUANT TO RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933.

<TABLE>
<CAPTION>
                                                                        Part of Report on
                                                                        Form 10-KSB into
                                                                        Which the Document
Documents incorporated by reference                                     is Incorporated
-----------------------------------                                     -----------------------

<S>                                                                     <C>
Report on Form 8-K dated March 18, 1993                                 Part I, Item 1

Report on Form 8-K dated June 8, 1993                                   Part I, Item 1

Report on Form 8-K dated September 10, 1993                             Part I, Item 1

Report on Form 8-K dated January 14, 1994                               Part I, Item 1

Post-Effective Amendment No. 1-3 to the Form S-11
     Registration Statement, File # 33-52468                            Part I, Item 1

Post-Effective Amendment No. 4 to the Form S-11
     Registration Statement, File # 33-52468                            Part III, Item 11

Prospectus - Sections Entitled:

     "Investment Objectives and Policies -
      Principal Investment Objectives"                                  Part I, Item 1

     "Investment Risks"                                                 Part I, Item 1

     "Estimated Use of Proceeds"                                        Part III, Item 12

     "Management Compensation and Fees"                                 Part III, Item 12

     "Profits and Losses for Tax Purposes, Tax
        Credits and Cash Distributions"                                 Part III, Item 12



</TABLE>




<PAGE>


        BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

                          ANNUAL REPORT ON FORM 10-KSB
                        FOR THE YEAR ENDED MARCH 31, 2006


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                           Page No.

PART I

     <S>          <C>                                                       <C>
     Item 1       Business                                                   K-3
     Item 2       Properties                                                 K-5
     Item 3       Legal Proceedings                                          K-10
     Item 4       Submission of Matters to a Vote of
                  Security Holders                                           K-11

PART II

     Item 5       Market for the Registrant's Units and
                  Related Security Holder Matters                            K-11
     Item 6       Management's Discussion and Analysis of
                  Financial Condition and Results of Operations              K-11
     Item 7       Financial Statements and Supplementary Data                K-17
     Item 8       Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure                     K-17
     Item 8A      Controls and Procedures                                    K-17
     Item 8B      Other Information                                          K-17

PART III

     Item 9       Directors and Executive Officers
                  of the Registrant                                          K-18
     Item 10      Management Remuneration                                    K-18
     Item 11      Security Ownership of Certain Beneficial
                  Owners and Management                                      K-19
     Item 12      Certain Relationships and Related Transactions             K-19
     Item 13      Exhibits, Financial Statement Schedules and
                  Reports on Form 8-K                                        K-21
     Item 14.     Principal Accountant Fees and Services                     K-21

SIGNATURES                                                                   K-22
----------

CERTIFICATIONS                                                               K-24
--------------
</TABLE>


<PAGE>


                                     PART I


Item 1.  Business

Boston Financial Tax Credit Fund VII, A Limited Partnership (the "Fund") is a
Massachusetts limited partnership formed on September 14, 1992 under the laws of
the Commonwealth of Massachusetts. The Fund's partnership agreement
("Partnership Agreement") authorizes the sale of up to 100,000 units of Limited
Partnership Interest ("Unit") at $1,000 per Unit. On November 30, 1993, the Fund
held its final investor closing. In total, the Fund received $50,930,000 ("Gross
Proceeds") of capital contributions for 50,930 Units. Such amounts exclude five
unregistered Units previously acquired for $5,000 by the Initial Limited
Partner, which is also one of the General Partners. The offering of Units
terminated on January 21, 1994. No further sale of Units is expected.

The Fund is engaged solely in the business of real estate investment.
Accordingly, a presentation of information about industry segments is not
applicable and would not be material to an understanding of the Fund's business
taken as a whole.

The Fund has invested as a limited partner in other limited partnerships ("Local
Limited Partnerships") which own and operate residential apartment complexes
("Properties"), some of which benefit from some form of federal, state or local
assistance programs and all of which qualify for low-income housing tax credits
("Tax Credits") added to the Internal Revenue Code (the "Code") by the Tax
Reform Act of 1986. The investment objectives of the Fund include the following:
(i) to provide investors with annual tax credits which they may use to reduce
their federal income taxes; (ii) to provide limited cash distributions from the
operations of apartment complexes; and (iii) to preserve and protect the Fund's
capital with the possibility of realizing a profit through the sale or
refinancing of apartment complexes. There cannot be any assurance that the Fund
will attain any or all of these investment objectives. A more detailed
discussion of these investment objectives, along with the risks in achieving
them, is contained in the sections of the Prospectus entitled "Investment
Objectives and Policies - Principal Investment Objectives" and "Investment
Risks", which are herein incorporated by this reference.

Table A on the following page lists the Properties originally acquired by the
Local Limited Partnerships in which the Fund has invested. Item 6 of this Report
contains other significant information with respect to such Local Limited
Partnerships. As required by applicable rules, the terms of the acquisition of
each Local Limited Partnership interest have been described in a supplement to
the Prospectus and collected in the post-effective amendment to the Registration
Statement; such descriptions are incorporated herein by this reference.


<PAGE>

<TABLE>
<CAPTION>

                                     TABLE A

                             SELECTED LOCAL LIMITED
                                PARTNERSHIP DATA


                                                                                                      Date
                              Properties owned by                                                   Interest
                         Local Limited Partnerships                Location                         Acquired

<S>                                                      <c>                                       <C>
Oak Ridge                                                Macon, GA                                  12/31/92
Santa Fe Oaks II                                         Gainesville, FL                            12/31/92
Andrew's Pointe                                          Burnsville, MN                             04/13/92
Palo Verde II                                            Henderson, NV                              05/19/93
Woods Lane                                               Rogers, AR                                 07/30/93
Crafton Place                                            Fayetteville, AR                           07/30/93
Guardian Place                                           Richmond, VA                               10/07/93
Twin Oaks Meadows                                        Lansing, MI                                10/29/93
Sunrise Terrace                                          Madera, CA                                 11/24/93
Wynmor                                                   Brooklyn Park, MN                          12/22/93
Citrus Glen                                              Orlando, FL                                12/30/93
St. Andrews Pointe                                       Columbia, SC                               01/05/94
Des Moines St. Village                                   Des Moines, IA                             01/31/94
Fountain Lakes                                           Benton, AR                                 02/02/94
Fairhaven Manor                                          Burlington, WA                             03/08/94
Grand Boulevard Renaissance                              Chicago, IL                                08/03/94
Los Claveles II                                          Trujillio Alto, PR                         08/31/94
Springwood                                               Tallahassee, FL                            12/15/94
Harford Commons                                          Baltimore, MD                              02/28/95
</TABLE>

Although the Fund's investments in Local Limited Partnerships are not subject to
seasonal fluctuations, the Fund's equity in losses of Local Limited
Partnerships, to the extent it reflects the operations of individual Properties,
may vary from quarter to quarter based upon changes in occupancy and operating
expenses as a result of seasonal factors.

Each Local Limited Partnership has as its general partners ("Local General
Partners") one or more individuals or entities not affiliated with the Fund or
its General Partners. In accordance with the partnership agreements under which
such entities are organized ("Local Limited Partnership Agreements"), the Fund
depends on the Local General Partners for the management of each Local Limited
Partnership. As of March 31, 2006, the following Local Limited Partnerships have
a common Local General Partner or affiliated group of Local General Partners
accounting for the specified percentage of the total capital contributions to
Local Limited Partnerships: (i) Oak Ridge Apartments, A Limited Partnership,
Santa Fe Oaks Phase II, A Limited Partnership, St. Andrews Pointe Apartments, A
Limited Partnership, and Springwood Apartments, A Limited Partnership,
representing 23.92%, have Flournoy Development Company and John Flournoy as
Local General Partners; (ii) Woods Lane, A Limited Partnership, Crafton Place, A
Limited Partnership, and Fountain Lakes, A Limited Partnership, representing
16.92%, have Lindsey Management Company as Local General Partner. The Local
General Partners of the remaining Local Limited Partnerships are identified in
the Acquisition Reports reported on Forms 8-K, which are herein incorporated by
reference.

The Properties owned by Local Limited Partnerships in which the Fund has
invested are, and will continue to be, subject to competition from existing and
future apartment complexes in the same areas. The success of the Fund will
depend on many outside factors, most of which are beyond the control of the Fund
and which cannot be predicted at this time. Such factors include general
economic and real estate market conditions, both on a national basis and in
those areas where the Properties are located, the availability and cost of
borrowed funds, real estate tax rates, operating expenses, energy costs and
governmental regulations. In addition, other risks inherent in real estate
investment may influence the ultimate success of the Fund, including: (i)
possible reduction in rental income due to an inability to maintain high
occupancy levels or adequate rental levels; (ii) possible adverse changes in
general economic conditions and adverse local conditions, such as competitive
over-building or a decrease in employment or adverse changes in real estate
laws, including building codes; and (iii) possible future adoption of rent
control legislation which would not permit increased costs to be passed on to
the tenants in the form of rent increases or which suppress the ability of the
Local Limited Partnerships to generate operating cash flow. Since some of the
Properties benefit from some form of governmental assistance, the Fund is
subject to the risks inherent in that area including decreased subsidies,
difficulties in finding suitable tenants and obtaining permission for rent
increases. In addition, any Tax Credits allocated to investors with respect to a
Property are subject to recapture to the extent that the Property or any portion
thereof ceases to qualify for the Tax Credits. Other future changes in federal
and state income tax laws affecting real estate ownership or limited
partnerships could have a material and adverse affect on the business of the
Fund.

The Fund is managed by Arch Street VIII, Inc., the Managing General Partner of
the Fund. The other General Partner of the Fund is Arch Street VII Limited
Partnership. The Fund, which does not have any employees, reimburses MMA
Financial, Inc. ("MMA") an affiliate of the General Partners, for certain
expenses and overhead costs. A complete discussion of the management of the Fund
is set forth in Item 9 of this Report.

Item 2.  Properties

The Fund owns limited partnership interests in nineteen Local Limited
Partnerships which own and operate Properties, some of which benefit from some
form of federal, state or local assistance programs and all of which qualify for
the Tax Credits added to the Code by the Tax Reform Act of 1986. The Fund's
ownership interest in each Local Limited Partnership is 99%, with the exception
of Springwood Apartments which is 19.8%, Eden Park which is 67.00%, Fountain
Lake which is 90%, and Twin Oaks Meadow which is 95.89%.

Each of the Local Limited Partnerships has received an allocation of Tax Credits
from the relevant state tax credit agency. In general, the Tax Credits run for
ten years from the date the Property is placed in service. The required holding
period (the "Compliance Period") of the Properties is fifteen years. During
these fifteen years, the Properties must satisfy rent restrictions, tenant
income limitations and other requirements, as promulgated by the Code, in order
to maintain eligibility for the Tax Credits at all times during the Compliance
Period. Once a Local Limited Partnership has become eligible for the Tax
Credits, it may lose such eligibility and suffer an event of recapture if its
Property fails to remain in compliance with the requirements. To date, none of
the Local Limited Partnerships have suffered an event of recapture of Tax
Credits.

In addition, some of the Local Limited Partnerships have obtained one or a
combination of different types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the Property is located at favorable terms; or iii) loans that have repayment
terms that are based on a percentage of cash flow.

The schedule on the following pages provides certain key information on the
Local Limited Partnership interests acquired by the Fund.


<PAGE>



<TABLE>
<CAPTION>


                                               Capital Contributions
Local Limited Partnership                   Total            Paid          Mtge. Loans                             Occupancy at
Property Name               Number of     Committed at      Through        Payable at               Type of          March 31,
Property Location           Apts Units    March 31, 2006  March 31, 2006  December 31, 2005        Subsidy *             2006
---------------------      -----------     -------------- ---------------- ----------------         --------------   ----------

Oak Ridge Apartments,
  A Limited Partnership
Oak Ridge
<S>                        <C>          <C>                   <C>             <C>                                            <C>
Macon, GA                  152          $    2,870,245        $   2,870,245   $ 3,723,021                None                59%

Santa Fe Oaks Phase II,
  A Limited Partnership
Santa Fe Oaks II
Gainesville, FL            129               2,698,586            2,698,586     3,367,617                None                98%

Andrew's Pointe Limited
  Partnership
Andrew's Pointe
Burnsville, MN              57                1,333,800            1,333,800    2,026,974                None                95%

Palo Verde II, A Nevada
  Limited Partnership
Palo Verde II
Henderson, NV               60                1,324,801            1,324,801      981,740                None                93%

Woods Lane, A Limited
  Partnership
Woods Lane
Rogers, AR                 156               2,574,180            2,574,180     2,986,914                None                95%

Crafton Place, A Limited
  Partnership
Crafton Place
Fayetteville, AR            84                1,365,120            1,365,120    1,493,477                None               100%



</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                                               Capital Contributions
Local Limited Partnership                   Total            Paid          Mtge. Loans                             Occupancy at
Property Name               Number of     Committed at      Through        Payable at               Type of          March 31,
Property Location           Apts Units    March 31, 2006  March 31, 2006  December 31, 2005        Subsidy *             2006
---------------------      -----------     -------------- ---------------- ----------------         --------------   ----------

Guardian Place
  Limited Partnership
<S>                          <C>            <C>                  <C>            <C>                                          <C>
Guardian Place               120            2,174,390            2,174,390      3,560,968                None                98%
Richmond, VA

Twin Oaks Meadows Limited
  Dividend Housing Association
  Limited Partnership
Twin Oaks Meadows
Lansing, MI                   63            1,436,400            1,436,400      1,886,010                None                83%

Madera Sunrise Terrace
  Limited Partnership
Sunrise Terrace
Madera, CA                    52            1,523,196            1,523,196      1,196,048                None                98%

Eden Park Limited
  Partnership
Wynmor
Brooklyn Park, MN            324            5,527,758            5,527,758      5,881,797                None                91%

Affordable Citrus Glen
  Limited Partnership
Citrus Glen
Orlando, FL                  176            4,581,360            4,581,360      3,423,821                None                98%

St. Andrews Pointe Apartments,
A Limited Partnership
St. Andrews Pointe
Columbia, SC                 150            3,414,528            3,414,528      4,232,065                None                71%

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                                               Capital Contributions
Local Limited Partnership                   Total            Paid          Mtge. Loans                             Occupancy at
Property Name               Number of     Committed at      Through        Payable at               Type of          March 31,
Property Location           Apts Units    March 31, 2006  March 31, 2006  December 31, 2005        Subsidy *             2006
---------------------      -----------     -------------- ---------------- ----------------         --------------   ----------

Des Moines Street Associates
  Limited Partnership
Des Moines St. Village
<S>                          <C>           <C>                  <C>             <C>                         <C>              <C>
Des Moines, IA               42            1,083,996            1,083,996       1,492,862           Section 8                93%

Fountain Lakes, A Limited
   Partnership
Fountain Lakes
Benton, AR                  180            2,854,593            2,854,593       3,777,712                None                99%

Fairhaven Manor Limited
       Partnership
Fairhaven Manor
Burlington, WA               40            1,232,020            1,232,020         828,947                None                90%

Grand Boulevard Renaissance I
   Limited Partnership
Grand Boulevard Renaissance
Chicago, IL                  30            1,085,000              936,719       1,798,957           Section 8                90%

Los Claveles, S.E. Limited
    Partnership
Los Claveles II
Trujilio Alto, PR           180            1,272,000            1,273,374      10,169,816           Section 8                96%

Springwood Apartments,
    A Limited Partnership
Springwood
Tallahassee, FL             113              624,805              624,805       3,529,532                None                97%


</TABLE>


<PAGE>



<TABLE>
<CAPTION>


                                               Capital Contributions
Local Limited Partnership                   Total            Paid          Mtge. Loans                             Occupancy at
Property Name               Number of     Committed at      Through        Payable at               Type of          March 31,
Property Location           Apts Units    March 31, 2006  March 31, 2006  December 31, 2005        Subsidy *             2006
---------------------      -----------     -------------- ---------------- ----------------         --------------   ----------

BHP/Harford Commons
 Limited Partnership
Harford Commons
<S>                            <C>           <C>              <C>                 <C>                                     <C>
Baltimore, MD                  30            1,187,000        1,128,000           1,736,092            None               100%
                             ------       --------------   -------------    ---------------
                             2,138       $   40,163,778    $  39,957,871    $    58,094,370
                             =====       ==============    =============    ===============


*              Section 8 This subsidy, which is authorized under Section 8 of
               Title II of the Housing and Community Development Act of 1974,
               allows qualified low-income tenants to pay 30% of their monthly
               income as rent with the balance paid by the federal government.
</TABLE>





<PAGE>


                                      K-24
The Fund does not guarantee any of the mortgages or other debt of the Local
Limited Partnerships.

Duration of leases for occupancy in the Properties described above is generally
six to twelve months. The Managing General Partner believes the Properties
described herein are adequately covered by insurance.

Additional information required under this item, as it pertains to the Fund, is
contained in Items 1, 6 and 7 of this Report.

Item 3.  Legal Proceedings

On or about July 13, 2004, Park G.P., Inc. ("Park") commenced litigation against
Boston Financial Qualified Housing Tax Credits L.P. IV ("QH IV") and its
purported general partners (collectively, the "Defendants") in Clay County,
Missouri, claiming that the Defendants breached QH IV's partnership agreement
and their fiduciary duties owed to Park by, among other things, failing to
permit inspection of certain alleged "books and records" of QH IV. On or about
October 7, 2004, Park sought leave of the court to amend its Petition to include
claims for inspection of the alleged "books and records" against the Fund,
Boston Financial Qualified Housing Limited Partnership, Boston Financial
Qualified Housing Tax Credits L.P. II, Boston Financial Qualified Housing Tax
Credits L.P. III, Boston Financial Qualified Housing Tax Credits L.P. V, Boston
Financial Tax Credit Fund Plus, A Limited Partnership, and their purported
general partners (collectively, the "New Defendants"). On or about October 8,
2004, Park moved the court for entry of a temporary restraining order compelling
the Defendants and the New Defendants to turn over the alleged "books and
records" in conjunction with a transaction Park was proposing entering into. On
October 12, 2004, the court denied Park's request for a temporary restraining
order, and on November 15, 2004 it granted the request to amend the Petition.

In October, 2005, Park again sought leave of the court in the Missouri action to
amend its Petition, claiming that the Defendants were in violation of the
Partnership Agreement by disposing of interests in Local Limited Partnerships
following expiration of the Compliance Period(s) without first obtaining Limited
Partner consent. On or about October 11, 2005, Park moved the court for a
temporary restraining order prohibiting the Defendants from entering into any
agreement to sell, transfer, or otherwise convey any interest in Local Limited
Partnerships. On October 14, 2005, the court denied Park's request for a
temporary restraining order. In December 2005, the court granted Park's request
to amend its Petition to include the alleged claim regarding disposition of
Local Limited Partnership interests. The New Defendants have filed a motion to
dismiss the second amended complaint. That motion is pending. If the motion to
dismiss is denied, a trial is scheduled for this matter on October 16, 2006,
although it is possible that a portion of the case may be heard and resolved at
an earlier date.

The Defendants and the New Defendants maintain that Park is not entitled to
review the materials requested and/or use the materials in secondary market
transactions because, among other things: (i) they are not "books and records"
of the partnerships; (ii) Park does not seek to review them for a proper
purpose; and (iii) selective disclosure of the information to Park would give it
an unfair informational advantage in secondary market transactions and may
violate federal and/or state securities laws. The Defendants and New Defendants
accordingly intend on defending against the claims vigorously. The court has
scheduled an evidentiary hearing for May 31, 2006 with respect to Park's "books
and records" claims against the Defendants and the New Defendants. The
Defendants and New Defendants have not formed an opinion that an unfavorable
outcome is either probable or remote, and their counsel refrains from expressing
an opinion as to the likely outcome of the case or the range of any loss.

On August 24, 2004, the Fund, Boston Financial Qualified Housing Limited
Partnership, Boston Financial Qualified Housing Tax Credits L.P. II, Boston
Financial Qualified Housing Tax Credits L.P. III, Boston Financial Qualified
Housing Tax Credits L.P. IV, Boston Financial Qualified Housing Tax Credits L.P.
V, Boston Financial Tax Credit Fund Plus, A Limited Partnership, and Boston
Financial Tax Credit Fund VIII, A Limited Partnership (collectively, the
"Partnerships"), and their general partners commenced litigation against Everest
Housing Investors 2, LLC ("Everest 2") and several other Everest-related
entities (collectively, the "Everest Entities") in Massachusetts state court,
seeking a declaratory judgment that certain materials the Everest Entities
sought to inspect are not "books and records" of the Partnerships and that the
Everest Entities are in any case not entitled to inspect said information under
applicable partnership agreements, partnership law or otherwise. On October 7,
2004, the Everest Entities filed an answer and counterclaim against the
Partnerships and their purported general partners, claiming that they breached
applicable partnership agreements, partnership law and their fiduciary duties to
the Everest Entities by failing to make the purported "books and records"
available. On January 12, 2005, the Partnerships moved to amend their complaint
to, among other things, add a claim based on Everest 2's breach of a November
24, 2003 letter agreement which compelled Everest 2 to keep confidential certain
information contemporaneously disseminated by four of the Partnerships to
Everest 2. The Court granted this Motion. Discovery in the matter is ongoing.

The Partnerships maintain that the Everest Entities are not entitled to review
the materials requested and/or use the materials in secondary market
transactions because, among other things: (i) they are not "books and records"
of the Partnerships; (ii) the Everest Entities do not seek to review them for a
proper purpose; and (iii) selective disclosure of the information to the Everest
Entities would give them an unfair informational advantage in secondary market
transactions and may violate federal and/or state securities laws. The
Partnerships have not formed an opinion that an unfavorable outcome is either
probable or remote, and their counsel refrains from expressing an opinion as to
the likely outcome of the case or the range of any loss.

Except as noted above, the Fund is not a party to any pending legal or
administrate proceeding, and to the best of its knowledge, no legal or
administrative proceeding is threatened or contemplated against it.

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

None.
                                     PART II

Item 5.  Market for the Registrant's Units and Related Security Holder Matters

There is no public market for the Units, and it is not expected that a public
market will develop. If a Limited Partner desires to sell Units, the buyer of
those Units will be required to comply with the minimum purchase and retention
requirements and investor suitability standards imposed by applicable federal or
state securities laws and the minimum purchase and retention requirements
imposed by the Fund. The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers, will be subject
to negotiation by the Limited Partner seeking to sell his Units. Units will not
be redeemed or repurchased by the Fund.

The Partnership Agreement does not impose on the Fund or its General Partners
any obligation to obtain periodic appraisals of assets or to provide Limited
Partners with any estimates of the current value of Units.

As of March 31, 2006, there were 2,335 record holders of Units of the Fund.

Cash distributions, when made, are paid annually. For the years ended March 31,
2006 and 2005, no cash distributions were made.

Item 6.  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 are 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 their 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.




Executive Level Overview

The Fund is a Massachusetts limited partnership organized to invest in Local
Limited Partnerships which own and operate apartment complexes that are eligible
for low income housing tax credits which may be applied against the federal
income tax liability of an investor. The Fund's objective are to: (i) provide
investors with annual tax credits which they may use to reduce their federal
income tax liability; ii) provide limited cash distributions from the operations
of apartment complexes and; iii) preserve and protect the Fund's capital. Arch
Street VIII, Inc., a Massachusetts corporation is the Managing General Partner
of the Fund. Arch Street VII Limited Partnership, a Massachusetts limited
partnership, whose general partner consists of Arch Street, Inc., is also a
General Partner. Both the Managing General Partner and Arch Street VII, L.P. are
affiliates of MMA. The fiscal year of the Fund ends on March 31.

As of March 31, 2006, the Fund's investment portfolio consists of limited
partnership interests in nineteen 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 Fund has generated Tax Credits of
approximately $1,486 per Limited Partner Unit. The Managing General Partner
estimates that the Fund will generate an immaterial amount of Tax Credits in
2006, the expected final year of Tax Credits. In the aggregate, actual and
estimated Tax Credits will enable the Fund to meet the objective specified in
the Fund's prospectus.

Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 calendar years
from the date the property is placed in service. Failure to do so would result
in the recapture of a portion of the property's Tax Credits. Between 2007 and
continuing through 2009, the Compliance Periods of the nineteen Properties in
which the Fund has an interest will expire. The Managing General Partner has
negotiated agreements that will ultimately dispose of the Fund's interest in
five Local Limited Partnerships. It is unlikely that the disposition of any of
these Local Limited Partnership interests will generate any material cash
distributions to the Fund.

The Managing General Partner will continue to closely monitor the operations of
the Properties during the Compliance Periods and will formulate disposition
strategies with respect to the Fund's remaining Local Limited Partnership
interests. It is unlikely that the Managing General Partner will be able to
dispose of the Fund's Local Limited Partnership interests concurrently with the
expiration of each Property's Compliance Period. The Fund shall dissolve and its
affairs shall be wound up upon the disposition of the final Local Limited
Partnership interest and other assets of the Fund. Investors will continue to be
Limited Partners, receiving K-1s and quarterly and annual reports, until the
Fund is dissolved.

Critical Accounting Policies

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


The Local Limited Partnerships in which the Fund invests are Variable Interest
Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling
limited partner equity holder. Because the Fund 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 Fund's exposure to economic and financial statement losses is limited
to its investments in the VIEs ($4,507,304 at March 31, 2006). The Fund may be
subject to additional losses to the extent of any financial support that the
Fund voluntarily provides in the future. Under the equity method, a Local
Limited Fund investment will not be carried below zero. To the extent that
equity in losses are incurred when the Fund'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 Fund that distribution is recorded as income on the
books of the Fund and is included in "other revenue" in the accompanying
financial statements.

The Fund 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 Fund's financial
statements. During the year ended March 31, 2006, the Fund concluded that two of
the Local Limited Partnerships had experienced other-than-temporary declines in
their carrying value and impairment losses were recorded: Des Moines Street
Associates LP for approximately $133,000 and Grand Boulevard Renaissance I LP
for approximately $13,000. Generally, the carrying values 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 March 31, 2006, the Fund had cash and cash equivalents of $546,806, as
compared with $1,035,163 at March 31, 2005. This decrease is primarily due to
purchases of investment securities, cash used for operations and advances to
Local Limited Partnerships. These decreases are partially offset by proceeds
from maturities of investment securities and cash distributions received from
Local Limited Partnerships. Cash used for operations includes $341,824 paid to
the Managing General Partner for accrued asset management fees.


The Managing General Partner initially designated 5% of the Gross Proceeds as
Reserves, as defined in the Partnership Agreement. The Reserves were established
to be used for working capital of the Fund 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. At March 31, 2006, approximately $789,000 of cash, cash equivalents
and investment securities has been designated as Reserves.

To date, professional fees relating to various Property issues totaling
approximately $125,000 have been paid from Reserves. In the event a Local
Limited Partnership encounters operating difficulties requiring additional
funds, the Fund's management might deem it in its best interest to voluntarily
provide such funds in order to protect its investment. As of March 31, 2006, the
Fund has advanced approximately $648,000 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 Fund's
ongoing operations. Reserves may be used to fund operating deficits, if the
Managing General Partner deems funding appropriate. To date, the Fund has used
approximately $985,000 of Reserves to fund operations. If Reserves are not
adequate to cover the Fund's operations, the Fund 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.

At March 31, 2006, the Fund has committed to make future capital contributions
and to pay future purchase price installments on its investments in Local
Limited Partnerships. These future payments are contingent upon the achievement
of certain criteria as set forth in the Local Limited Partnership Agreements and
total approximately $58,000.

Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of March 31, 2006, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for except as disclosed above.

Cash Distributions

No cash distributions were made to Limited Partners in the two years ended March
31, 2006. It is not expected that cash available for distribution, if any, will
be significant during the 2006 calendar year. Based on the results of 2005
Property operations, the Local Limited Partnerships are not expected to
distribute significant amounts of cash to the Fund because such amounts will be
needed to fund Property operating costs. In addition, some 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

The Fund's results of operations for the year end March 31, 2006 resulted in a
net loss of $2,276,364 as compared to a net loss of $2,680,814 for the same
period in 2005. The decrease in net loss is primarily attributable to a decrease
in equity in losses of Local Limited Partnerships. The decrease is partially
offset by an increase in provision for valuation allowance on advances to Local
Limited Partnerships, an increase in provision for valuation allowance on
investments in Local Limited Partnerships, an increase in general and
administrative expenses and a decrease in other income. Equity in losses
decreased primarily due to an increase in unrecognized losses by the Fund of
Local Limited Partnerships with carrying value of zero. The increase in
provision for valuation allowance on of advances to Local Limited Partnership is
the result of a reserve for advances made to two Local Limited Partnerships.
Provision for valuation allowance on investments increased due to the Fund,
recording a valuation allowance of its investments in certain Local Limited
Partnerships. The increase in general and administrative expenses is due to
increased expenses associated with auditing the Fund's financial statements
partially offset by a decrease in charges due to an affiliate of the Managing
General Partner for operational and administrative expenses necessary for
operations of the Fund.

Low-Income Housing Tax Credits

The 2005 and 2004 Tax Credits were $10.40 and $62.47 per Unit, respectively. The
Tax Credits per Limited Partner stabilized in 1996 at approximately $147 per
Unit. The Tax Credits were expected to be stable for about seven years
subsequent to 1996 and then to decrease as certain Properties reached the end of
the ten year Tax Credit period. However, because the Compliance Periods extend
significantly beyond the Tax Credit periods, the Fund is expected to retain most
of its interests in the Local Limited Partnerships for the foreseeable future.

Property Discussions

Most of the Properties in which the Fund has an interest have stabilized
operations and operate above breakeven. Some Properties generate cash flow
deficits that the Local General Partners of those Properties fund through
project expense loans, subordinated loans or operating escrows. However, some
Properties have had persistent operating difficulties that could either; (i)
have an adverse impact on the Fund's liquidity; (ii) result in their
foreclosure; or (iii) result in the Managing General Partner deeming it
appropriate for the Fund to dispose of its interest in the Local Limited
Partnership prior to the expiration of the Compliance Period. Also, the Managing
General Partner, in the normal course of the Fund'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, operations at Los Claveles II, located in Trujillio
Alto, Puerto Rico, continue to improve. The sister property to the Property
("Tower I"), which is not owned by the Fund, remained vacant for 18 months due
to subsidy issues, making it very difficult to repair and occupy units at Los
Claveles II. In March 2002, the subsidy issue was resolved after a long
negotiating period with the United States Department of Housing and Urban
Development. Since resolution of the subsidy issue at Tower I, occupancy at the
Property improved substantially, and stood at 97% as of December 31, 2005.
Despite these improvements, significant risks to the Fund remain. The Property
continued to be in default of its first mortgage, which was restructured as part
of a workout in 1999. Debt service payments were scheduled to commence in
February 2000 but were delayed until July 2003 because turnaround efforts at the
Property were stalled for almost two years due to the subsidy issues at Tower I.
Although the loan was technically in default, the workout agreement contained a
clause that obligated the lender to renegotiate the terms of the workout
agreement in the event that the terms of the agreement were not met. As a
result, a second workout of the Property in January 2004 cured existing defaults
under the 1999 workout agreement. This second workout extended maturity dates on
two loans by roughly four years, and the interest rates on those two loans
remained the same at 6% and 0% respectively. Interest of $630,000, which had
accrued on one of the loans during the three years that the Property did not
generate sufficient income to make required debt service payments was rolled
into the second loan. The workout also provided for partial pay down of accrued
management fees due to an affiliate of the Local General Partner. The
transaction generated roughly $1.1 million in cancellation of indebtedness
taxable income to the Fund. Monthly debt service was reduced by approximately
$2,000 under this second workout. Although the Property operated at above
breakeven from the January 2004 debt restructuring through June 2005, higher
maintenance expenses have caused the Property to operate at below breakeven
during the six-month period ended December 31, 2005. The Property continues to
be current on its loan obligations. In addition, a site visit conducted by a
representative of the Managing General Partner in August 2004 indicated the
Property is in fair physical shape. The Managing General Partner, concerned
about the Property's long-term viability, signed an agreement in December 2002
with the Local General Partner whereby the Fund would pay its remaining capital
commitment of $350,000 and release Fund Reserves of approximately $50,000 in
exchange for an exit option that would allow the Fund to put its interest to the
Local General Partner at any time for $10,000. In addition, the Local General
Partner has the right, subsequent to the expiration of the Compliance Period on
December 31, 2008, to call the Fund's interest for a price of $10,000. As part
of the agreement, the Local General Partner is providing an operating guarantee
in the form of a Local General Partner indemnification of any loss or any
recapture of Tax Credits through the end of the Compliance Period.

As previously reported, Grand Boulevard Renaissance, located in Chicago,
Illinois, continues to experience operating difficulties. Lower revenues, as a
result of the lowering of some unit rents in order to comply with Home loan
funding requirements, along with higher administrative expenses contributed to
the Property's below breakeven operating performance at December 31, 2005. In
response to prior deficits, during 2001 the Local General Partner negotiated
with the first mortgage lender to reduce the interest rate on the current first
mortgage. In addition, in an effort to further reduce the Property's debt
service burden, in July 2003 the Local Limited Partnership and the Illinois
Housing Development Authority closed on a mortgage restructuring of the second
mortgage that reduced monthly debt service payments until June 1, 2005. As part
of the transaction, the management agent agreed to subordinate a percentage of
its management fee to payment of the second mortgage debt service. Although
acceptable occupancy levels had been achieved throughout the nine-month period
ended December 31, 2005, working capital and debt service coverage ratios remain
below appropriate levels. In addition, there is significant deferred maintenance
and property management is weak. A site visit by representatives of the Managing
General Partner is scheduled for the middle of 2006. Advances from the Local
General Partner and working capital have enabled the Property to remain current
on its loan obligations.

As previously reported, operations at Oak Ridge, located in Macon, Georgia,
continue to suffer primarily due to very low occupancy levels and low rental
rates as of December 31, 2005. The low occupancy levels are generally
attributable to a lack of public transportation near the site and a struggling
economy in the Macon area. The Property's net operating income remains
insufficient to meet debt service payments. Therefore the Local General Partner
continues to advance the funds necessary for the Property to stay current on its
loan obligations. The Managing General Partner will continue to work closely
with the management agent and Local General Partner to monitor Property
operations. The Managing General Partner and Local General Partner continue to
explore an exit strategy that would allow for a disposal of the Fund's interest
in the Local Limited Partnership.

As previously reported, although operations at Palo Verde II, located in
Henderson, Nevada, remain strong, the former Local General Partner filed for
bankruptcy protection and refused to remit to the Fund its priority cash
distributions, representing a default under the terms of the Local Limited
Partnership Agreement. An affiliate of the Managing General Partner assumed the
Local General Partner interest in September 2001. The Managing General Partner
continues to seek an acceptable replacement Local General Partner. These efforts
are being negatively impacted by the remote possibility of litigation involving
one of the former Local General Partners, who remains in bankruptcy at this
time. Since the statute of limitations on potential litigation has expired, a
disposition of the Partnership's interest in the Local Limited Partnership will
be pursued.

As previously reported, Wynmor, located in Brooklyn Park, Minnesota, had been
experiencing operating difficulties since mid 2002. Low occupancy due mainly
from a weak rental market has reduced revenues and resulted in significant
operating deficits that the Local General Partner had initially expected to
continue for some time. However, as a result of improved occupancy levels and a
refinancing of the Property's first mortgage, discussed below, the Property was
able to operate at above breakeven for the twelve-month period ended December
31, 2005. In an effort to reduce the Fund's risk, on October 1, 2003 the
Managing General Partner and Local General Partner entered an agreement to
transfer a portion of the Fund's interest in the Property's future Tax Credits
(approximately $11 per Unit) and tax losses to the Local General Partner in
return for the Local General Partner agreeing to deposit $500,000 into an escrow
to be used to fund current and future operating deficits and to fund as much as
an additional $500,000 to cover future operating deficits. During the second
quarter of 2004, the Local General Partner successfully refinanced the
Property's first mortgage, which saved the Property approximately $200,000 in
annual debt service payments. Finally, the Managing General Partner and Local
General Partner agreed that the Managing General Partner could put the Fund's
interest to the Local General Partner for $1 any time after October 1, 2003 and
that the Local General Partner could call the Fund's interest for fair market
value any time after January 2, 2009. The Compliance Period ends for the
Property on December 31, 2008.

As previously reported, St. Andrews Pointe, located in Columbia, South Carolina,
continues to suffer primarily from its location; the Property was built in an
area of town that was once thriving but is now considered less desirable. The
Property's Manager decided to adopt stricter income guidelines in an effort to
reduce the rate of evictions and delinquent tenants. At least in the short term,
this has resulted in undesirable occupancy and debt service coverage levels
during the nine-month period ended December 31, 2005. However, the management
agent is strong and is working diligently to advertise and attract qualified
residents to the Property. Advances from the Local General Partner have enabled
the Property to stay current on its loan obligations. The Managing General
Partner and Local General Partner have begun to explore an exit strategy that
would allow for the disposition of the Fund's interest in the Local Limited
Partnership.

As previously reported, Twin Oaks Meadows, located in Lansing, Michigan, has
suffered from security issues and a soft rental market. As a result, occupancy
and revenues decreased and working capital and debt service remained below
appropriate levels throughout 2005. To address both of these issues, the Local
General Partner worked to obtain a new soft loan to undertake much needed
security improvements to the Property and another soft loan to reduce payables
and fund current operations. With the consent of the Fund, these loans closed in
early May 2004. In return for its consent, the Fund received a put option that
allows the Fund to transfer its interest in the Local Limited Partnership for a
nominal price to the Local General Partner at any time subsequent to the end of
the Property's Compliance Period on December 31, 2009. Although working capital
and debt service levels have not deteriorated further, both remain below
acceptable levels. Occupancy was 90% as of December 31, 2005.

As previously reported, Des Moines Street Village, located in Des Moines, Iowa,
continues to operate at below breakeven with debt service coverage and working
capital levels that were below appropriate levels as of December 31, 2005,
despite very acceptable occupancy levels throughout the same twelve-month period
ended December 31, 2005. While the Local General Partner had previously funded
deficits and the Property has remained current on its debt obligations, the
Local General Partner requested and the Managing General Partner approved a
reduced rate refinancing of the Property's first mortgage that occurred in April
2004. As part of this transaction, the Managing General Partner and the Local
General Partner entered into a put agreement whereby the Fund can transfer its
interest in the Local Limited Partnership for a nominal amount at any time after
the expiration of the Compliance Period on December 31, 2009.

As previously reported, in early 2004, the Local General Partner of Sunrise
Terrace, located in Madera, California, requested the Managing General Partner
to approve a refinancing and consolidation of the Property's first and second
mortgage loans into a single loan. As part of this transaction, the Managing
General Partner and the Local General Partner entered into an agreement to
require the Local General Partner to either purchase the Fund's interest after
the end of the compliance period on December 31, 2007 based on the appraised
value of the Property or to market the Property for sale. The refinancing closed
on September 3, 2004 and resulted in a distribution of refinancing proceeds of
$48,519 to the Fund. The Managing General Partner, in accordance with and as
permitted by the Fund's Partnership Agreement, retained the entire amount of net
proceeds in Reserves.

As previously reported, Santa Fe Oaks II, located in Gainesville, Florida
continues to display the effects of the addition of three new properties in the
remote area that hinder this aging property's ability to compete. While improved
demand has increased occupancy to a level of 88% as of December 31, 2005,
working capital and debt service coverage remain at unacceptable levels. The
Managing General Partner currently anticipates a 2006 sale of the Property, as a
Purchase and Sale agreement has been executed. Under the current terms, a sale
would result in net proceeds of approximately $1,350,000, or $27 per Unit. The
sale of this Local Limited Partnership interest is projected to result in 2006
taxable income of approximately $1,575,000, or $31 per Unit.

As previously reported, Guardian Place, located in Richmond, Virginia, closed on
a refinancing of its existing debt on July 29, 2005. In addition to an annual
debt service reduction of approximately $49,000, additional loan proceeds were
utilized to retire a second mortgage and provide for a distribution of
refinancing proceeds of $212,461 to the Fund on August 1, 2005. The Managing
General Partner, in accordance with and as permitted by the Partnership
Agreement, retained the entire amount of refinancing proceeds in Reserves. As
part of this transaction, the Managing General Partner and the Local General
Partner entered into an agreement that would allow for a sale at the end of the
Compliance Period on December 31, 2009.

Inflation and Other Economic Factors

Inflation had no material impact on the operations or financial condition of the
Fund for the years ended March 31, 2006 and 2005.

Since some Properties benefit from some form of government assistance, the Fund
is subject to the risks inherent in that area including decreased subsidies,
difficulties in finding suitable tenants and obtaining permission for rent
increases. In addition, the Tax Credits allocated to investors with respect to a
Property are subject to recapture to the extent that a Property or any portion
thereof ceases to qualify for Tax Credits.

Certain Properties in which the Fund has invested are located in areas suffering
from poor economic conditions. Such conditions could have an adverse effect on
the rent or occupancy levels at such Properties. Nevertheless, the Managing
General Partner believes that the generally high demand for below market rate
housing will tend to negate such factors. However, no assurance can be given in
this regard.

Item 7.  Financial Statements and Supplementary Data

Information required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
-------------------------------------------------------------------------

None.

Item 8A.  Controls and Procedures

Based on the Fund's evaluation within 120 days prior to filing this Form 10-KSB,
the Fund's Principal Executive Officer has concluded that the Fund's disclosure
controls and procedures are effective to ensure that information required to be
disclosed in the reports that the Fund files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.

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

Item 8B.  Other Information

No reports on Form 8-K were filed during the fourth quarter of the year end
March 31, 2006.

                                    PART III



Item 9.  Directors and Executive Officers of the Registrant

The Managing  General  Partner of the Fund is Arch Street VIII,  Inc., a
Massachusetts  corporation  (the "Managing General  Partner"),  an affiliate of
MMA. The Managing  General  Partner was  incorporated  in September  1992. The
Investment  Committee of the Managing  General  Partner  approved all
investments.  The names and positions of the principal officers and the
directors of the Managing General Partner are set forth below.


     Name                                           Position

Jenny Netzer                                Executive Vice President
Michael H. Gladstone                        Principal, Member

The other General Partner of the Fund is Arch Street VII Limited Partnership,
a Massachusetts  limited partnership ("Arch  Street VII L.P.") that was
organized in September  1992. The managing  general  partner of Arch Street VII
L.P. is Arch Street VII, Inc.

The Managing General Partner provides day-to-day management of the Fund.
Compensation is discussed in Item 10 of this report. Such day-to-day management
does not include the management of the Properties.

The business experience of each of the persons listed above is described below.
There is no family relationship between any of the persons listed in this
section.

Jenny Netzer, age 50, Executive Vice President - Ms. Netzer joined MMA as a
result of the Boston Financial and subsequent Lend Lease HCI acquisitions,
starting with Boston Financial in 1987 and leading Boston Financial's new
business initiatives and managing the firm's Asset Management division. Prior to
joining Boston Financial, Ms. Netzer served as Deputy Budget Director for the
Commonwealth of Massachusetts where she was responsible for the Commonwealth's
health care and public pension program's budgets. Ms. Netzer also served as
Assistant Controller at Yale University, as a former member of Watertown Zoning
Board of Appeals, as the Officer of Affordable Housing Tax Credit Coalition and
is a frequent speaker on affordable housing and tax credit industry issues. Ms.
Netzer is a graduate of Harvard University (BA) and Harvard's Kennedy School of
Government (MPP).

Michael H. Gladstone, age 49, Principal, Member - Mr. Gladstone is responsible
for capital transactions work in the Asset Management group of MMA. He joined
MMA as a result of the Boston Financial and Lend Lease HCI acquisitions,
starting with Boston Financial in 1985 as the firm's General Counsel. Prior to
joining Boston Financial, Mr. Gladstone was associated with the law firm of
Herrick & Smith and served on the advisory board of the Housing and Development
Reporter. Mr. Gladstone has lectured at Harvard University on affordable housing
matters and is a member of the National Realty Committee, Cornell Real Estate
Council, National Association of Real Estate Investment Managers and
Massachusetts Bar. Mr. Gladstone is a graduate of Emory University (BA) and
Cornell University (J.D. & MBA).

The Fund is organized as a limited partnership solely for the purpose of real
estate investment and does not have any employees. Therefore the Fund has not
adopted a Code of Ethics.


The Fund is structured as a limited partnership that was formed principally for
real estate investment and is not "listed" issuer as defined by Rule 10A-3 of
the Securities Exchange Act of 1934. Accordingly, neither an audit committee nor
a financial expert to serve on such a committee has been established by the
Fund.

Item 10.  Management Remuneration

Neither the directors nor officers of Arch Street VIII, Inc., nor the partners
of Arch Street VII L.P., nor any other individual with significant involvement
in the business of the Fund receives any current or proposed remuneration from
the Fund.



Item 11.  Security Ownership of Certain Beneficial Owners and Management

As of March 31, 2006, the following is the only entity known to the Fund to be
the beneficial owner of more than 5% of the Units outstanding:
<TABLE>
<CAPTION>


      Title of                          Name and Address of                    Beneficially            Amount
        Class                            Beneficial Owner                          Owned           Percent of Class

<S>                                                                           <C>                        <C>
   Limited                      Oldham Institutional Tax Credits LLC          5,349 units                10.5%
   Partner                      101 Arch Street
                                Boston, MA
</TABLE>

Oldham Institutional Tax Credits LLC, is an affiliate of Arch Street VIII, Inc.,
the Managing General Partner.

The equity securities registered by the Fund under Section 12(g) of the Act of
1934 consist of 100,000 Units, 50,930 of which were sold to the public. The
remaining Units were deregistered in Post-Effective Amendment No. 4 dated
January 20, 1995, which is herein incorporated by reference. Holders of Units
are permitted to vote on matters affecting the Fund only in certain unusual
circumstances and do not generally have the right to vote on the operation or
management of the Fund.

Arch Street VII L.P. owns five (unregistered) Units not included in the Units
sold to the public.

Except as described in the preceding paragraphs, neither Arch Street VIII, Inc.,
Arch Street VII L.P., MMA nor any of their executive officers, directors,
partners or affiliates is the beneficial owner of any Units. None of the
foregoing persons possesses a right to acquire beneficial ownership of Units.

The Fund does not know of any existing arrangement that might at a later date
result in a change in control of the Fund.

Item 12.  Certain Relationships and Related Transactions

The Fund was required to pay certain fees to and reimburse certain expenses of
the Managing General Partner or its affiliates in connection with the
organization of the Fund and the offering of Units. The Fund is also required to
pay certain fees to and reimburse certain expenses of the Managing General
Partner or its affiliates in connection with the administration of the Fund and
its acquisition and disposition of investments in Local Limited Partnerships. In
addition, the General Partners are entitled to certain Fund distributions under
the terms of the Partnership Agreement. Also, an affiliate of the General
Partners will receive up to $10,000 from the sale or refinancing proceeds of
each Local Limited Partnership, if it is still a limited partner at the time of
such transaction. All such fees, expenses and distributions paid during the
years ended March 31, 2006 and 2005 are described below and in the sections of
the Prospectus entitled "Estimated Use of Proceeds", "Management Compensation
and Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash
Distributions." Such sections are incorporated herein by reference.

The Fund is permitted to enter into transactions involving affiliates of the
Managing General Partner, subject to certain limitations established in the
Partnership Agreement.

Information regarding the Fees paid and expense reimbursements made in the two
years ended March 31, 2006 is presented as follows:




Organizational Fees and Expenses and Selling Expenses

In accordance with the Partnership Agreement, the Fund is required to pay
certain fees to and reimburse expenses of the Managing General Partner and
others in connection with the organization of the Fund and the offering of its
Limited Partnership Units. Commissions, fees and accountable expenses related to
the sale of the Units totaling $6,304,898 were charged directly to Limited
Partners' equity. In connection therewith, $4,329,050 of selling expenses and
$1,975,848 of offering expenses incurred on behalf of the Fund have been paid to
an affiliate of the Managing General Partner. In addition, the Fund has paid
$50,000 in organization costs to an affiliate of the Managing General Partner.
This cost has been included in the balance sheet. Total organization and
offering expenses, exclusive of selling commissions and underwriting advisory
fees, did not exceed 5.5% of the Gross Proceeds, and organizational and offering
expenses, inclusive of selling commissions and underwriting advisory fees, did
not exceed 15.0% of the Gross Proceeds. No organizational fees and expenses were
paid during the two years ended March 31, 2006.

Acquisition Fees and Expenses

In accordance with the Partnership Agreement, the Fund was required to pay
acquisition fees to and reimburse acquisition expenses of the Managing General
Partner or its affiliates for selecting, evaluating, structuring, negotiating
and closing the Fund's investments in Local Limited Partnerships. Acquisition
fees totaled 6% of the Gross Proceeds. Acquisition expenses, which include legal
fees and expenses, travel and communications expenses, costs of appraisals and
accounting fees and expenses, totaled 1.5% of the Gross Proceeds. Acquisition
fees totaling $3,055,800 for the closing of the Fund's Local Limited Partnership
investments were paid to an affiliate of the Managing General Partner. Of this
amount, approximately $2,567,000 is included as capital contributions to Local
Limited Partnerships. Acquisition expenses totaling $763,950 were incurred and
have been reimbursed to an affiliate of the Managing General Partner. No
acquisition fees or expenses were paid during the two years ended March 31,
2006.

Asset Management Fees

In accordance with the Partnership Agreement, an affiliate of the Managing
General Partner is paid an annual fee for services in connection with the
administration of the affairs of the Fund. The affiliate currently receives 0.5%
(annually adjusted by the CPI factor) of Gross Proceeds as the annual Asset
Management Fee. Fees earned during the years ended March 31, 2005 and 2004 are
as follows:

                                            2006                  2005
                                      --------------        ----------

Asset management fees                 $      341,824        $    333,634

Salaries and Benefits Expense Reimbursements

An affiliate of the Managing General Partner is reimbursed for the cost of the
Fund's salaries and benefits expenses. The reimbursements are based upon the
size and complexity of the Fund's operations. Reimbursements paid or payable
during the years ended March 31, 2006 and 2005 are as follows:

                                                  2006                2005
                                            --------------        ----------

Salaries and benefits expense reimbursements    $  122,687        $  197,292

Cash Distributions Paid to the General Partners

In accordance with the  Partnership  Agreement,  the General  Partners of the
Fund, Arch Street VIII, Inc. and Arch Street  VII L.P.,  receive  1% of cash
distributions  paid to  partners.  To date,  the Fund has not paid any cash
distributions to partners.

Additional information concerning cash distributions and other fees paid or
payable to the Managing General Partner and its affiliates and the reimbursement
of expenses paid or payable to MMA and its affiliates during the years ended
March 31, 2006 and 2005 is presented in Note 5 to the Financial Statements.

Item 13.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Documents filed as a part of this Report

In response to this portion of Item 13, the financial statements and the
auditors' report relating thereto are submitted as a separate section of this
Report. See Index to the Financial Statements on page F-1 hereof.

All other financial statement schedules and exhibits for which provision is made
in the applicable accounting regulations of the Securities and Exchange
Commission are not required under related instructions or are inapplicable and
therefore have been omitted.

(b)      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

Item 14.   Principal Accountant Fees and Services

The Partnership paid or accrued fees for services rendered by the principal
accountant for the two years ended March 31, 2006 as follows:

                                            2006                  2005
                                       --------------        ----------

Audit fees                           $       71,762           $    20,350
Tax fees                             $        2,400           $     1,950

No other fees were paid or accrued to the principal accountants during the two
years ended March 31, 2006.


<PAGE>


                                   SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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.

      BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

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


     By:   /s/Jenny Netzer                               Date:    June 28, 2006
           ---------------------------------------                -------------
           Jenny Netzer
           Executive Vice President
           MMA Financial, Inc.



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Managing General
Partner of the Fund and in the capacities and on the dates indicated:

     By:   /s/Jenny Netzer                               Date:    June 28, 2006
           ---------------------------------------                -------------
           Jenny Netzer
           Executive Vice President
           MMA Financial, Inc.



     By:   /s/Michael H. Gladstone                       Date:   June 28, 2006
           -----------------------------                         --------------
           Michael H. Gladstone
           Principal
           MMA Financial, Inc.








<page>

           BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

         ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED MARCH 31, 2006
                                      INDEX

<TABLE>
<CAPTION>

                                                                               Page No.


Report of Independent Registered Public Accounting Firm
<S>                                                                              <C>
   for the years ended March 31, 2006 and 2005                                   F-2

Financial Statements

   Balance Sheet - March 31, 2006                                                F-3

   Statements of Operations - For the years ended
     March 31, 2006 and 2005                                                     F-4

   Statements of Changes in Partners' Equity (Deficiency) -
     For the years ended March 31, 2006 and 2005                                 F-5

   Statements of Cash Flows - For the years ended
     March 31, 2006 and 2005                                                     F-6

   Notes to the Financial Statements                                             F-7



</TABLE>


<PAGE>



             Report of Independent Registered Public Accounting Firm




To the Partners of
Boston Financial Tax Credit Fund VII, A Limited Partnership


In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Boston
Financial Tax Credit Fund VII, A Limited Partnership ("the Partnership") at
March 31, 2006, and the results of its operations and its cash flows for each of
the two years in the period ended March 31, 2006 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.



PricewaterhouseCoopers LLP
Boston, Massachusetts
June 28, 2006

<page>

           BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP


                                  BALANCE SHEET
                                 MARCH 31, 2006


<TABLE>
<CAPTION>

         Assets

<S>                                                                                               <C>
Cash and cash equivalents                                                                         $       546,806
Restricted cash (Notes 4 and 6)                                                                            55,957
Investment securities, at fair value (Note 3)                                                             299,409
Restricted investment securities                                                                          199,168
Investments in Local Limited Partnerships (Note 4)                                                      4,301,397
Other assets                                                                                                1,384
                                                                                                  ---------------
   Total Assets                                                                                   $     5,404,121
                                                                                                  ===============

Liabilities and Partners' Equity

Due to affiliate (Notes 4 and 5)                                                                  $       316,737
Accrued expenses                                                                                           61,175
                                                                                                  ---------------
   Total Liabilities                                                                                      377,912
                                                                                                  ---------------

Commitments (Note 6)

General, Initial and Investor Limited Partners' Equity                                                  5,027,590
Net unrealized losses on investment securities                                                             (1,381)
                                                                                                  ---------------
   Total Partners' Equity                                                                               5,026,209
                                                                                                  ---------------
   Total Liabilities and Partners' Equity                                                         $     5,404,121
                                                                                                  ===============

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

</TABLE>

<PAGE>

          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS
                   For the Years Ended March 31, 2006 and 2005

<TABLE>
<CAPTION>


                                                                                 2006                     2005
                                                                           ----------------         ----------
        Revenue:
<S>                                                                        <C>                      <C>
   Investment                                                              $         35,616         $        21,182
   Other                                                                             30,000                  70,000
                                                                           ----------------         ---------------
     Total Revenue                                                                   65,616                  91,182
                                                                           ----------------         ---------------

Expense:
   Asset management fees, affiliate (Note 5)                                        341,824                 333,634
   Provision for valuation allowance on advances to Local
     Limited Partnerships (Note 4)                                                  200,275                  13,876
   Provision for valuation allowance on investments in Local
     Limited Partnerships (Note 4)                                                  146,158                       -
   General and administrative (includes reimbursements
     to an affiliate in the amount of $122,687 and
     $197,292 in 2006 and 2005, respectively) (Note 5)                              323,717                 316,246
   Amortization                                                                      21,558                  24,982
                                                                           ----------------          --------------
     Total Expense                                                                1,033,532                 688,738
                                                                           ----------------         ---------------

Loss before equity in losses of Local Limited Partnerships                         (967,916)               (597,556)

Equity in losses of Local Limited Partnerships (Note 4)                          (1,308,448)             (2,083,258)
                                                                           ----------------         ---------------

Net Loss                                                                   $     (2,276,364)        $    (2,680,814)
                                                                           ================         ===============

Net Loss allocated:
   General Partners                                                        $        (22,764)        $       (26,808)
   Limited Partners                                                              (2,253,600)             (2,654,006)
                                                                           ----------------         ----------------
                                                                           $     (2,276,364)        $    (2,680,814)
                                                                           ================         ===============
Net Loss per Limited Partner Unit
   (50,930 Units)                                                          $         (44.25)        $        (52.11)
                                                                           ================         ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>
          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP


             STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                   For the Years Ended March 31, 2006 and 2005

<TABLE>
<CAPTION>


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

<S>                                            <C>               <C>                <C>                <C>             <C>
Balance at March 31, 2004                      $    (344,473)    $        5,000     $   10,324,241     $       2,607   $  9,987,375

Comprehensive Loss:
  Change in net unrealized
       gains on investment securities
       available for sale                                  -                  -                  -            (2,454)       (2,454)
  Net Loss                                           (26,808)                 -         (2,654,006)                -    (2,680,814)
                                               -------------     --------------     --------------     -------------   ------------
Comprehensive Loss                                   (26,808)                 -         (2,654,006)           (2,454)   (2,683,268)
                                               -------------     --------------     --------------     -------------  -------------

Balance at March 31, 2005                           (371,281)             5,000          7,670,235               153      7,304,107
                                               -------------     --------------     --------------     -------------    -----------

Comprehensive Loss:
  Change in net unrealized
       gains on investment securities
       available for sale                                  -                  -                  -            (1,534)       (1,534)
  Net Loss                                           (22,764)                 -         (2,253,600)                -    (2,276,364)
                                               -------------     --------------     --------------     -------------   ------------
Comprehensive Loss                                   (22,764)                 -         (2,253,600)           (1,534)   (2,277,898)
                                               -------------     --------------     --------------     -------------   ------------

Balance at March 31, 2006                      $    (394,045)    $        5,000     $    5,416,635     $      (1,381)  $  5,026,209
                                               =============     ==============     ==============     =============   ============

</TABLE>

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


<PAGE>


           BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

                           STATEMENTS OF CASH FLOWS
                   For the Years Ended March 31, 2006 and 2005


<TABLE>
<CAPTION>

                                                                                 2006                     2005
                                                                           ----------------         ----------
Cash flows from operating activities:
<S>                                                                        <C>                      <C>
   Net Loss                                                                $     (2,276,364)        $    (2,680,814)
   Adjustments to reconcile net loss to net
     cash used for operating activities:
   Equity in losses of Local Limited Partnerships                                 1,308,448               2,083,258
   Provision for valuation allowance on advances to Local
     Limited Partnerships                                                           200,275                  13,876
   Provision for valuation allowance on investments in Local
     Limited Partnerships                                                           146,158                       -
   Amortization                                                                      21,558                  24,982
   Accretion                                                                         (8,392)                      -
   Other non-cash item                                                                  (23)                   (385)
   Increase (decrease) in cash arising from changes
     in operating assets and liabilities:
     Restricted cash                                                                192,856                  (3,204)
     Other assets                                                                      (231)                    359
     Due to affiliate                                                               130,749                   5,934
     Accrued expenses                                                                32,375                   3,278
                                                                           ----------------         ---------------
Net cash used for operating activities                                             (252,591)               (552,716)
                                                                           ----------------         ---------------

Cash flows from investing activities:
   Proceeds from maturities of investments securities                               551,585                 105,047
   Advances to Local Limited Partnerships                                          (200,275)                (13,876)
   Purchases of investment securities                                              (841,997)                      -
   Purchases of restricted investment securities                                   (196,400)                      -
   Cash distributions received from Local
     Limited Partnerships                                                           451,321                 192,509
                                                                           ----------------         ---------------
Net cash provided by (used for) investing activities                               (235,766)                283,680
                                                                           ----------------        ----------------

Net decrease in cash and cash equivalents                                          (488,357)               (269,036)

Cash and cash equivalents, beginning                                              1,035,163               1,304,199
                                                                           ----------------         ---------------

Cash and cash equivalents, ending                                          $        546,806         $     1,035,163
                                                                           ================         ===============
The accompanying notes are an integral part of these financial statements.


</TABLE>


<PAGE>


          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
                        NOTES TO THE FINANCIAL STATEMENTS


1.   Organization

Boston Financial Tax Credit Fund VII, A Limited Partnership (the "Fund") is a
Massachusetts limited partnership organized to invest in other limited
partnerships ("Local Limited Partnerships") which own and operate apartment
complexes that are eligible for low income housing tax credits which may be
applied against the federal income tax liability of an investor. The Fund's
objective are to: (i) provide investors with annual tax credits which they may
use to reduce their federal income tax liability; ii) provide limited cash
distributions from the operations of apartment complexes and; iii) preserve and
protect the Fund's capital. Arch Street VIII, Inc., a Massachusetts corporation
is the Managing General Partner of the Fund. Arch Street VII Limited
Partnership, a Massachusetts limited partnership, whose general partner consists
of Arch Street, Inc., is also a General Partner. Both the Managing General
Partner and Arch Street VII, L.P. are affiliates of MMA Financial, Inc. ("MMA").
The fiscal year of the Fund ends on March 31.

The Partnership Agreement authorizes the sale of up to 100,000 Units of limited
partnership interest ("Units") at $1,000 per Unit. In total, the Fund received
$50,930,000 of capital contributions from investors admitted as Limited Partners
for 50,930 Units. On November 30, 1993, the Fund held its final investor
closing.

Under the terms of the Partnership Agreement, the Fund originally designated 5%
of the Gross Proceeds from the sale of Units as a reserve for working capital of
the Fund and contingencies related to ownership of Local Limited Partnership
interests. The Managing General Partner may increase or decrease such amounts
from time to time as it deems appropriate. At March 31, 2006, the Managing
General Partner has designated approximately $789,000 of cash, cash equivalents
and investment securities as such Reserve.

Generally, profits, losses, tax credits and cash flow from operations are
allocated 99% to the Limited Partners and 1% to the General Partner. Net
proceeds from a sale or refinancing will be allocated 95% to the Limited
Partners and 5% to the General Partner 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.

2.   Significant Accounting Policies

Cash Equivalents

Cash equivalents represent short-term, highly liquid instruments with original
maturities of 90 days or less.

Concentration of Credit Risk

The Fund invests its cash primarily in money market funds with commercial banks.
At times, cash balances at a limited number of banks and financial institutions
may exceed federally insured amounts. Management believes it mitigates its
credit risk by investing in major financial institutions.

Investment Securities

The Fund's investment securities are classified as "Available for Sale" and
reported at fair value as reported by the brokerage firm at which the securities
are held. Realized gains or losses from sales of securities are based on the
specific identification method. Unrealized gains and losses are excluded from
earnings and reported as a separate component of partners' equity.




<PAGE>


          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
                  NOTES TO THE FINANCIAL STATEMENTS (Continued)


2.       Significant Accounting Policies (continued)

Investments in Local Limited Partnerships

The Local Limited Partnerships in which the Fund invests are Variable Interest
Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling
limited partner equity holder. Because the Fund 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 Fund's exposure to economic and financial statement losses is limited
to its investments in the VIEs ($4,507,304 at March 31, 2006). The Fund may be
subject to additional losses to the extent of any financial support that the
Fund voluntarily provides in the future. Under the equity method, a Local
Limited Fund investment will not be carried below zero. To the extent that
equity in losses are incurred when the Fund'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 Fund that distribution is recorded as income on the
books of the Fund and is included in "other revenue" in the accompanying
financial statements.

The Tax Credits generated by Local Limited Partnerships are not reflected on the
books of the Fund as such credits are allocated to partners for use in
offsetting their Federal income tax liability.

Excess investment costs over the underlying net assets acquired have arisen from
acquisition fees paid and expenses reimbursed to an affiliate of the Fund. These
fees and expenses are included in the Fund's investments in Local Limited
Partnerships and are being amortized on a straight-line basis over 35 years
until a Local Limited Partnership's respective investment balance has been
reduced to zero.

The Fund may provide advances to the Local Limited Partnerships to finance
operations or to make debt service payments. The Fund assesses the
collectibility of any advances at the time the advance is made and records a
reserve if collectibility is not reasonably assured.

The Fund does not guarantee any of the mortgages or other debt of the Local
Limited Partnerships.

The Fund, as a limited partner in the Local Limited Partnerships, is subject to
risks inherent in the ownership of property which are beyond its control, such
as fluctuations in occupancy rates and operating expenses, variations in rental
schedules, proper maintenance and continued eligibility of tax credits. If the
cost of operating a Property exceeds the rental income earned thereon, the Fund
may deem it in its best interest to voluntarily provide funds in order to
protect its investment.

The Managing General Partner have decided to report results of the Local Limited
Partnerships on a 90 day lag basis because the Local Limited Partnerships report
their results on a calendar year basis. Accordingly, the financial information
about the Local Limited Partnerships that is included in the accompanying
financial statements is as of December 31, 2005 and 2004 and for the years then
ended.

The Fund 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 Fund's financial
statements.




<PAGE>
          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP


                  NOTES TO THE FINANCIAL STATEMENTS (Continued)


2.       Significant Accounting Policies (continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"),
Disclosures About Fair Value of Financial Instruments, requires disclosure for
the fair value of most on- and off-balance sheet financial instruments for which
it is practicable to estimate that value. The scope of SFAS No. 107 excludes
certain financial instruments, such as trade receivables and payables when the
carrying value approximates the fair value and investments accounted for under
the equity method, and all nonfinancial assets, such as real property. Unless
otherwise described, the fair values of the Fund's assets and liabilities which
qualify as financial instruments under SFAS No. 107 approximate their carrying
amounts in the accompanying balance sheet.

Income Taxes

No provision for income taxes has been made, as the liability for such taxes is
an obligation of the partners of the Fund.

3.   Investment Securities

A summary of investment securities is as follows:
<TABLE>
<CAPTION>

                                                                   Gross               Gross
                                                                Unrealized          Unrealized            Fair
                                               Cost                Gains              Losses              Value

Debt securities issued by the US
Treasury and other US
<S>                                       <C>                 <C>                 <C>                <C>
Government Agency                         $      297,622      $            -      $       (1,441)    $      296,181

Mortgage backed securities                         3,168                  60                   -              3,228
                                          --------------      --------------      --------------     --------------

Investment securities
     at March 31, 2006                    $      300,790      $           60      $       (1,441)    $      299,409
                                          ==============      ==============      ==============     ==============

The contractual maturities at March 31, 2006 are as follows:

                                                                                                        Fair
                                                                                Cost                    Value

Due in less than one year                                                 $       297,622           $     296,181
Mortgage backed securities                                                          3,168                   3,228
                                                                          ---------------           -------------
                                                                          $       300,790           $     299,409
                                                                          ===============           =============

</TABLE>


<PAGE>
          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP


                  NOTES TO THE FINANCIAL STATEMENTS (Continued)


3.   Investment Securities (continued)

Actual maturities for mortgage backed securities may differ from contractual
maturities because some borrowers have the right to call or prepay obligations.
Proceeds from the maturities of investment securities were approximately
$552,000 and $105,000 during the years ended March 31, 2006 and 2005,
respectively.

4.   Investments in Local Limited Partnerships

The Fund has limited partnership interests in nineteen Local Limited
Partnerships which were organized for the purpose of owning and operating
multi-family housing complexes, all of which are government-assisted. The Fund's
ownership interest in each Local Limited Partnership is 99%, with the exception
of Springwood Apartments which is 19.8%, Eden Park which is 67%, Fountain Lakes
which is 90%, and Twin Oaks Meadow which is 95.89%. The Fund may have negotiated
or may negotiate options with the Local General Partners to purchase or sell the
Fund's interests in the Local Limited Partnership's at the end of the Compliance
Period at nominal prices. In the event that Local Limited Partnerships are sold
to a third parties, or upon dissolution of the Local Limited Partnership's,
proceeds will be distributed according to the terms of each Local Limited
Partnership agreement.

The following is a summary of investments in Local Limited Partnerships at March
31, 2006:
<TABLE>
<CAPTION>

Capital contributions and advances paid to Local Limited Partnerships and
purchase
<S>                                                                                                 <C>
   price paid to withdrawing partners of Local Limited Partnerships                                 $    40,605,570

Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
   unrecognized losses of $10,632,803)                                                                  (30,100,061)

Cumulative cash distributions received from Local Limited Partnerships                                   (2,445,914)
                                                                                                    ---------------

Investments in Local Limited Partnerships before adjustments                                              8,059,595

Excess investment costs over the underlying assets acquired:

   Acquisition fees and expenses                                                                          1,252,338

   Cumulative amortization of acquisition fees and expenses                                                (356,678)
                                                                                                    ---------------

Investments in Local Limited Partnerships before valuation allowance                                      8,955,255

Valuation allowance on investments in Local Limited Partnerships                                         (4,653,858)
                                                                                                    ---------------

Investments in Local Limited Partnerships                                                           $     4,301,397
                                                                                                    ===============
</TABLE>

For the year ended March 31, 2006, the Fund advanced $200,275 to two of the
Local Limited Partnerships, all of which was reserved. The Fund has also
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. During the year ended March 31, 2006, the Fund
concluded that two of the Local Limited Partnerships had experienced
other-than-temporary declines in their carrying value and impairment losses were
recorded: Des Moines Street Associates LP for approximately $133,000 and Grand
Boulevard Renaissance I LP for approximately $13,000.

Summarized combined financial information of the Local Limited Partnerships in
which the Fund has invested as of December 31, 2005 and 2004 (due to the Fund's
policy of reporting the financial information of its Local Limited Partnership
interests on a 90 day lag basis) is as follows:


<PAGE>

          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

                  NOTES TO THE FINANCIAL STATEMENTS (Continued)


4. Investments in Local Limited Partnerships (continued)

Summarized Balance Sheets - as of December 31,

<TABLE>
<CAPTION>
                                                                                   2005                2004
                                                                             ----------------    ----------

Assets:
<S>                                                                          <C>                 <C>
   Investment property, net                                                  $     65,776,252    $     68,580,232
   Other assets                                                                     4,799,547           5,154,232
                                                                             ----------------    ----------------
     Total Assets                                                            $     70,575,799    $     73,734,464
                                                                             ================    ================

Liabilities and Partners' Deficiency:
   Mortgage notes payable                                                    $     58,094,370    $     59,760,118
   Other liabilities                                                               11,305,121           8,762,158
                                                                             ----------------    ----------------
     Total Liabilities                                                             69,399,491          68,522,276
                                                                             ----------------    ----------------

Fund's deficiency                                                                  (3,906,911)           (419,471)
Other partners' deficiency                                                          5,083,219           5,631,659
                                                                             ----------------    ----------------
   Total Partners' Deficiency                                                       1,176,308           5,212,188
                                                                             ----------------    ----------------
   Total Liabilities and Partners' Deficiency                                $     70,575,799    $     73,734,464
                                                                             ================    ================

Summarized Statements of Operations  -
for the years ended December 31,

                                                                                   2005                2004
                                                                             ----------------    ----------

Rental and other income                                                      $     13,903,188    $     13,530,513

Expenses:
   Operating                                                                        9,511,395          10,119,505
   Interest                                                                         3,997,778           4,168,803
   Depreciation and amortization                                                    3,887,899           3,797,164
                                                                             ----------------    ----------------
     Total Expenses                                                                17,397,072          18,085,472
                                                                             ----------------    ----------------

Net Loss                                                                     $     (3,493,884)   $     (4,554,959)
                                                                             ================    ================

Fund's share of net loss                                                     $     (3,178,495)   $     (3,729,801)
                                                                             ================    ================
Other partners' share of net loss                                            $       (315,389)   $       (825,158)
                                                                             ================    ================
</TABLE>

For the years ended March 31, 2006 and 2005, the Fund has not recognized
$1,870,047 and $1,646,543, respectively, of equity in losses relating to certain
Local Limited Partnerships in which cumulative equity in losses and
distributions exceeded its total investment in these Local Limited Partnerships.

The Fund's deficiency as reflected by the Local Limited Partnerships of
($3,906,911) differs from the Fund's investments in Local Limited Partnerships
before adjustments of $8,059,595 primarily because of cumulative unrecognized
losses as described above and advances to Local Limited Partnerships which the
Fund has included in investments in Local Limited Partnerships.

The Fund has set aside in an escrow account future capital contributions related
to its investment in one Local Limited Partnership. Interest earned on this
deposit is payable to the Local General Partner. As of March 31, 2006, $108,594
of interest due to the Local General Partner is included in due to affiliates.



<PAGE>

          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

                  NOTES TO THE FINANCIAL STATEMENTS (Continued)


5.   Transactions with Affiliates

An affiliate of the Managing General Partner receives the base amount of 0.50%
(annually adjusted by the CPI factor) of Gross Proceeds as the annual Asset
Management Fee for administering the affairs of the Fund. Asset Management Fees
of $341,824 and $333,634 have been expensed in the years ended March 31, 2006
and 2005, respectively. Included in due to affiliates at March 31, 2006 is
$85,456 of Asset Management Fees. During the years ended March 31, 2006 and
2005, $341,824 and $330,904 respectively, were paid out of available cash flow
for Asset Management Fees.

An affiliate of the Managing General Partner is reimbursed for the cost of the
Fund's salaries and benefits expenses. Included in general and administrative
expenses for the years ended March 31, 2006 and 2005 is $122,687 and $197,292,
respectively, that the Fund has incurred for these expenses. During the year
ended March 31, 2006 and 2005, salaries and benefits of $0 and $197,292,
respectively, were paid to the affiliate of the Managing General Partner. As of
March 31, 2006, $122,687 of these reimbursements remains unpaid.

6.   Commitments

At March 31, 2006, the Fund has committed to make future capital contributions
and pay future purchase price installments on its investments in Local Limited
Partnerships. These future payments are contingent upon the achievement of
certain criteria as set forth in the Local Limited Partnership agreements and
total approximately $206,000. Of this amount, the Fund has set aside $148,281 in
escrow for future capital contributions to one Local Limited Partnership.

7.   Federal Income Taxes

The following schedule reconciles the reported financial statement net loss for
the fiscal years ended March 31, 2006 and 2005 to the net loss reported on the
Form 1065, U.S. Partnership Return of Income for the years ended December 31,
2005 and 2004:
<TABLE>
<CAPTION>

                                                                                    2006                  2005
                                                                               --------------         --------

<S>                                                                            <C>                    <C>
Net loss per financial statements                                              $   (2,276,364)        $  (2,680,814)

Equity in losses of Local Limited Partnerships for financial reporting
   purposes in excess of equity in losses for tax purposes                            200,110             1,864,694

Equity in losses of Local Limited Partnerships not recognized
   for financial reporting purposes                                                (1,870,047)           (1,646,543)

Adjustment to reflect March 31 fiscal year end to
   December 31 taxable year end                                                        19,824                15,738

Amortization for tax purposes in excess of amortization
   for financial reporting purposes                                                   (23,982)              (20,558)

Provision for valuation allowance on advances to Local Limited
   Partnerships, not deductible for tax purposes                                      200,275                13,876

Provision for valuation allowance on investments in Local Limited
   Partnerships not deductible for tax purposes                                       146,158                     -
                                                                               --------------         -------------

Net Loss per tax return                                                        $   (3,604,026)        $  (2,453,607)
                                                                               ==============         =============
</TABLE>


<PAGE>

          BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP

                  NOTES TO THE FINANCIAL STATEMENTS (Continued)


7. Federal Income Taxes (continued)

The differences in the assets and liabilities of the Fund for financial
reporting purposes and tax purposes as of March 31, 2006 and December 31, 2005,
respectively are as follows:
<TABLE>
<CAPTION>

                                                                Financial
                                                                Reporting            Tax
                                                                Purposes          Purposes           Differences

<S>                                                         <C>                <C>                 <C>
Investments in Local Limited Partnerships                   $    4,301,397     $    2,308,136      $    1,993,261
                                                            ==============     ==============      ==============
Other assets                                                $    1,102,724     $    7,462,755      $   (6,360,031)
                                                            ==============     ==============      ==============
Liabilities                                                 $      377,912     $      247,075      $      130,837
                                                            ==============     ==============      ==============
</TABLE>

The differences in assets and liabilities of the Fund for financial reporting
and tax purposes are primarily attributable to: (i) the cumulative equity in
losses from Local Limited Partnerships for tax purposes is approximately
$5,165,000 more than for financial reporting purposes., including approximately
$10,633,000 of losses the Fund has not recognized relating to Local Limited
Partnerships whose cumulative equity in losses exceed its total investments;
(ii) the cumulative amortization of acquisition fees for tax purposes exceeds
financial reporting purposes by approximately $155,000; (iii) approximately
$63,000 of cash distributions received from Local Limited Partnerships were
received during the three months ended March 31, 2006; (iv) the Fund has
recorded an impairment allowance on its investments in Local Limited
Partnerships for approximately $4,654,000 that is not recorded for tax purposes;
and (v) organizational and offering costs of approximately $6,305,000 that have
been capitalized for tax purposes are charged to Limited Partners' equity for
financial reporting purposes.

8.   Significant Subsidiaries

The following Local Limited Partnerships invested in by the Fund represents more
than 20% of the Fund's total assets or equity as of March 31, 2006 or 2005 or
net losses for the years ended either March 31, 2006 or 2005. The following
financial information represents the performance of these Local Limited
Partnerships for the years ended December 31, 2005 and 2004:
<TABLE>
<CAPTION>

Eden Park Limited Partnership                                                      2005                     2004
-----------------------------                                                 ---------------           --------

<S>                                                                           <C>                       <C>
Total Assets                                                                  $    10,117,502           $  10,695,883
Total Liabilities                                                             $     6,928,986           $   7,022,327
Revenue                                                                       $     2,594,610           $   2,583,652
Net Income (Loss)                                                             $      (465,040)          $  (1,668,232)

Citrus Glen

Total Assets                                                                  $     6,198,501           $   6,473,662
Total Liabilities                                                             $     5,928,680           $   5,835,356
Revenue                                                                       $     1,495,538           $   1,325,487
Net Income (Loss)                                                             $      (188,362)          $    (337,064)


</TABLE>