IRS 1274 Due Upfront on Hard Money Loan

[Kyle Affronti]

I have a friend who has been in talks with a hard money lender. On a $400,000 Hard Money Loan.

He already received a PPI of $12,000 and now he stated now that my friend needs to pay 6% of the loan which is a 1274 Tax payment.

I've never heard of this.

What is a 1274 and why if it's a tax payment is it due Upfront?

[Caleb Heimsoth]

@Kyle Affronti are you saying your friend paid this hard money lender 12k already?

There is no tax payment. This a scam. You don’t owe taxes on borrowed money.

Your friend has paid a scammer most likely and is out any money he gave them