To Sell or to Rent in Arlington, Jacksonville, FL

[Thea Linkfield]

I have a house in the Woodland Acres (32211) area of Jacksonville that was purchased for $47,300 cash. We are currently renovating it with about ~$30,000 in and when it's done it will be completely move-in ready with modern finishes to attract buyers. It's a 3/2 with 1229 sq ft. The original thought was to sell it for at least $100,000; and buy a new one with the profit. The more I look at related listings, it looks like we could get between $115,000-$125,000 for a house that we are tearing down the the studs and rebuilding with nice finishes and an open large kitchen. Assuming we can get $120000 for it, less $77300 all in, less $10000 closing costs, we'd be looking at $32,700 profit minus taxes. I need help calculating the taxes for this equation, so any guidance helps. 

I keep reading/hearing about getting taxed TWICE for flipping houses but I'm not understanding. I understand at the end of the year when you do your taxes the profit you make on the flips will be added to your yearly income and potentially bump you tax brackets, but where is the second tax? Also, having very little knowledge on the subject, I was hearing this 1031 thing being thrown around and thought I could just do that, but the more I read recently, because my intent when purchasing was to sell, 1031 won't be an option... can anyone argue that I could use 1031 in this instance? 

Comparables:

http://www.realtor.com/realestateandhomes-detail/8...

^NEW BUILD 3/2.5 1509 sq ft SOLD for $149,000 = $99/sq ft

http://www.realtor.com/realestateandhomes-detail/8...

^"NEW" 3/2 1229 sq ft SOLD for $130,000 = $106/sq ft

The other option would be to cash out refi and hold on to it for at least a year and rent it out.  3/2's in the neighborhood are renting for between $1000-$1100/month. With 77000 in that's about 1.3% of the 2% rule which seems to be as close as you can get nowadays. Conservatively assuming an appraisal would come in around $100000, we'd about break even when it comes to getting cash out and could reinvest the original money in a new place while getting passive income. Typing it all out it almost sounds like a no-brainer, but with 2 other people's money at play, people who were expecting 40% profit up front, convincing them to hold on to it for a whole year might not be so easy. 

I don't have a direct mentor so I'm just seeking seasoned investor's pros and cons of selling vs renting.

Thanks!