Inheriting a house may seem like winning the lottery, but you need to be prepared to make a number of tough financial and emotional decisions.

Here are five important things you probably didn't know about inheriting a home:

No. 1: Existing debt and bills will ultimately trump sentimentality

Even though you probably shouldn't make quick decisions in the wake of a loved one's passing, eventually you will have to decide what to do with an inherited home. You basically have three options:

Sell it Move into it Rent it out

If you are currently a renter, it might seem like a good idea to move in. But that can be complicated if you’ve inherited a family home with siblings or other relatives.

"If three of you inherit a house you're probably not going to live in it together," says Simon Brady, a Certified Financial Planner in New York City.

"That really leaves you with two options that generate money. One is simple: sell it and split it three ways. Or rent it out," he says.

Brady cautions beneficiaries to think twice before turning the home into a rental, because becoming a landlord can be costly and time-consuming.

Besides, selling is often preferable if you -- or your siblings -- need the money right away.

"Debt collectors and bills will trump sentimentality in the end," adds Brady.

No. 2: You may get huge tax breaks

If you sell the house, even if it appreciated significantly since the deceased purchased it, you won't pay capital gains tax because the property's tax basis is "stepped to market value" at the date of death.

"The 'step' means that any increase in value over the cost of the home comes to you tax-free," says Rhea Friedman, a CFP in New York City. "You inherit it at the fair market value at the date of death."

"When you sell the property, any tax you owe is based only on the increase in value in your hands," adds Friedman, who also teaches tax planning at NYU's School of Professional Studies.

No. 3: But you could get hit with other hefty taxes

Most people won't have to deal with federal estate taxes, which in 2015 is triggered when an estate has more than $5.43 million of assets.

"But the bar for state estate taxes be can much lower," says A. Timo Lipping, a CFP in New York City, who specializes in estate planning.

"Where the person you are inheriting from lived can make a big difference in how much you actually get to inherit," he explains.

For instance, taxes in Massachusetts and Oregon are levied on estates worth more than $1 million. Meanwhile, New Jersey taxes estates valued at more than $675,000 and residents are also subject to an inheritance tax with a marginal rate up to 16 percent, Lipping adds.

No. 4: Even a "free" home can still be costly

If the house has an existing mortgage, the estate may settle it. "You're usually getting a house free and clear of debt," says Lipping.

Still, owning a home can be expensive -- even if you're not paying a mortgage.

"Property taxes, home owners insurance, liability insurance, heating, electricity and general wear and tear can make a huge dent in your finances," cautions Brady.

"It's an enormous ongoing expense," he adds.

No. 5: You might inherit other "baggage"

Inheritances can be fraught with emotional consequences, as well as financial ones. You could find yourself dealing with not only a lot of physical stuff from a home inheritance -- like furniture, electronics, household goods or clothing -- but also other "baggage."

You and your siblings might want the same sentimental items like mom's favorite tablecloth, dad's class ring or your parents' wedding album. That can cause real strife within the family.

When prepping the home for sale or new tenants, it can also be emotionally difficult to move certain personal belongings of a loved one who's passed away.

"Inheriting your parents' house almost certainly brings up all of the horrors associated with their deaths," says Friedman. "That is why many people cannot bring themselves to clear out and sell houses that they have inherited."

Many families find they cannot handle the stress that comes with cleaning out inherited property, so they do nothing for a year, which can be costly.

But Friedman warns against long-term inaction: "Not selling a house and not living in it makes for increased maintenance and insurance costs without much to show for them, and that financial stress adds to the emotional stresses involved."

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