The recapture of Tal Ksaiba on Saturday came as fierce fighting continued on the outskirts of former Iraqi leader Saddam Hussein's home city Tikrit.
Iraqi government forces and Iran-backed fighters are pressing on with the biggest offensive yet against ISIL who seized the north last year.
"We stormed and searched the house to protect the people and maintain the advance of our forces," said Ismaiel Dhia Sultan, a member of the Engineering Effort of the Shia Badr Organisation.
Tal Ksaiba town lies east of Al-Alam town, and is barely 10km east of the city of Tikrit.
The army and Shia fighters retook the town of al-Dour on Tikrit's southern outskirts on Friday, an area where Saddam was hiding when he was found in a pit near a farm house in 2003.
A plan would be put in place to facilitate the return of families to their homes and provide them with relief aids, Major-General Raid Shakir, police commander, said.
"Security forces have not set a foot in these areas since 2003. We have already put in place administrative and security plans to enable all the displaced families to return to their homes and provide food, medicine and other humanitarian aids."
On Saturday, Iraqi security forces and Shia fighters struggled to advance into the two towns of al-Alam and al-Dour near Tikrit, their progress slowed by fierce defence from ISIL fighters.
"We are facing a strong resistance from terrorist groups and we are trying to surround Daesh inside al-Alam and al-Dour and cut all supply routes for them," Laith al-Jubouri, Al-Alam's mayor, said, referring to IS fighters