Homes on several streets are seen to be converted for combat and one house with rooms full of excavated dirt contained a tunnel linking houses on opposite sides of the street.
The tunnel also contained areas for working, sleeping and praying, according to the report.
A pershmerga soldier told Sky News five ISIS terrorists had been killed fleeing from the position several days earlier.
Troops are seen moving building to building, searching across town for any hidden ISIS terrorists.
The offensive to reclaim Bashiqa is part of the broader push to drive ISIS out of Mosul, Iraq's second-largest city, relieving those living under its occupation from the type of brutality, such as mass killings, that the group has committed.
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