What were once among the most sensitive US sites in Iraq, including a palace that housed top generals and a bombed-out villa that held Saddam Hussein, will soon be back in Iraqi hands.

US forces are closing down the Victory Base Complex (VBC) on Baghdad's outskirts, a small city that once featured American fast-food chains and was the main base from which the US war in Iraq was run, and are to finish handing it over to the Iraqi government in December.

"The Victory Base Complex will transition over to the government of Iraq sometime in the first few weeks of December," said Brigadier General Brad Becker, the deputy commanding general for support for the United States Division - Centre, who is responsible for the handover of bases.

There are currently about 8,500 personnel on VBC, with about 4,000 of them soldiers and the rest contractors, said Becker.

That is down from an estimated peak of more than 100,000 -- some 42,000 military personnel and more than 65,000 contractors, according to Lieutenant Colonel Jerry Brooks, the command historian for United States Forces - Iraq (USF-I).

Some portions of VBC have already been handed over to Iraq.

One that has not is known as Camp Victory, a sprawling collection of canals, man-made lakes, palm trees and palaces.

It was a secret, guarded area in which Saddam housed visiting dignitaries before his overthrow in 2003, and it has been no less guarded in the years since, when the palaces housed top US commanders and served as the administrative nerve centre for US forces in Iraq.

The top US generals here have lived in the 25,000-square-foot (2,300-square-metre), 20-room waterfront Al-Ez palace, which was completed in 1994 and is said to have been a favourite of the late King Hussein of Jordan.

"Since 2003, it has been used as the residence for the commanding general of the various task forces that have been here," said Brooks.

"First it was Lieutenant General Ricardo Sanchez, and then General George Casey, and then General David Petraeus, General Ray Odierno, and the last occupant was the current USF-I commander, General Lloyd Austin," he said.

Austin moved to Baghdad's heavily-fortified Green Zone in September 2011, and the palace has been empty since.

The bedroom where the commanding generals stayed features the original bed, an over-the-top piece that has light green and gold trim and two doves with linked wings topping the headboard.

But "this was not just a living quarters -- this was also a working office," Brooks said, noting that there is an office next door.

Al-Ez is dwarfed by another waterfront palace, the 450,000-square-foot (41,800-square-metre), 62-room, 29-bathroom Al-Faw, which features a multi-storey rotunda, swathes of marble, massive chandeliers and kitschy furniture.

Al-Faw was once the workplace of more than 3,000 US personnel, said Brooks.

"This is where all the planning was done," he said, although it was initially used as a barracks for troops and a dining facility.

It once hosted the various Iraq-wide commands -- Combined Joint Task Force 7, Multi-National Forces - Iraq, and most recently United States Forces - Iraq.

But the palace, which was only completed in 2000, has been empty since September 2011, with the soldiers who once worked here having either left Iraq or moved to the Green Zone, he said.

"There are a total of nine palaces on the Victory Base Complex," four of which have yet to be handed over, Brooks said.

The Camp Victory area also holds two apparently-decrepit bombed-out villas on a small island, which is only accessible by a drawbridge.

While their exteriors would seem to mark them as unimportant, one once held now-executed leader Saddam Hussein, as well as his also-executed cousin Ali Hassan Majid for his involvement in alleged poison gas attacks.

"The exterior was left bombed-out, so people wouldn't know what was going on inside," said Brooks. But "inside, we converted it to a maximum-security prison."

The multi-million-dollar modifications took several months and were "done with a great deal of secrecy," he said. The prison was guarded by military police.

"What you wanted to do was ensure that no attempts were made to break Chemical Ali or Saddam Hussein out of jail," he said.

Saddam's and Majid's small cells featured concrete platforms that held their mattresses, stainless steel combination toilet-sinks and little else.

But now even Saddam's toilet and cell door are gone -- both are bound for a military police museum in Missouri in the United States, Brooks said.

The prison has been closed since 2009 and without power since 2010, Brooks said.

It will be handed over to the Iraqis along with the rest of Camp Victory. There is speculation it may be turned into a museum.

"The original plan was that we would turn over this entire, large base at the end of the mission," Becker said of VBC. But it was later decided to hand it over in sections.

Which Iraqi ministry would receive what posed problems for the process of handing over bases, especially at VBC, he said.

"The biggest challenge in handing over the bases in some ways was getting the government of Iraq to commit to which government agency, which ministry, would sign for the base," Becker said.

"There are so many ministries that would like to have this prime piece of property right next to the airport," he said of VBC.

US officers estimated that over $100 million in equipment at VBC will be left for the Iraqis.

The handover date is fast approaching, but there are still substantial amounts of equipment to be shipped out.

"We estimate right now there's approximately 10,500 truckloads of equipment that still need to be shipped out of country, and that's theatre-wide," Becker said.

The roughly 31,000 US soldiers still in Iraq are all to depart by year's end.