If you are definitely past the point of deciding whether or not to hold on to the property (i.e., you are holding on to it regardless of this discussion) ...
- if you are planning to buy a house in the next year or so, I suggest that you do not pay off the mortgage.
- if you are not planning to buy a house in the near future, you could pay off the mortgage. But note that the trade-off is that instead of paying interest on the mortgage balance, you will end up paying taxes on your rental income.
For a detailed analysis, read a book like this one
. You could also spend some time on other websites that cater to landlords such as Mr.Landlord
. The point being that you can reduce the amount of tax owed by using depreciation and other available deductions to lower your taxable rental income.