Should this prorated credit be considered income to the business
It depends. If you paid property taxes on that property in 2021, then just subtract the prorated amount from what you actually paid.
If you did not pay property taxes on that property in 2021, then include the credit in the rental income received in 2021.
If you have not (yet) paid property taxes in 2021, then that portion should be reported as Other income.
No. It gets included in rental income. Reporting it as "other" income may treat it as earned income. Long term residential rental income is passive, not earned.
