''Interest incurred is a legitimate deduction against the...

''Interest incurred is a legitimate deduction against the assessable income as is the taxation treatment on many classes of income.''

Negative gearing allows that business loss to be carried across to a completely different source of income and it's taxation, while any capital gains are further subsidised by a reduced taxation liability.

Clearly any property business that uses negative gearing is running at a loss while the true gains are only available thanks to the 'special' tax concessions that prop it up and make it viable.