> negative gearing allows the average person investing to have the same tax advantages as a company investing (in anything), because for a company, only profits (revenue minus expenses) are taxed.

From a quick Google, it looks like companies are not entitled to CGT discounts. This means that forming a business would increase the tax you pay for almost everyone.

>If there were no "negative gearing" for investment properties, then either there would be fewer such properties, or people would have to form businesses to perform such investments (which adds an extra bit of friction with accounting and tax).

This doesn't sound like a bad thing. It would discourage people from speculating on the property market and outbidding owner/occupiers (which is a net negative for society) and encourage them to invest their money in productive businesses (which is a net positive).

The problem with negative gearing is the 'average person' can't participate in negative gearing.

Negative gearing only works for those who have a high level of income with the corresponding high level of taxation.

Why it works so well for these individuals is they can greatly reduce their tax liability by using the property deductions negatively gearing has to offer.

As a secondary benefit, those same investors also win on the capital gain side of the equation as these negative gearing tax incentives create massive demand for property.

Your 'average person' living on the average wage can't benefit from negative gearing as their wage bracket does not attract a high enough level of taxation.

In fact it hurts this group of people only because those higher property prices also means they are priced out of the housing market.