Negative gearing is not about losing money and not paying any tax.
It is a way of offsetting the costs of investment / making a profit. It helps you hold/fund an investment until capital gains are realised or an investment becomes cash flow positive.
For example. Say the loan amount is $1,000,000 and the interest is $50,000 (5% interest rate).
Rather than costing you $50,000 a year in interest, the ATO will return your marginal tax rate to you - ie. at a rate of say 50%, it'll only cost you $25,000 in interest.
Giving you a $25,000 lump sum return in your pocket either at the end of the year or in incremental amounts during the year if you submit an ITWV.
Did you look into claiming deductions on the bank interest/rates etc whilst the planning for development was in progress. Even if you have zero taxable income for the current year (because of overseas income being non-taxable) the 'losses' will carry over into subsequent years when you do finally have income (rent or salary) to declare.
At least this is my understanding regarding negative gearing.