Liverpool are now a point behind the champions, and the Champions League is the only other competition which the Reds remain in this term.
They played out a 0-0 draw in the first leg of their last-16 tie with Bayern and will travel to Bavaria for the second leg next week on Wednesday.
"Getting points on the board is a big advantage," Neville said on his Sky Sports podcast. "I always thought that if Liverpool could win the league this season then they'd need a clean fixture list.
"I'm going to say it: go out against Bayern Munich. That sounds like madness.
"Of course, you'd never play to lose a game but it will be in Liverpool's favour if they have a clean run as they can get everyone fresh. City have got a couple of FA Cup games, where Liverpool could go five or six points in front. That's tough to pull back in the closing weeks.
"This title race is still 50-50."
While Liverpool were knocked out of the FA Cup in the third round by Wolves, City remain in the tournament and face a trip to Swansea in the quarter-finals.
And Jamie Carragher believes the Reds could use their lack of domestic cup action to their advantage in the Premier League.
"Liverpool have to stay with Manchester City until there are four or five games to go," Carragher said. "Manchester City's last six fixtures include Tottenham, Manchester United and away to Burnley - they also will have Champions League fixtures in between, although we don't know how far both teams will go.
"When City play in the FA Cup, Liverpool play on those days too. If Liverpool can win on those days it puts the pressure on City to win a game in hand. One of those games in hand is Manchester United in midweek. If Liverpool can get results on the board in FA Cup weekends, that could put pressure on City."