diff --git a/controller/state.go b/controller/state.go
index a5c121d484897..82b92b899f609 100644
--- a/controller/state.go
+++ b/controller/state.go
@@ -502,6 +502,10 @@ func (m *appStateManager) CompareAppState(app *v1alpha1.Application, project *ap
 	_, refreshRequested := app.IsRefreshRequested()
 	noCache = noCache || refreshRequested || app.Status.Expired(m.statusRefreshTimeout)
 
+	for i := range reconciliation.Target {
+		_ = m.resourceTracking.Normalize(reconciliation.Target[i], reconciliation.Live[i], appLabelKey, string(trackingMethod))
+	}
+
 	if noCache || specChanged || revisionChanged || m.cache.GetAppManagedResources(app.Name, &cachedDiff) != nil {
 		// (rare) cache miss
 		diffResults, err = diff.DiffArray(reconciliation.Target, reconciliation.Live, diffOpts...)
diff --git a/util/argo/resource_tracking.go b/util/argo/resource_tracking.go
index d55d088add2d1..08bbc65ad7c1f 100644
--- a/util/argo/resource_tracking.go
+++ b/util/argo/resource_tracking.go
@@ -4,6 +4,8 @@ import (
 	"fmt"
 	"strings"
 
+	"github.com/argoproj/gitops-engine/pkg/utils/kube"
+
 	"github.com/argoproj/argo-cd/v2/common"
 
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
@@ -30,6 +32,7 @@ type ResourceTracking interface {
 	SetAppInstance(un *unstructured.Unstructured, key, val, namespace string, trackingMethod v1alpha1.TrackingMethod) error
 	BuildAppInstanceValue(value AppInstanceValue) string
 	ParseAppInstanceValue(value string) (*AppInstanceValue, error)
+	Normalize(config, live *unstructured.Unstructured, labelKey, trackingMethod string) error
 }
 
 //AppInstanceValue store information about resource tracking info
@@ -57,6 +60,10 @@ func GetTrackingMethod(settingsMgr *settings.SettingsManager) v1alpha1.TrackingM
 	return v1alpha1.TrackingMethod(tm)
 }
 
+func IsOldTrackingMethod(trackingMethod string) bool {
+	return trackingMethod == "" || trackingMethod == string(TrackingMethodLabel)
+}
+
 // GetAppName retrieve application name base on tracking method
 func (rt *resourceTracking) GetAppName(un *unstructured.Unstructured, key string, trackingMethod v1alpha1.TrackingMethod) string {
 	retrieveAppInstanceValue := func() string {
@@ -142,3 +149,31 @@ func (rt *resourceTracking) ParseAppInstanceValue(value string) (*AppInstanceVal
 	appInstanceValue.Name = nsParts[1]
 	return &appInstanceValue, nil
 }
+
+func (rt *resourceTracking) Normalize(config, live *unstructured.Unstructured, labelKey, trackingMethod string) error {
+	if IsOldTrackingMethod(trackingMethod) {
+		return nil
+	}
+
+	if live == nil || config == nil {
+		return nil
+	}
+
+	label := kube.GetAppInstanceLabel(live, labelKey)
+	if label == "" {
+		return nil
+	}
+
+	annotation := argokube.GetAppInstanceAnnotation(config, common.AnnotationKeyAppInstance)
+	err := argokube.SetAppInstanceAnnotation(live, common.AnnotationKeyAppInstance, annotation)
+	if err != nil {
+		return err
+	}
+
+	err = argokube.SetAppInstanceLabel(config, labelKey, label)
+	if err != nil {
+		return err
+	}
+
+	return nil
+}
diff --git a/util/argo/resource_tracking_test.go b/util/argo/resource_tracking_test.go
index 2d12a4459c005..a0a485ffd1c55 100644
--- a/util/argo/resource_tracking_test.go
+++ b/util/argo/resource_tracking_test.go
@@ -4,6 +4,8 @@ import (
 	"io/ioutil"
 	"testing"
 
+	"github.com/argoproj/argo-cd/v2/util/kube"
+
 	"github.com/stretchr/testify/assert"
 	"gopkg.in/yaml.v2"
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
@@ -104,3 +106,33 @@ func TestParseAppInstanceValueCorrectFormat(t *testing.T) {
 	_, err := resourceTracking.ParseAppInstanceValue("app:group/kind:test/ns")
 	assert.NoError(t, err)
 }
+
+func TestResourceIdNormalizer_Normalize(t *testing.T) {
+	yamlBytes, err := ioutil.ReadFile("testdata/svc.yaml")
+	assert.Nil(t, err)
+	var obj *unstructured.Unstructured
+	err = yaml.Unmarshal(yamlBytes, &obj)
+	assert.Nil(t, err)
+
+	rt := NewResourceTracking()
+
+	err = rt.SetAppInstance(obj, common.LabelKeyAppInstance, "my-app", "", TrackingMethodLabel)
+	assert.Nil(t, err)
+
+	yamlBytes, err = ioutil.ReadFile("testdata/svc.yaml")
+	assert.Nil(t, err)
+	var obj2 *unstructured.Unstructured
+	err = yaml.Unmarshal(yamlBytes, &obj2)
+	assert.Nil(t, err)
+
+	err = rt.SetAppInstance(obj2, common.AnnotationKeyAppInstance, "my-app2", "", TrackingMethodAnnotation)
+	assert.Nil(t, err)
+
+	_ = rt.Normalize(obj2, obj, common.LabelKeyAppInstance, string(TrackingMethodAnnotation))
+	annotation := kube.GetAppInstanceAnnotation(obj2, common.AnnotationKeyAppInstance)
+	assert.Equal(t, obj.GetAnnotations()[common.AnnotationKeyAppInstance], annotation)
+}
+
+func TestIsOldTrackingMethod(t *testing.T) {
+	assert.Equal(t, true, IsOldTrackingMethod(string(TrackingMethodLabel)))
+}