diff --git a/fs/xfs/xfs_inode.c b/fs/xfs/xfs_inode.c
index 8ebd9c64aa48..e2a1db4cee43 100644
--- a/fs/xfs/xfs_inode.c
+++ b/fs/xfs/xfs_inode.c
@@ -775,6 +775,7 @@ xfs_init_new_inode(
 	prid_t			prid,
 	struct xfs_inode	**ipp)
 {
+	struct inode		*dir = pip ? VFS_I(pip) : NULL;
 	struct xfs_mount	*mp = tp->t_mountp;
 	struct xfs_inode	*ip;
 	unsigned int		flags;
@@ -804,18 +805,17 @@ xfs_init_new_inode(
 
 	ASSERT(ip != NULL);
 	inode = VFS_I(ip);
-	inode->i_mode = mode;
 	set_nlink(inode, nlink);
-	inode->i_uid = current_fsuid();
 	inode->i_rdev = rdev;
 	ip->i_d.di_projid = prid;
 
-	if (pip && XFS_INHERIT_GID(pip)) {
-		inode->i_gid = VFS_I(pip)->i_gid;
-		if ((VFS_I(pip)->i_mode & S_ISGID) && S_ISDIR(mode))
-			inode->i_mode |= S_ISGID;
+	if (dir && !(dir->i_mode & S_ISGID) &&
+	    (mp->m_flags & XFS_MOUNT_GRPID)) {
+		inode->i_uid = current_fsuid();
+		inode->i_gid = dir->i_gid;
+		inode->i_mode = mode;
 	} else {
-		inode->i_gid = current_fsgid();
+		inode_init_owner(inode, dir, mode);
 	}
 
 	/*