diff --git a/pkg/synchronizer/kubernetes/sync_test.go b/pkg/synchronizer/kubernetes/sync_test.go
index a06c81cb1..924a79ed6 100644
--- a/pkg/synchronizer/kubernetes/sync_test.go
+++ b/pkg/synchronizer/kubernetes/sync_test.go
@@ -784,11 +784,10 @@ var _ = Describe("test resource overwrite", func() {
 		// age field should be deleted because the reconcile option was replace
 		Expect(cm.Data["age"]).Should(Equal(""))
 
-		// The hosting annotations should not be added when existing resource, that is not owned by the subscription,
-		// gets overwritten
+		// If reconcile option is replace, the hosting annotations should added to existing resource, that is not owned by the subscription.
 		cmAnnotations = cm.GetAnnotations()
-		Expect(cmAnnotations["apps.open-cluster-management.io/hosting-deployable"]).To(Equal(""))
-		Expect(cmAnnotations["apps.open-cluster-management.io/hosting-subscription"]).To(Equal(""))
+		Expect(cmAnnotations["apps.open-cluster-management.io/hosting-deployable"]).To(Equal(configMapSharedkey.Namespace + "/" + configMapSharedkey.Name))
+		Expect(cmAnnotations["apps.open-cluster-management.io/hosting-subscription"]).To(Equal(configMapSharedkey.Namespace + "/" + configMapSharedkey.Name))
 	})
 
 	It("resource owned by others can be merged by subscription", func() {
@@ -865,7 +864,7 @@ var _ = Describe("test resource overwrite", func() {
 		// age field should be kept because the reconcile option was merge
 		Expect(cm.Data["age"]).Should(Equal("19"))
 
-		// The hosting annotations should not be added when existing resource, that is not owned by the subscription,
+		// With merge option, the hosting annotations should not be added when existing resource, that is not owned by the subscription,
 		// gets overwritten
 		cmAnnotations = cm.GetAnnotations()
 		Expect(cmAnnotations["apps.open-cluster-management.io/hosting-deployable"]).To(Equal(""))
diff --git a/pkg/synchronizer/kubernetes/synchronizer.go b/pkg/synchronizer/kubernetes/synchronizer.go
index 10c128101..7f514d422 100644
--- a/pkg/synchronizer/kubernetes/synchronizer.go
+++ b/pkg/synchronizer/kubernetes/synchronizer.go
@@ -267,7 +267,11 @@ func (sync *KubeSynchronizer) updateResourceByTemplateUnit(ri dynamic.ResourceIn
 	newobj := tplunit.Unstructured.DeepCopy()
 	newobj.SetResourceVersion(obj.GetResourceVersion())
 
-	if overwrite {
+	// If subscription-admin chooses merge option, remove the typical annotations we add. This will avoid the resources being
+	// deleted when the subscription is removed.
+	// If subscription-admin chooses replace option, keep the typical annotations we add. Subscription takes over the resources.
+	// When the subscription is removed, the resources will be removed too.
+	if overwrite && merge {
 		// If overwriting someone else's resource, remove annotations like hosting subscription, hostring deployables... etc
 		newobj = utils.RemoveSubAnnotations(newobj)
 		newobj = utils.RemoveSubOwnerRef(newobj)