diff --git a/fs/reiserfs/inode.c b/fs/reiserfs/inode.c
index 132ec44..6419e6d 100644
--- a/fs/reiserfs/inode.c
+++ b/fs/reiserfs/inode.c
@@ -2097,6 +2097,15 @@ int reiserfs_new_inode(struct reiserfs_transaction_handle *th,
 		goto out_inserted_sd;
 	}
 
+	/*
+	 * Mark it private if we're creating the privroot
+	 * or something under it.
+	 */
+	if (IS_PRIVATE(dir) || dentry == REISERFS_SB(sb)->priv_root) {
+		inode->i_flags |= S_PRIVATE;
+		inode->i_opflags &= ~IOP_XATTR;
+	}
+
 	if (reiserfs_posixacl(inode->i_sb)) {
 		reiserfs_write_unlock(inode->i_sb);
 		retval = reiserfs_inherit_default_acl(th, dir, dentry, inode);
@@ -2111,8 +2120,7 @@ int reiserfs_new_inode(struct reiserfs_transaction_handle *th,
 		reiserfs_warning(inode->i_sb, "jdm-13090",
 				 "ACLs aren't enabled in the fs, "
 				 "but vfs thinks they are!");
-	} else if (IS_PRIVATE(dir))
-		inode->i_flags |= S_PRIVATE;
+	}
 
 	if (security->name) {
 		reiserfs_write_unlock(inode->i_sb);