diff --git a/apis/sql/v1beta1/sqlinstance_types.go b/apis/sql/v1beta1/sqlinstance_types.go
index 759cdde24f..913fef4db8 100644
--- a/apis/sql/v1beta1/sqlinstance_types.go
+++ b/apis/sql/v1beta1/sqlinstance_types.go
@@ -595,7 +595,7 @@ type SQLInstanceStatus struct {
 // +k8s:deepcopy-gen:interfaces=k8s.io/apimachinery/pkg/runtime.Object
 // +kubebuilder:resource:categories=gcp,shortName=gcpsqlinstance;gcpsqlinstances
 // +kubebuilder:subresource:status
-// +kubebuilder:metadata:labels="cnrm.cloud.google.com/managed-by-kcc=true";"cnrm.cloud.google.com/stability-level=stable";"cnrm.cloud.google.com/system=true"
+// +kubebuilder:metadata:labels="cnrm.cloud.google.com/managed-by-kcc=true";"cnrm.cloud.google.com/stability-level=stable";"cnrm.cloud.google.com/system=true";"cnrm.cloud.google.com/tf2crd=true"
 // +kubebuilder:printcolumn:name="Age",JSONPath=".metadata.creationTimestamp",type="date"
 // +kubebuilder:printcolumn:name="Ready",JSONPath=".status.conditions[?(@.type=='Ready')].status",type="string",description="When 'True', the most recent reconcile of the resource succeeded"
 // +kubebuilder:printcolumn:name="Status",JSONPath=".status.conditions[?(@.type=='Ready')].reason",type="string",description="The reason for the value in 'Ready'"
diff --git a/config/crds/resources/apiextensions.k8s.io_v1_customresourcedefinition_sqlinstances.sql.cnrm.cloud.google.com.yaml b/config/crds/resources/apiextensions.k8s.io_v1_customresourcedefinition_sqlinstances.sql.cnrm.cloud.google.com.yaml
index dbaec446dc..8550d083ac 100644
--- a/config/crds/resources/apiextensions.k8s.io_v1_customresourcedefinition_sqlinstances.sql.cnrm.cloud.google.com.yaml
+++ b/config/crds/resources/apiextensions.k8s.io_v1_customresourcedefinition_sqlinstances.sql.cnrm.cloud.google.com.yaml
@@ -8,6 +8,7 @@ metadata:
     cnrm.cloud.google.com/managed-by-kcc: "true"
     cnrm.cloud.google.com/stability-level: stable
     cnrm.cloud.google.com/system: "true"
+    cnrm.cloud.google.com/tf2crd: "true"
   name: sqlinstances.sql.cnrm.cloud.google.com
 spec:
   group: sql.cnrm.cloud.google.com
diff --git a/pkg/clients/generated/apis/sql/v1beta1/sqlinstance_types.go b/pkg/clients/generated/apis/sql/v1beta1/sqlinstance_types.go
index ed236c652d..fed22c7373 100644
--- a/pkg/clients/generated/apis/sql/v1beta1/sqlinstance_types.go
+++ b/pkg/clients/generated/apis/sql/v1beta1/sqlinstance_types.go
@@ -585,7 +585,7 @@ type SQLInstanceStatus struct {
 // +k8s:deepcopy-gen:interfaces=k8s.io/apimachinery/pkg/runtime.Object
 // +kubebuilder:resource:categories=gcp,shortName=gcpsqlinstance;gcpsqlinstances
 // +kubebuilder:subresource:status
-// +kubebuilder:metadata:labels="cnrm.cloud.google.com/managed-by-kcc=true";"cnrm.cloud.google.com/stability-level=stable";"cnrm.cloud.google.com/system=true"
+// +kubebuilder:metadata:labels="cnrm.cloud.google.com/managed-by-kcc=true";"cnrm.cloud.google.com/stability-level=stable";"cnrm.cloud.google.com/system=true";"cnrm.cloud.google.com/tf2crd=true"
 // +kubebuilder:printcolumn:name="Age",JSONPath=".metadata.creationTimestamp",type="date"
 // +kubebuilder:printcolumn:name="Ready",JSONPath=".status.conditions[?(@.type=='Ready')].status",type="string",description="When 'True', the most recent reconcile of the resource succeeded"
 // +kubebuilder:printcolumn:name="Status",JSONPath=".status.conditions[?(@.type=='Ready')].reason",type="string",description="The reason for the value in 'Ready'"
diff --git a/pkg/controller/registration/registration_controller.go b/pkg/controller/registration/registration_controller.go
index 9433f40380..aee3aa7c72 100644
--- a/pkg/controller/registration/registration_controller.go
+++ b/pkg/controller/registration/registration_controller.go
@@ -248,21 +248,12 @@ func registerDefaultController(r *ReconcileRegistration, config *config.Controll
 
 		// If we have a choice of controllers, construct predicates to choose between them
 		if hasDirectController && (hasTerraformController || hasDCLController) {
-			reconcileGate := registry.GetReconcileGate(gvk.GroupKind())
-			if reconcileGate != nil {
+			if reconcileGate := registry.GetReconcileGate(gvk.GroupKind()); reconcileGate != nil {
 				// If reconcile gate is enabled for this gvk, generate a controller-runtime predicate that will
 				// run the direct reconciler only when the reconcile gate returns true.
 				useDirectReconcilerPredicate = kccpredicate.NewReconcilePredicate(r.mgr.GetClient(), gvk, reconcileGate)
 				useLegacyPredicate = kccpredicate.NewInverseReconcilePredicate(r.mgr.GetClient(), gvk, reconcileGate)
-			}
-
-			if !hasTerraformController && !hasDCLController {
-				// We're always going to use the direct reconciler
-				useDirectReconcilerPredicate = nil
-				useLegacyPredicate = nil
-			}
-
-			if (hasTerraformController || hasDCLController) && useDirectReconcilerPredicate == nil {
+			} else {
 				logger.Error(fmt.Errorf("no predicate where we have multiple controllers"), "skipping direct controller registration", "group", gvk.Group, "version", gvk.Version, "kind", gvk.Kind)
 				hasDirectController = false
 			}
@@ -282,7 +273,6 @@ func registerDefaultController(r *ReconcileRegistration, config *config.Controll
 				return nil, fmt.Errorf("error adding direct controller for %v to a manager: %w", crd.Spec.Names.Kind, err)
 			}
 		}
-
 		// register controllers for dcl-based CRDs
 		if hasDCLController {
 			su, err := dclcontroller.Add(r.mgr, crd, r.dclConverter, r.dclConfig, r.smLoader, r.defaulters, r.jitterGenerator, useLegacyPredicate)