diff --git a/bundle/config/mutator/apply_presets.go b/bundle/config/mutator/apply_presets.go
index 4b29f0057..cdccf5491 100644
--- a/bundle/config/mutator/apply_presets.go
+++ b/bundle/config/mutator/apply_presets.go
@@ -222,13 +222,17 @@ func (m *applyPresets) Apply(ctx context.Context, b *bundle.Bundle) diag.Diagnos
 		dashboard.DisplayName = prefix + dashboard.DisplayName
 	}
 
-	root := b.SyncRoot.Native()
-	_, ok := env.Lookup(ctx, envDatabricksRuntimeVersion)
-	isInWorkspace := ok && strings.HasPrefix(root, "/Workspace/")
+	if config.IsExplicitlyEnabled((b.Config.Presets.InPlaceDeployment)) {
+		root := b.SyncRoot.Native()
+		_, ok := env.Lookup(ctx, envDatabricksRuntimeVersion)
+		isInWorkspace := ok && strings.HasPrefix(root, "/Workspace/")
 
-	if !isInWorkspace {
-		disabled := false
-		b.Config.Presets.InPlaceDeployment = &disabled
+		if isInWorkspace {
+			b.Config.Workspace.FilePath = b.BundleRootPath
+		} else {
+			disabled := false
+			b.Config.Presets.InPlaceDeployment = &disabled
+		}
 	}
 
 	return diags
diff --git a/bundle/config/mutator/default_workspace_paths.go b/bundle/config/mutator/default_workspace_paths.go
index 9dfbf763a..02a1ddb3b 100644
--- a/bundle/config/mutator/default_workspace_paths.go
+++ b/bundle/config/mutator/default_workspace_paths.go
@@ -5,7 +5,6 @@ import (
 	"path"
 
 	"github.com/databricks/cli/bundle"
-	"github.com/databricks/cli/bundle/config"
 	"github.com/databricks/cli/libs/diag"
 )
 
@@ -26,10 +25,6 @@ func (m *defineDefaultWorkspacePaths) Apply(ctx context.Context, b *bundle.Bundl
 		return diag.Errorf("unable to define default workspace paths: workspace root not defined")
 	}
 
-	if config.IsExplicitlyEnabled((b.Config.Presets.InPlaceDeployment)) {
-		b.Config.Workspace.FilePath = b.BundleRootPath
-	}
-
 	if b.Config.Workspace.FilePath == "" {
 		b.Config.Workspace.FilePath = path.Join(root, "files")
 	}