isync (mbsync) on gmail marks mail as new after move to another folder

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I'm trying to use (neo)mutt combined with isync (mbsync) for reading my mail from gmail account. However I have slight issue. When I use mutt to move mail to another folder, the message is marked as "new" again. Is there a way around this?

Relevant part of ~/.mbsyncrc is I guess (rest is just mapping of remote to local folders and credentials)

# Automatically create missing mailboxes, both locally and on the server
Create Both
Expunge Both
# Save the synchronization state files in the relevant directory
SyncState *

I'm not sure what I should (can) do about this. Thanks for help

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