I've found it! There is no Freesync issue. The game engine forces the monitor to display at 1920x1200 @59Hz. I wrote a tool in c++ showing me realtime resolution and vertical frequency of active monitors to find this.
What is more nasty is that the game engine is locked at 60 FPS! Dropping the vertical frequency down to 59Hz makes my freesync range lowered to 40-59Hz. Since in 1080p my R9 290 can produce a solid 60fps, Freesync is obviously out of range and tearing was inevitable.
I used the 'Frame Rate Target Control' in the Radeon Settings and set it 59. Miracle, tearing is gone and I can fully enjoy the game with Freesync working as it should be.
One annoying thing is Nier Automata profile in settings doesn't work. I have to use the global FRTC to limit my fps. It would be nice to fix this since I play other games at 72Hz.
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One more thing, I tried RivaTuner Statistics Server from MSI Afterburner to limit fps. It works but some tearing pops in the bottom of the screen. I can see this in all my games.
So FRTC > RTSS when you use Freesync.