The maintenance work costing £150m to be carried out will see the Queen moving out of Buckingham Palace till the renovation is complete.
It is one option being considered by the royal household, which says the palace needs new plumbing and wiring and has not been decorated since 1952.
It comes as the Crown Estate, which owns property on behalf of the Queen, returned record profits of £285 million to the taxpayer last year – up 6.7%.
Public funding of the Queen is expected to rise by £2m next year – to £42.8m reports BBC.
The monarch is paid 15% of the Crown Estate’s profits by the government under the Sovereign Grant formula launched in 2011.
Last year, the Queen received £37.9m from the grant – of which she spent £35.7m. That figure will increase to £40.05m this year, and is expected to rise to £42.8m next year.
It comes as the Crown Estate’s annual results show its capital value is at a historic high of £11.5 billion – up 16.1%.
The publication of the royal finances also comes as a spokesman for the Scottish government said it would continue to make the same financial contribution to the monarchy, even if further devolution is approved.
Reports suggested Scotland could cut its contribution to the monarchy by between £1m and £1.5m – if profits from the Crown Estate in Scotland are retained by the Scottish Parliament under further devolved powers.