The Queen gave Prince Harry and Meghan the use of Frogmore Cottage within her vast Windsor Castle estate but it needed work done to convert it into a modern royal household.
"The scheme (Frogmore Cottage) consisted of the reconfiguration and full refurbishment of five residential units in poor condition to create the official residence for The Duke and Duchess of Sussex and their family," Buckingham Palace said in a statement cited by Efe news.
The cottage is located northwest of Frogmore House, a larger luxury residence set within palatial gardens where the royal couple, as newlyweds in May 2018, held their wedding reception.
The Duke and Duchess had previously shared Kensington Palace in central London with Harry's older brother, William, Duke of Cambridge, and his family.
However, Prince Harry and Meghan moved out in April, before the birth of their son Archie.
According to Buckingham Palace, refurbishment work on Frogmore Cottage began in November 2018 and was "substantially completed by the end of March 2019".
The money for the repair work on the cottage came from the Queen's Sovereign Grant, which the government paid to the Head of State in 2018-19.
The total amount given to the queen was 82 million pounds, of which 33 million pounds were dedicated to the maintenance of royal residences, including major repair work on Buckingham Palace.
The grant paid for what was considered to be basic work and infrastructure on the cottage, with the Duke of Sussex reportedly paying for the new fittings.
According to the accounts published, the Queen's official expenses over the past year were 67 million pounds, a 41 per cent year-on-year hike, principally due to renovation work carried out on royal residences.
The Queen's property holdings, known as the Crown Estate, contributed 343.5 million pounds to the UK's Treasury in 2018-19, an increase of 4.3 per cent, year-on-year. The Sovereign Grant is funded by profits from the Crown Estate.
( With inputs from IANS )