Yes that is how it works.Let's look it from another angle: I made money and built a house (in this case it was William the Conqueror), then made more money and built (bought) another house and let's imagine my heirs continue to do that. After sufficient number of years, my heirs would own as much palaces and land as RF. Do you expect my heirs to give a country their profit except for taxable income?
As far as I understand, instead of directly owning all the palaces, your RF made the trust (Crown estate) and all revenue from the Estate goes in your treasury. All antiquities and jewellry is also in trust and RF can't sell them or give them away? From the revenue, about 20% goes back to RF for maintenance of the said palaces and salaries of employees.
What is in private RF hands (Balmoral and few others), maintenance is paid from private income of royals.
The argument is that if we got rid of the Royal’s the Crown Estate is still the publics. The Royal’s argument is that it isn’t, it’s theirs in trust. It’s also why they don’t pay taxes (including inheritance) as all the income from the Crown Estate goes to the public anyway