Contact your city compliance department about building codes. You may need to obtain building permits. Be aware of what the regulations are concerning building standards and materials. If you are in violation, the fines can be steep and the garage may have to be restored to its original condition.
Determine if you want to remove the garage door. It can be replaced with a standard exterior door flanked with long windows. If this is not an option, hang insulated drapes that will hide the door from the inside of the room.
Install a ceiling. You will need to decide what style ceiling you want. You can choose a pitched ceiling, beamed ceiling, dropped or sheet rock.
Finish the floor. Decide if you want tile or carpeting. The cement foundation is an excellent sub floor for any covering you choose to use. Seal it before finishing the floor. Laminate or ceramic tile will work well. If you decide to use carpeting, consider laying two layers of padding to provide additional insulation.
Finish the walls. You may want to add insulation before installing panelling or sheet rock. Paint your walls the color of your choice and finish them with baseboard trim.
Add your furniture and accessories. Your new room is ready to be decorated and enjoyed.