This depends entirely upon whether or not you are talking about doing it with a permit. If you add square footage to your home legally, you add value. Now, mind you, that adding sq. footage by losing a garage will not gain you as much dollar for dollar value, as it would had you built on an addition separately and also retained a garage.
If you're thinking about doing it without permits, you could be shooting yourself in the foot and limiting the number of buyers who could qualify for your home because FHA won't allow converted garages without permits.
Best of Luck!
Jeri Creson, Broker
TotalAccess Realty Advisors