Translation:I am going to transform my house in a palace.
"en" is very versatile, it does not only mean "in" but it also contains an article, like "je vais en Italie" (lit. à la), or "repose en paix" (lit. dans la), "j'y vais en voiture" (lit. dans une).
It is probably the only preposition that does not always require an article.