If you in fact have 12-2 Type NM cable supplying a general purpose (lights and receptacles) branch circuit connected to a 40Amp circuit breaker then you have a NEC violation as well as a potentially dangerous situation. You say this is a new home. I would contact the builder and ask him to have an electrician inspect this. Maybe also contact the local electrical inspectors office. It should not have passed inspection.
What you need is a 20 amp breaker protecting the existing circuit, assuming that no factors exist in your house which would force derating of the circuit to 15 amps. If you need more than a single 20-amp circuit in the garage, discuss that with the electrician and (s)he can look at what the cost would be to install additional circuits.
You might also consider having the electrician do a safety check on the garage and your wiring installation. Are the receptacles in the garage GFCI-protected? Are there other safety issues that were missed in the earlier inspection?
I have 4 lights plus 8 15 amp plugs and yes one gfci running on the 12-2 wire. Would it be enough to simply change the breaker to a 20amp. Or will the 20 amp on 12-2 still be overloaded? Thanks for taking your time to answer!