While it may come as a great surprise to many people, magic in fiction isn't an 'anything goes' territory. It's not a subject where logic gets left at the door, whimsy reigns supreme, and a writer can just do whatever she pleases if it's convenient for the plot at the time. No no, there are rules to these things. It takes great study, intuition, and instinct to learn such things. That's what Hogwarts is for, after all.
But wait, what on earth does this have to do with romance? Well, technically nothing. The better question is what does this have to do with fiction, because elements of magic, like romantic themes, don't stick to one specific genre. Does your paranormal romance have unique powers? Do you need to figure out the healing factor for your vampires? Does your story, like Therese Walsh's The Last Will of Moira Leahy, weave a thread of magic realism into a women's fiction story via a unique object that may or may not be somehow influencing the protagonist? Or maybe you're just throwing your protagonist through some standing stones and into 18th century Scotland.
Either way, you'd better know what the heck you're doing with your magic, because you just can't go throwing this stuff around like finger paints. It just makes a mess, and no one wants to read a mess.
Rule of Limits: Magic can't just do anything it pleases. If you're going to develop a system of magic, you need to know how it works. Do your characters work with psionics? What about channeling water, or blood magic? How do your vampires heal so quickly? It could take time, or food, or concentration for your undead protagonist to recover from his injuries, but whatever you choose, you have to stick with it. There will be times when there's no access to fresh blood, or things are too chaotic to concentrate, and then your protag will just have to deal. Likewise there may be things simply beyond that character's skill or ability. Either way, the presence of magic can't become a limitless deus ex machina, or you'll suck all the tension right out of your story.
Rule of Costs: Hand in hand with limitations, magic needs costs, which I already touched on above. An action may sap strength, or even memories, and potentially leave the character prone. Each use may bring the character closer and closer to a premature death. You could look at this as basic science, not creating something from nothing. Sure, the express purpose of some magics is to create something from nothing, but if magic isn't your focus (we're a romance blog, after all) that's probably not the route you're going to take. Magic needs limits, and it needs repercussions, reasons not to go using it as a quick fix for every situation. When you're making it all up yourself, you've got to make sure you build in all facets, not just the good ones.
Other costs can emerge in terms of character, such as being reviled by other characters, emotional trepidation to use an ability, or moral debate over whether your magical object's influence is benevolent or malevolent.
Rule of Tone: Less quantifiable but equally important is the tone of your magical element. This is kissing cousin to the voice of your book and the atmosphere of your story. Are you writing a dark, intense paranormal? You probably won't want bright, sparkly magic. Are you writing something light and realistic, save for your spirit-summoning protag? You'll want light, realistic elements of magic rather than blood-filled consequences or divine manifestations in the final act. It's all part of creating the tone of a book, equivalent to the mise en scene of cinema. It all combines together to create a specific mood, and if something jars with that mood, it won't feel believable.
Tone also creates another aspect of limitation. In JK Rowling's Harry Potter series, for example, magic can do well nigh anything a wizard pleases, but the magic matches the voice of the series. Aside from a several key scenes of gripping flash and dazzle, the majority of magic is just as often hazardous as convenient, and quite often is more banal than efficient. Clean dishes? Sure. Remove pimples? Or possibly your whole face.
Rule of Character: By now you may have noticed a parallel among these points. They all apply to characters. In the end, that's what magic boils down to -- another character to explore and develop, to show strengths and flaws for, and to enrich the story. If a character is all strengths and no flaws, they're less believable. So too for magic. A character's actions need to match the tone of the book, they need to have limits in knowledge, compassion, ability, and they need flaws and consequences. You wouldn't give your protagonist an easy fix for a dire situation, so why assume magic can do the same? Treat the magic elements of your story the same as you treat your characters and they will serve you well. Treat them poorly, and they will drag your story down as fast as any poor character.
Likewise, don't forget your characters. They're the ones who have to deal with the presence of magic in your story, and it's through them that we will learn of it. If magic is a known element, and they believe it, we will believe it too (barring anything that jars us out of the world you've created). If magic is unknown, your character's process of discovery and dealing with this new knowledge will help the reader toward the same. Think things through, underpin them with believable limits and consequences, and the rest comes naturally. We're imagining the private thoughts and heartaches of words on a page, after all. We're already in a willing state to suspend disbelief. If the little details ring true, the big things don't matter.
A few final notes on magic in fiction. Once you know the costs, use them. If you have the possibility for your protagonist to be drained, unable to draw more energy -- use it! If your magic object could make the heroine lose her mind, make her doubt everything! Don't let the prospect of peril be enough, when you can make the low moments that much worse by bringing your magic to its cost and limits as well. It's far more fun that way.
Likewise please, for the love of pete, don't break your rules once you build them. Great stories and series have been ruined when a once-hard Fact was suddenly changed to accommodate a new plot development. If your summoner needs water to focus her abilities, she can't suddenly use sand instead. Not unless you've been hinting at it all along and always knew you were going to do that.
Magic in fiction is no different than the magic of writing fiction in the first place. Ostensibly it seems a person can do anything, say anything, and get away with anything. In time, though, we learn what works and doesn't work, what makes the craft stronger and more effective, and what is just going to get our work thrown against a wall in frustration. Like every other aspect of fiction, magic needs your unique flare for execution and storytelling.