Due to its unique climate and geography, Taiwan experiences abundant rainfall but still faces significant water scarcity. As a result, rainwater harvesting systems (RWHSs) have been recognized as potential water resources within both water legal and green building policies. However, the effects of climate change—manifested in more frequent extreme rainfall events and uneven rainfall distribution—have heightened the risks of both droughts and floods. This underscores the need to retrofit existing RWHSs to function as stormwater management tools and water supply sources. In Taiwan, the use of simple and cost-effective passive release systems is particularly suitable for such retrofits. Four key considerations are central to designing passive release RWHSs: the type of discharge outlet, the size of the outlet, the location of the outlet, and the system’s operational strategy. This study analyzes three commonly used outlet types—namely, the orifice, short stub fitting, and drainage pipe. Their respective discharge flow formulas and design charts have been developed and compared. To determine the appropriate outlet size, design storms with 2-, 5-, and 10-year return periods in the Taipei area were utilized to examine three different representative buildings. Selected combinations of outlet diameters and five different outlet locations were assessed. Additionally, probably hazardous rainfall events between 2014 and 2023 were used to verify the results obtained from the design storm analysis. Based on these analyses, the short stub fitting outlet type with a 15 mm outlet diameter was selected and verified. For determining the suitable discharge outlet location, a three-step process is recommended. First, the average annual water supply reliability for different scenarios and outlet locations in each representative building is calculated. Using this information, the maximum allowable decline in water supply reliability and the corresponding outlet location can be identified for each scenario. Second, break-even points between average annual water supply and regulated stormwater release curves, as well as the corresponding outlet locations, are identified. Finally, incremental analyses of average annual water supply and regulated stormwater release curves are conducted to determine the suitable outlet location for each scenario and representative building. For the representative detached house (DH), scenario 2, which designates 50% of the tank’s volume as detention space (i.e., the discharge outlet located halfway up the tank), and scenario 3, which designates 75% (i.e., the discharge outlet at one-quarter of the tank height), are the most suitable options. For the four-story building (FSB), the outlet located at one-quarter of the tank’s height is suitable for both scenarios 2 and 3. For the eight-story building (ESB), scenario 2, with the outlet at one-quarter of the tank’s height, and scenario 3, with the outlet at the lowest point on the tank’s side, are preferred. The framework developed in this study provides drainage designers with a systematic method for determining the key parameters in passive-release RWHS design at the household scale.