Form 709 question regarding the valuation of a home gifted

I gave my non-citizen wife half of my house by putting it into community property, thus it becomes a gift.  In filing out Form 709, I need to determine the value of the house that I am gifting half of.  I am getting an appraisal so I will know the market value, however, I also have a sizable mortgage on the house.  Is the appraisal reduced by the mortgage to determine the gift value?  My wife is now on the mortgage as well as the house.