Sources tell Badass Digest that director J.J. Abrams will begin shooting "Star Wars: Episode VII'" in mid-May in Morocco. Not only could the country stand in for the desert planet, but the location is close to Tunisia, where most Tatooine scenes were shot for "Star Wars: Episode IV - A New Hope."
Those old sets are still standing in Tunisia, though they have begun to break down over the years. Fans are campaigning to save the sets, though Badass Digest notes that Abrams might want to use them in their weathered state to demonstrate the passage of time ("Episode 7" is set 30 years after "Return of the Jedi").
This rumor, along with one that the crew would be shooting landscape shots in Iceland (possibly to stand in for Hoth), indicates Abrams won't be relying on green screen as much as George Lucas did. Cheers to that!