1 John 3:3-10 (NKJV) And everyone who has this hope in Him purifies himself, just as He is pure.  Whoever commits sin also commits lawlessness, and sin is lawlessness.  And you know that He was manifested to take away our sins, and in Him there is no sin.  Whoever abides in Him does not sin. Whoever sins has neither seen Him nor known Him.  Little children, let no one deceive you. He who practices righteousness is righteous, just as He is righteous.  He who sins is of the devil, for the devil has sinned from the beginning. For this purpose the Son of God was manifested, that He might destroy the works of the devil.  Whoever has been born of God does not sin, for His seed remains in him; and he cannot sin, because he has been born of God.  In this the children of God and the children of the devil are manifest: Whoever does not practice righteousness is not of God, nor [is] he who does not love his brother.
1 John 3:3: The two previous verses have exalted what God has already done for us in the spirit and what will happen to us in our souls and bodies at the coming of the Lord. Those who have experienced this salvation and have the hope of the future salvation of our completion purify themselves. This verse says that is true of everyone who has this hope. Therefore, those who act ungodly on purpose show no evidence that they have truly been born again.
I do believe that a Christian can live a sinful life and still be truly born again because of wrong, legalistic teaching. 1 Corinthians 15:56 says, "...the strength of sin is the law." Romans 7:8-11 says, "But sin, taking occasion by the commandment, wrought in me all manner of concupiscence. For without the law sin was dead. For I was alive without the law once: but when the commandment came, sin revived, and I died. And the commandment, which was ordained to life, I found to be unto death. For sin, taking occasion by the commandment, deceived me, and by it slew me." But regardless of how badly a true believer sins, his heart's desire is to live for God. He may not know how to accomplish that, and his wrong religious teaching may even drive him to sin; but he doesn't want to live that way. The very fact that a person is now disgusted with the sins that he used to enjoy is a token of the saving grace of God in his heart.
1 John 3:4: Since sin is the transgression of the Law, what happens when there is no Law? The answer is found in Romans 5:13. This is not to say there is no sin, but sin is not imputed when there is no Law.
1 John 3:5: The only part of us that is truly in Him is our spirits. Our born-again spirits are sinless and pure and sealed until the day of redemption, so no sin we commit penetrates that seal (Ephesians 1:13-14).
This is speaking of our born-again spirits and is not saying that we as true Christians can't sin. That would void the scriptures in this very epistle in 1 John 1:8-10 and 2:1-2.
1 John 3:6: This verse needs a little interpretation. Romans 14:23 says, "For whatsoever is not of faith is sin." All of us would have to say we have not operated in faith. James 2:9 says, "But if ye have respect to persons, ye commit sin, and are convinced of the law as transgressors." So anytime we treat people differently based on carnal things or if we are afraid of people, we commit sin.
I don't think any Christians can really defend the position that they have never sinned since their conversion. In fact, the Apostle John in this very epistle said, "If we say that we have no sin, we deceive ourselves, and the truth is not in us. If we confess our sins, he is faithful and just to forgive us our sins, and to cleanse us from all unrighteousness. If we say that we have not sinned, we make him a liar, and his word is not in us. My little children, these things write I unto you, that ye sin not. And if any man sin, we have an advocate with the Father, Jesus Christ the righteous" (1 John 1:8-2:1).
So the emphasis in this verse must be on "abiding in him." When we abide in Him or live in the spirit, there is no sin. Our spirits cannot sin. It is only our flesh that sins. Those who say they are abiding in Him and are still living in sin are liars.
1 John 3:7: Jesus said in Matthew 5:20 that our righteousness had to be greater than that of the scribes and Pharisees. They acted right outwardly, but Jesus revealed that it was only an act. They were not doing the will of God from the heart (Matthew 23:23-28). Jesus revealed that righteousness is actually an attitude of the heart that expresses itself in outward actions (Matthew 5:21-22 and 5:27-29).
Therefore, this verse has to be speaking of more than just acting properly. Righteousness is a heart attitude that expresses itself through actions.
1 John 3:8: On the surface, this scripture is very problematic. It appears to be saying that anyone who sins is not truly born again. Yet that contradicts the message of the whole Bible, the message of Jesus, the context of this very book (1 John 1:8-10 and 2:1-2), and common sense. If that were true, then no one could be saved. There are two basic approaches to explaining this verse, in a manner consistent with other well-established truths of Scripture.
First, some people believe this is speaking of committing sin habitually, not a single sin but a habitual lifestyle of sin. The thought is that a drunkard might sin a few times after true salvation, but if he continues to drink, that is a sign that he is not truly born again. I could agree with that illustration to a degree, but what if you use the sin of gluttony? Gluttony is put in the same list as drunkenness (Proverbs 23:21). It is sin, and it is a habitual sin. You can't get fat just overeating one time. Are you willing to say that any fat person can't be saved? No one could meet this standard.
Others believe this is actually referring to those who sin as being under the influence of the devil. I would have to believe this is the meaning here to be compatible with other scriptural truths. The born-again spirit of a believer cannot sin (see my note at 1 John 3:9). Therefore, anytime a Christian sins, it is not an action under the control or influence of the born-again spirit but of the flesh or direct demonic influence. Our sin doesn't proceed from God or the part of us that has been born again by God. It is either the direct influence of Satan or the flesh that has been programmed by Satan. That would lead perfectly into the next statement of this verse, that "the devil sinneth from the beginning." This is saying that the devil was the first to sin. He introduced sin to the world, and all sin ultimately comes from him. Satan is the author and finisher of sin.
Jesus was manifest to destroy the works of the devil, which are sin. So, when a Christian is under the influence of God or their born-again spirit, they cannot sin. But when they do sin, they can't attribute that to God. That is yielding to the influence of the devil. Therefore, he that commits sin is of the devil or under the influence of the devil at the time the sin was committed.
1 John 3:9: This is not saying that a Christian does not sin. That is contrary to many scriptural truths and the context of this very letter (1 John 1:8-10 and 2:1-2).
The part of us that is born of God, or born again, is the spirit. That born-again spirit was created in righteousness and true holiness (Ephesians 4:24). It is identical to Jesus (1 John 4:17 and 1 Corinthians 6:17), for it is the spirit of God's Son (Galatians 4:6). Anyone who doesn't have the Spirit of Christ isn't truly born again (Romans 8:9). And immediately upon being born again and receiving this new spirit, we are sealed, vacuumed packed, by the Holy Spirit (Ephesians 1:13) so that born-again spirit can never be contaminated again.
It is this born-again spirit that cannot sin (this verse). When we are walking in the spirit, or being led by the spirit, we cannot sin. Those who sin are not being led by their spirit. Either they don't have a spirit that has been born from above or they aren't following the leading of the part of them that is in relationship with God. God will never lead anyone into sin.
Therefore, the point of this verse is to say that any time we sin, we are not under the influence of God through our born-again spirits, because the born-again spirit cannot sin and will never lead us to sin. So, anyone crediting their sin to God or the leading of their born-again spirit is lying.
1 John 3:10: We can't literally see into the heart of any person. Only God knows a person's heart. But their actions do give us an indication of what's in their heart because "as he thinketh in his heart, so is he" (Proverbs 23:7). That is not to say that a true Christian will never do anything wrong (see my note at 1 John 3:9), but a changed heart will produce changed actions. Those who say they have relationship with God and have no fruit to verify that, are just deceiving themselves, for "by their fruits ye shall know them" (Matthew 7:20).
Therefore, as this verse is saying, our actions are an indication of whether or not our hearts have been changed. But there has to be some discernment here. The scribes and Pharisees lived very holy lives outwardly. They fasted twice each week (Luke 18:12). They paid tithes down to the spices in their gardens (Matthew 23:23). But their hearts were wicked. They were only acting this way because of the advantage their works gave them over other people and the deception that their actions earned them favor with God.
How can we accurately evaluate the condition of someone's heart? It's not just religious actions but actions of love. The Pharisees only loved themselves. They had holy outward actions, but they didn't love people. They only loved themselves (Matthew 23:5-12). God's kind of love is just the opposite. God's kind of love will also cause acts of holiness (1 Corinthians 13:4-8), but those outward actions will be motivated by an inward love for God and others. This is how you truly know those who are of God and those who are of the devil. It's by their love one for another (John 13:34-35).