FIRST JOHN 3:7-10 AND SINLESSNESS
Thanks for writing and for the good question.
First, see my very long article at ETERNAL SECURITY. I present scores of texts coming from every conceivable direction which conclude that a born-again Christian cannot fall from grace. Perhaps the strongest is that a person cannot choose to become un-born. We simply cannot base the doctrine of sanctification on one verse and ignore the remainder of inspired Scripture.
When one reads all of First John, it appears to teach two opposites: (1) that born-again Christians cannot and will not sin and (2) that born-again Christians still sin. Notice the "we" of 1 John 1:8 If we say that we have no sin, we deceive ourselves, and the truth is not in us.
Your interpretation of First John requires all Christians to be instantly sinless at the moment of accepting Christ. Though that is true concerning justification and imputed righteousness, it is not true concerning sanctification which is the work of a lifetime. We will not become sinless until Christ returns per 1 Cor 15:51-55. In every letter, Paul pleads with Christians (not the lost) to "put on Christ" and to be "led by teh Spirit" that they overcome sin.
First John only makes sense and only agrees with the remainder of inspired Scripture if it is interpreted as a "habitual walk" towards sinlessness. Even Pentecostal Holiness Christians admit that it only means that they do not WILLFULLY or DELIBERATELY SIN -- which also goes beyond the literal text.
Post-justification sin breaks FELLOWSHIP with God --- not RELATIONSHIP. That is what First John 1:1-9 is all about.
Russell E Kelly