A better translation from the original Greek manuscripts renders the passage as, “No one who has been begotten by God practices sin; because His seed abides in him; and he cannot sin, because he has been begotten by God.” This begetting takes place at the time of the receiving of the holy Spirit. In other words, it is the beginning of the new spiritual life, the living of the Christlike life. 

This “new creature” (2 Corinthians 5:17) is in an embryonic state or condition while in the flesh and will be born of the spirit in the resurrection. The spirit of the Lord God is the power or influence exerted upon the minds and hearts of those who have surrendered their own wills and are obedient to the Divine will. This holy power of the Lord gradually transforms the mind of the Christian, shaping the mental faculties so that earthly hopes, desires and ambitions die, while heavenly spiritual ones are developed. 

The spirit-begotten new creature becomes spiritually minded, develops a new mind. His mind is renewed for so states the Apostle Paul, “Be not conformed to the things of this world but be ye transformed by the renewing of your minds” (Romans 12:2). Because of the weakness and the imperfections of the flesh, we sin almost constantly, not willfully; the new mind, the mind of Christ cannot sin. All who are honest with themselves will acknowledge that they are imperfect and cannot do the things that they would, perfectly. (See 1 John 1:8, 1 John 2:1.) The embryotic New Creature (the mind of Christ dominated by the holy spirit) cannot sin (willfully) as long as “His Seed (the spirit) remaineth in him.”

Additional Resource:
Christian Questions Podcast 
Episode #1095: “Jesus Died For You! Are You Dying For Him?”
Describing what the life of a true disciple of Jesus looks like
Preview Video
CQ Rewind Show Notes