4. The penalty of sin remains as long as the hatred of self (that is, true inner repentance), namely till our entrance into the kingdom of heaven.
This phrase is a little confusing, but it seems that Luther was making the statement only after this life on earth would we be free of sin. Truly our sin has penalties (consequences) here on earth in the life that we live. Sin brings its own penalties into our life. Luther did not want anyone to think that true repentance would lead to a sinless life. While we strive to lead the life of repentance, we are plagued by sin as long as we live.
From this position Luther later would talk about how we are at the same time “sinner and saint”. Saint because we have been saved for eternity by Christ’s suffering and death and our sin is not counted against us. Sinner because as long as we live in this world we will always go back to our sinful selfish nature. So while we live on this earth we will have to struggle with this dichotomy.
In Romans chapter 7:19,20 the Apostle Paul speaks about this when he says, “for I do not do the good I want to do , but the evil I do not want to do this I keep on doing. Now if I do what I do not want to do, it is no longer I who do it, but it is sin living in me that does it.” Paul refers to this as Life under the law. He says that we will be in that situation as long as we are alive here on Earth.
Father, I come to you through the blood of Jesus shed for me on the cross. I pray that You will walk with me throughout my life that I may be yours body and soul. Only You can give me peace when I am taunted by my sinful nature. Give me the assurance of forgiveness that only Your Holy Spirit can give. Amen.