I don't want to date my transgender best friend
Is there a particular reason for not wanting to do date them?
I'm not attracted to them.  I think transgender people look gross
No one says you have to be attracted to them or want to date them, but to say that people look gross because they are transgender is wrong and quite hateful. I hope you think about that belief and realize that it's unfair to negatively view an entire group of people.
I know, but I don't want to date her.
If you don't want to date them then kindly tell them so. However, that doesn't make it right to refer to and think of them as "gross."